Obama says would not accept Geithner resignation

It came ahead of a critical week for Geithner, who is  expected to unveil his much-anticipated bank bailout plan and  outline broad financial regulatory reforms to better police  Wall Street within days.

Obama said in an interview with CBS television network’s  ‘60 Minutes’ programme that if Geithner tried to quit, he would  tell him, “Sorry buddy, you’ve still got the job.”

Geithner has been under fire over his failure to block at  least $165 million, and possibly as much as $218 million, in  bonuses paid out to employees of insurer American International  Group, which has received billions in government aid.

With public outrage over the AIG bonus scandal mounting and  several lawmakers calling for Geithner’s resignation, Obama was  forced this week to repeatedly defend his treasury secretary,  saying he had his complete confidence.

While Obama has said Geithner’s job is safe, some  Washington pundits have noted it is not a good sign that the  president has had to say it, and so often.

The odds on whether Geithner will leave by the end of June  increased over the last week in the Intrade political  prediction market, although traders still gave it only a small  chance of happening.

Obama stressed in the ‘60 Minutes’ interview, which will be  broadcast today, that neither he nor Geithner had discussed  the possibility of his quitting, CBS said in a statement yesterday.

Geithner said this week he took full responsibility for the  controversy surrounding the AIG bonuses and dismissed calls for  his resignation, saying it “just comes with the job.”

Geithner, who has been in his job less than two months, has  also faced criticism over his slow roll-out of plans to save  the banking sector, which Obama said this week was key to  staving off further financial calamity.

A source familiar with the bank bailout plan told Reuters  yesterday the Treasury Department would unveil a programme next  week aimed at cleansing toxic assets from bank balance sheets  that have frozen up lending and fuelled the recession.

The keenly awaited plan proposes setting up an entity the  Federal Deposit Insurance Corp will use to offer low-interest  loans to private interests for buying up banks’ soured assets,  many of which are tied to mortgages and have tumbled in value.

The Treasury Department will also hire outside investment  managers to run public-private partnerships that could invest  for potential profit in troubled mortgages, with government  capital matching private capital contributions.

The New York Times said Treasury would also unveil a  sweeping plan next week to overhaul financial regulation.

It would call for increased oversight of executive pay at  all banks, Wall Street firms and possibly other companies; a  new role for the Federal Reserve to oversee large companies,  including major hedge funds; and increased capital reserve  requirements for financial institutions to absorb any losses.

Trying to refocus attention from the AIG bonus scandal,  Obama vowed yesterday to stick to the big-ticket items in his  record $3.5 trillion budget proposal for 2010 but acknowledged  that dollar amounts would “undoubtedly change” as Congress  prepared to take up his record spending plan.

“It’s an economic blueprint for our future, a vision of  America where growth is not based on real estate bubbles or  over-leveraged banks, but on a firm foundation of investments  in energy, education and health care that will lead to a real  and lasting prosperity,” he said in his weekly radio address.

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