Geithner's Treasury Is a Lonely Place

The Treasury Department remains starved for political appointees at its top levels after two top picks of Secretary Timothy Geithner’s have withdrawn their names from consideration, sources said Thursday night.

Geithner’s top choice to be his deputy Treasury Secretary, Annette Nazareth, stepped aside, citing personal reasons. Geithner’s pick for a undersecretary of international affairs at Treasury, Caroline Atkinson, also took her name out of the running for the job.

"It was pretty clear for a while that [Nazareth] was not going to be the pick" for the deputy Treasury secretary position, despite her name being floated by Geithner for the post, one Democratic official said, speaking on condition of anonymity.

Nazareth spent nine years at the Securities and Exchange Commission, first as director of its market regulation division and later as a commissioner.

However, Nazareth’s time at the SEC proved to be a liability rather than an asset. Senate Democrats feared that Republicans would try to tie Wall Street scandals, include the alleged Bernie Madoff "Ponzi scheme" to Nazareth, in light of reports that the scheme was repeatedly overlooked by regulators during those years.

"You could tell that they wanted to beat up on an Obama nominee like her," said the source. "This was more like a trial balloon than anything."

After private consultations with senior Senate Democrats, Geithner was aware of potential opposition to her nomination, which caused Nazareth to voluntarily withdraw her name, the official said.

A person with knowledge of Nazareth’s situation insisted that no issue came up during her vetting that would have played in a role in her decision to step aside.

“She fully cleared the vetting process,” said the source, who asked not to be named, “It just came down to a personal decision…..After spending more than decade in government service she decided she’s enjoying what she’s doing now in private practice.”

The circumstances behind Atkinson’s departure were unclear.

Geithner has struggle to fill his top ranks – in part due to difficulties with the vetting process, which were leading a number of qualified candidates to drop out of consideration for important jobs at Treasury.

At a Senate hearing this week, Sen. Tom Carper (D-Del.) questioned Geithner about the difficulties in filling out the senior ranks at Treasury.

“I worry about the administration especially with Treasury the ability to — to get your team around you," Carper said. "Obviously, you need help."

"We're making some progress,” Geithner said. “We hope to come up for the committee soon with a full slate of very strong people.”

At a congressional hearing last week, a former Federal Reserve chairman who chairs a panel giving Obama economic advice, Paul Volcker, said he was distressed about the shortage of senior appointees at Treasury.

“There is an area that I think is, I don't know, shameful is the word," Volcker said. "The Secretary of the Treasury is sitting there without a deputy, without any undersecretaries, without any, as far as I know, assistant secretaries responsible in substantive areas at a time of very severe crisis. He shouldn't be sitting there alone."

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