AIG Bonuses Flap Has Geithner on Hot Seat

The political firestorm surrounding the $160 million in bonuses paid to AIG (AIG Quote) executives has put Treasury Secretary Timothy Geithner squarely on the hot seat once again.

Protesters at a Capitol Hill hearing on the AIG bonuses Wednesday held signs calling for Geithner's dismissal, as criticism mounts that the Treasury secretary should have stopped the controversial payments.

Just weeks into his appointment, Geithner is beginning to look vulnerable to charges that he is incompetent or, at the very least, lacks the gravitas needed from a Treasury secretary in the midst of an economic crisis. And as calls for his ouster begin to emerge from some quarters, President Barack Obama is in a difficult bind.

It is hard to see how Obama can fire Geithner without looking incompetent for choosing the wrong man to lead the economy out of crisis. However, by doing nothing, he risks allowing Geithner to become a distraction as calls for the Treasury secretary's head show few signs of subsiding.

Obama, before leaving for a trip to California, defended Geithner, saying he had "complete confidence" in the Treasury secretary. Obama made a similar defense of Tom Daschle, his pick for Secretary of Health and Human Services, only to see Daschle withdraw from consideration a day later.

Geithner squeaked through the appointment process largely because Congress was willing to give Obama the benefit of the doubt at such a critical time for the market and the economy.

At least one lawmaker is no longer willing to accept Geithner. Rep. Connie Mack (R., Fla.) later the Treasury secretary had "lost the confidence of the American people" and should either resign or be fired.