The political firestorm surrounding the $160 million in bonuses paid to AIG ( AIG) 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.
"Quite simply, the Timothy Geithner experience has been a disaster," Mack said in a statement. "The Treasury Department is in disarray. Taxpayer dollars are being wasted. America's economy hangs in the balance. America needs and deserves a Treasury secretary who can truly lead us forward." Geithner was a lightning rod for criticism even before Obama first nominated him for Treasury Secretary. In his previous position as president of the New York Federal Reserve, Geithner was criticized first for his role in the seemingly inconsistent policy decisions to bail out Bear Stearns, by aiding JPMorgan Chase's ( JPM) purchase of the ailing Wall Street bank with a federal backstop on losses, and then allowing Lehman Brothers to fail. Other issues, such as the revelation before his confirmation hearing that he had failed to pay taxes, have added to his unpopularity. Then Geithner got off the a bad start in his first big moves as Treasury Secretary, when a much-anticipated plan to address the crisis lacked detail and caused the market to plummet. Criticism of Geithner, first aimed at preventing him from becoming Treasury secretary, found a new focus when Henry Blodget, a former Wall Street analyst who has become an influential blogger, called for his firing in a March 6 column. Geithner, in a letter in response to the AIG bonus controversy sent to Republican and Democratic leaders of the House and Senate, said he did not know about the bonuses until last week. While he said he registered strong objections to AIG CEO Edward Liddy, ultimately Treasury lawyers agreed it would be "legally difficult" to stop the payments. Treasury, however, is working with the Justice Department to explore avenues to recoup the payments and refund U.S. taxpayers, Geithner said in the letter. Online betting service Intrade has begun taking odds on the likelihood of Geithner leaving his post before June 30, The New York Times noted in its business blog, DealBook, on Wednesday.