Tim Geithner considering leaving White House

Tim Geithner is considering leaving his post as Secretary of the Treasury after a deal to raise the debt ceiling is reached, a source familiar with the discussion told CNN Thursday.

Geithner is the lone remaining member of President Obama's original economic team.

Asked by former President Bill Clinton on Thursday at a Clinton Global Initiative event about his future plans, Geithner said he would be doing his job "for the foreseeable future."

A Treasury official said that Geithner will not make any decisions while he's focused on negotiations over the debt limit and deficit reduction.

Another source familiar with the discussions between Geithner and the White House said it could be a while before Geithner's ultimate departure. "You have to have somebody lined up for the job -- you can't just leave," this source said. "And there's a relative scarcity of people who would fit the bill."

Obama nominated Geithner to be the 75th Secretary of the Treasury, and the Senate confirmed him on Jan. 26, 2009.

Geithner went on to spearhead the administration's response to the financial crisis that threatened to unravel economic growth around the globe.

That response included a bailout of the U.S. auto industry, a massive economic stimulus package and a landmark Wall Street reform effort. So-called stress tests of the nation's largest banks in early 2009 also helped shore up confidence in financial markets.

Geithner's first days in the administration were not without stumbles, as markets met his efforts to support the banking industry with skepticism, and giant bonuses paid to executives at bailed-out insurer AIG sparked public outrage.

But Geithner emerged as one of the strongest voices on Obama's economic team.

"I think he has done a great job in a backbreaking position," Clinton said Thursday.

Another member of Obama's original team, Council of Economic Advisers chairman Austan Goolsbee, has said he will leave the administration in August to return to the University of Chicago.

That leaves the administration with two holes to fill in the months leading into the 2012 presidential race, where the economy is expected to be issue No. 1.

National Economic Council director Lawrence Summers, and Office of Management director Peter Orszag left the administration last year. Christina Romer, the original chair of the Council of Economic Advisers, has also left.

Before joining the administration, Geithner held the top post at the Federal Reserve Bank of New York, where he played a crucial advisory role during the financial crisis of 2008.

Before joining the Fed, he held posts at the IMF and worked in the Clinton administration Treasury Department.

New unemployment claims barely improve

The number of Americans filing for first-time unemployment benefits slipped only slightly last week, falling short of economists' expectations for a bigger drop.

There were 428,000 initial jobless claims filed in the week ended June 25 -- 1,000 fewer than the week before, the Labor Department said.

It marked the 12th straight week initial claims have stayed above the 400,000 mark -- and was worse than the 420,000 claims economists surveyed by Briefing.com had expected.

"Another week, another disappointing U.S. initial claims report," Jennifer Lee, senior economist with BMO Capital Markets said in a note to investors.

Lee pointed out that claims have been hovering at a level that offers little confidence that the job market's recovery picked up substantially in June. Slower auto manufacturing following Japan's earthquake could still be taking its toll, she said, and will hopefully let up later this summer.

The four-week moving average of initial claims, calculated to smooth out volatility, increased to 426,750, up 500 claims from the week before.

Fewer jobs for unemployed workers

Continuing claims -- which include people filing for the second week of benefits or more -- fell to 3,702,000 in the week ended June 18 -- also falling short of economists' forecasts for 3,700,000 ongoing claims.

California, New Jersey and Florida saw claims rise the most in the week ending June 18, the most recent data available.

Meanwhile, Ohio saw the biggest drop in unemployment claims, with 2,769 fewer people filing claims in that state. Illinois and New York followed, each with drops of 2,000 or more.

The Labor Department will release its closely watched monthly jobs report next Friday, detailing how many jobs the U.S. economy created in June.

May's report showed the economy added a disappointing 54,000 jobs that month -- far too low to bring down the unemployment rate.

Fed set to buy $300B more Treasuries

QE2 is just about done. But the Federal Reserve will still be buying massive amounts of long-term Treasuries.

In fact, the Fed's purchases over the next year will likely be at least $300 billion. That's half the size of QE2 -- even if QE3 never takes place.

While the Fed's efforts to pump about $600 billion of new cash into the economy over the last eight months comes to an end this week, the program, known as quantitative easing or QE2 for short, was not the only way the central bank was an active buyer of Treasuries.

Since last August, the Fed purchased $250 billion in long-term Treasuries in addition to the QE2 purchases. That's because it was reinvesting the principal from other securities that matured.

Assuming the Fed keeps reinvesting, as it said it would earlier this month, it will continue to be a very big buyer of bonds in the months to come.

"We still see the Fed being a major buyer of Treasuries, and giving the market some support," said Kim Rupert, managing director of fixed income for Action Economics.

But those purchases may not push yields, which move in the opposite direction of their price, lower for that much longer.

Rupert said she expects bond yields to rise even with the Fed's continued purchases. She said some investors who bought Treasuries recently in a flight to quality will unwind those positions. If the economic outlook improves later in the year, that could also lift interest rates.

The additional Fed purchases will have an impact though. Rupert said it should "slow the updraft in yields in a measurable way."

The Fed still has more than $1 trillion in mortgage-backed securities, debt issued by government-sponsored firms Fannie Mae and Freddie Mac and other long-term bonds on its balance sheet.

While not all of this debt is set to mature in the next few months, the Fed still has a lot at its disposal to roll over into new bond purchases.

Of course the Fed could decide to stop reinvesting the principal of maturing securities. But that could almost have the same effect of actually raising interest rates. It would take significant amounts of cash out of the economy.

Even though some Fed policymakers are worried about the impact the bond buying has had on the dollar and inflation, the Fed does not seem ready to remove all its stimulus just yet. After all, the central bank did just issue a gloomier forecast for growth and unemployment through the end of 2012.

"Most of us can agree the economy is not going gangbusters and it's not a self-sustaining recovery yet," said David Coard, director of fixed income sales and trading for The Williams Capital Group. "For the foreseeable future, the Fed will have to maintain an accommodative stance. It's the only game in town."

France's Lagarde for IMF post

U.S. Treasury Secretary Tim Geithner said Tuesday that he supports French finance minister Christine Lagarde as head of the International Monetary Fund.

"Minister Lagarde's exceptional talent and broad experience will provide invaluable leadership for this indispensable institution at a critical time for the global economy," Geithner said in a statement.

The global financial organization is expected to vote on a new managing director as early as Tuesday to replace Dominique Strauss-Kahn, who was arrested in New York last month on sexual assault charges.

The vote on whom to appoint to the influential post comes at a crucial time for the IMF, which has been working closely with the European Union and the European Central Bank to provide financial support for Greece and other troubled European economies.

The only other contender is Mexican Central Bank chief Agustin Carstens, who has been supported by Australia, Canada and Mexico.

Geithner commended Carstens "on his strong and very credible candidacy."

Lagarde, who would be the first woman to run the IMF, is also backed by the United Kingdom, Germany and most European powers. Some Asian and African nations have also signaled support for her candidacy.

The fund's 24-member executive board seeks to agree on a new managing director by consensus.

The IMF, which is made up of 187 member countries, has traditionally been led by a Western European official.

For Greece, the real challenge is still ahead

Some developing nations had pushed to break that tradition, arguing that the IMF should consider candidates from rising economic powers in Asia and South America.

In a statement to the IMF's executive board released last week, Lagarde said the fund "belongs to no one but its 187 member states."

"I am not here to represent the interest of any given region of the world, but rather the entire membership," she continued.

The fund was established in 1947 to help rebuild the international monetary system after World War II. In addition to monetary cooperation and exchange rate stability, the IMF works to facilitate international trade and promote economic growth around the world.

The IMF has been led by John Lipsky, a veteran deputy managing director, since May 19.

Strauss-Khan pleaded not guilty earlier this month to seven charges involving a May 14 incident in which a housekeeping employee at New York's Sofitel hotel accused him of sexual assault.

Once considered a top candidate in France's next presidential race, Strauss-Khan officially resigned from the IMF on May 19. He is being held under house arrest in a Manhattan apartment on $6 million in bail money.