Saying that the nation's system of checks and balances means being open to answering hard questions, well-known financial commentator and risk analyst Christopher Whalen sent a letter last week to New York Fed president Timothy Geithner, challenging the soon-to-be Treasury chief to a debate on the bailout and regulatory model that should be used as Barack Obama prepares to take office in January. President-elect Obama tapped Geithner to lead the U.S. Treasury on Nov. 25, saying then that the NY Fed president had “served with distinction under both Democrats and Republicans” and that he has a “long history of working comfortably and as an honest broker on both sides of the aisle.” Whalen, a frequent commentator on cable news and to well-known financial publications, has worked as an investment banker, research analyst and journalist for more than two decades. At the Federal Reserve Bank of New York, he worked in the Bank Supervision and Foreign Exchange Departments; he is most known currently for editing a well-read newsletter called The Institutional Risk Analyst. In his letter, Whalen indicated that producers at CNN had agreed to televise the debate, should Geithner agree to participate; he also said that members of the Professional Risk Managers International Association had agreed to moderate the event. "[W]hen our Founding Fathers spoke of the 'checks' in checks and balances, I believe they had something in mind like NHL hockey -- maybe even the Moscow league," Whalen writes in his letter. "When you step on the ice of public policy leadership, you have to take the shots." The letter, and challenge, has drawn some interesting response from those in the industry, although most concede that Geithner is not likely to respond, or to agree to a debate. While Whalen's market views are well-known, some said the move to challenge Geithner was not what they had expected. "I'm surprised to see this," said one MBS/ABS analyst that spoke with HousingWire, on condition on anonymity. "But you've got to give Whalen credit for going for it all on this, given the state of the national economy right now." Whalen has been a vocal critic of the choice of Geithner to lead the Treasury, saying in a Nov. 24 newsletter that "[b]y embracing Geithner, President-elect Barack Obama is endorsing the ill-advised scheme to support AIG directed by Hank Paulson et al at Goldman Sachs and executed by Tim Geithner and Ben Bernanke." "This scheme to stay AIG's resolution cannot possibly work and when it does collapse, Barack Obama and his administration will wear the blame due through their endorsement of Tim Geithner." In particular, Whalen's concern with the bailout of AIG (AIG) lies with the trillions of dollars worth of outstanding credit default swaps, a largely hidden market that Whalen has characterized as "the last, biggest speculative bubble." He has argued that forcing firms beholden to CDS contracts into insolvency is the "only way to deal with this ridiculous Ponzi scheme." "At some point, Washington is going to be forced to accept that bankruptcy and liquidation, the harsh medicine used with other financial insolvencies, are the best ways to deal with the last, greatest bubble, namely the CDS market," he said in his newsletter. Whalen isn't the only Wall Street source uneasy with Geither's pending role at the Treasury -- Andrew Ross Sorkin at the New York Times covered some of the broader Street response -- but he has been the most vocal. In the story, Whalen suggests that Geither "deserves retirement, not promotion." “He was in the room at every turn of the crisis,” an unnamed executive close to the Treasury was quoted by the Times as saying. “You can look at that both ways.” Clearly, not everyone on the Street is against Geithner, with the vast majority seemingly applauding the selection. Mohamed El-Erian, co-chief investment officer at bond giant PIMCO, has called Geithner a “great, great, choice," and said the pick offers continuity for market participants. Of course, whether that's a positive or a negative clearly depends on your market view. Write to Paul Jackson at Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.