Treasury Secretary Tim Geithner, expected to resign from his post following President Obama’s January inauguration, will have plenty of offers to join the private sector after becoming a free agent. But don’t expect Wall Street to roll out the red carpet.
Geithner, 51, will walk away from the Treasury in a much different position than virtually any of his predecessors. Unlike those who served before him, such as former Treasury Secretary Hank Paulson, the ex-chief executive of Goldman Sachs, or John Snow, the former CEO of CSX Corp., or Robert Rubin, a former Goldman Sachs executive who joined Citigroup after his Treasury stint, Geithner will leave the Obama administration as a career public servant, and not a very well-paid one.
Already one of the least wealthy Treasury chiefs to take the post, Geithner accepted a more than 50% pay cut in 2009 when he assumed the role. His current salary is $199,700, and, as of his 2009 Senate confirmation, Geithner maintained holdings valued at between $770,000 and $1.8 million, according to Bloomberg. His assets at the time totaled between $1,774,021 and $6,816,000, according to the Center for Responsive Politics. Compare that to the holdings of Paulson, Snow and Rubin, who are each worth hundreds of millions of dollars. Rubin earned $126 million in cash and stock during his post-Treasury stint at Citigroup, according to his Wikipedia profile.
No Wall Street Experience
With no experience on Wall Street, Geithner isn’t in a position to smoothly transition to the private capitalistic sector, said one former Goldman Sachs exec who requested anonymity. “I do not believe Wall Street would be too eager to hire him as he holds no secrets nor insight they could profit from,” said the former banker, “but I am sure there will be firms in the fields of consulting and legal that would want him on the masthead.”
Geithner spent three years working at Kissinger Associates in Washington before joining the Treasury Department in 1988, eventually becoming the Under Secretary of the Treasury for International Affairs a decade later, then became president of the Federal Reserve Bank of New York at age 42. He received his bachelor’s degree from Dartmouth College and earned a master’s in international economics and East Asian studies from Johns Hopkins. He was once approached to become CEO of Citigroup, according to the New York Times.
Bloomberg reported last week that private-equity shop BlackRock is a likely landing spot for Geithner due to his relationship with Chairman Laurence Fink, but Bobbie Collins, global head of media relations at BlackRock, told eFC “there are no plans for Secretary Geithner to join us.” Messages to Mr. Geithner’s office went unreturned.
Another issue for Geithner is the major decrease in interest in former senior government officials on Wall Street over the last 18 months, said Adam Zoia, CEO of Globcap, a New York-based executive search firm that partners with hedge funds, investment banks and private equity firms.
And, given the Obama administration’s stance on big bonuses, Geithner “may not follow that well-trodden path into financial consultancy,” said Chris Apostolou, a former economist who’s now the managing director at London-based Arbitrage Search and Selection.
“Someone at Mr. Geithner's level and prominence, however, will not have an issue obtaining multiple offers,” Zoia said, with a compensation package creeping into the seven figures.
Geithner’s real appeal would be on the relationship-smoothing side of the deal-making businesses, said Apostolou. “In the same way Tony Blair was asked by J.P. Morgan to talk to the Qataris in order to encourage them to approve of the Xstrata/Glencore merger, Geithner could no doubt make key calls and encourage finely-balanced deals to go through,” Apostolou said.
Other options for Geithner include the highly-lucrative speaking circuit or, as Bloomberg points out, the vacant role of president at his alma mater, Dartmouth College. A Dartmouth representative said the university had no comment, calling a possible Geithner appointment "just rumors."
For now, Geithner has more pressing matters at hand. The White House has confirmed that he will remain on the job to help resolve the so-called “fiscal cliff,” a job big enough to demand Geithner’s full attention.