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 expected in the coming days.

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

Speaking on condition of anonymity, senior Democratic figures questioned whether Mr Geithner has 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 Democratic lawmaker.

Analysts say President 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 (€192bn) financial sector bail-out item in the budget he announced last month implying 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,” said 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.”

Mr Geithner, previously the head of the Federal Reserve Bank of New York, was initially hailed for his knowledge of the complex financial issues at the centre of the crisis – and for being a known quantity on Wall Street.

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 he is being unfairly singled out as the lightning rod for the growing public anger on 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.

“I am quite certain that Tim Geithner has the full backing of the president and will continue to have it,” said Roger Altman, a former senior Treasury official in the Clinton administration. “The main question is can anybody, including President Obama himself, persuade Congress to give new money in this climate?”

Mr Geithner is also attracting much of the blame for controversies over the misuse of funds that have already been disbursed – some of it under the Bush administration. On Tuesday, Richard Shelby, the ranking Republican member of the Senate banking committee, blamed Mr Geithner for the administration’s failure to prevent executives at AIG from paying out $165m in bonuses.

On Monday, Mr Obama instructed Mr Geithner to explore every avenue to claw the bonuses back. AIG has received more than $170bn in public funds in the past four months.

“What I want to ask, where was the secretary of the Treasury?” Mr Shelby told CBS News. “Why didn’t Treasury step in and let the American people know – just try to block it [the latest tranche of public money for AIG]?”

On Tuesday night Mr Geithner said AIG would be forced to compensate taxpayers for the bonuses as a condition for receiving a further $30bn in government funds.

Additional reporting by Michael Mackenzie and Aline van Duyn in New York

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