GEITHNER FACES CRITICAL TEST WITH TOXIC ASSET PLAN

Tim Geithner, America's beleaguered Treasury secretary, faces a critical test of his credibility when he unveils a much awaited plan to take toxic assets off bank balance sheets – in an announcement that could come as soon as tomorrow.

Mr Geithner, whose initial announcement last month on the troubled asset purchase plan disappointed the market, has become the target of harsh criticism in Washington and on Wall Street with some questioning whether he can deliver.

Speaking on condition of anonymity, several senior Democratic figures questioned whether Mr Geithner would have the credibility with the markets and Capitol Hill to push through a new request for funds. “The more time passes the more convinced I am that Tim Geithner is becoming a liability for the administration,” said one lawmaker.

Analysts say Barack Obama would face steeper odds persuading Congress to authorise more money to recapitalise the banking sector if Mr Geithner was the one making the request. Mr Obama included a $250bn financial sector bail-out item in the budget he announced last month implying that the administration will need up to $750bn more in troubled asset funds.

“I don't think Tim Geithner will last beyond June – he has no credibility with the markets,” says Chris Whalen, managing director of Institutional Risk Analytics, a financial research group. “Given what we already know about the toxic asset purchase plan I very much doubt he is going to turn this situation around.”

Treasury officials could not be reached for comment. But defenders of Mr Geithner, who remains the only official at the Treasury department to have been confirmed by the Senate, say that he is being unfairly singled out as the lightning rod for the growing public anger Wall Street's misuse of emergency taxpayer funds. They say the Obama administration would have a difficult time requesting new bailout funds from Congress, whoever the Treasury secretary was.