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Is Obama's Team Too Wall Street?

Is Obama’s economic team -- especially its most public face, Treasury secretary Tim Geithner -- too Wall Street? Does that even matter if its policy is credible? The answer to both questions is “no,” but the charge still isn’t going away. Take this heated exchange yesterday between Treasury Secretary Tim Geithner and Damon Silvers, the associate general counsel of the AFL-CIO and a member of a panel supervising the Troubled Asset Relief Program (TARP).

At an oversight hearing, the AFL-CIOer prefaced his final question for the Treasury secretary with a dose of guilt-by-association, indicating that he practiced law, while Geithner was “in banking.” Geithner wouldn’t let Silvers finish. He’s never been in banking, the Treasury secretary bristled.

A long time ago, perhaps?


Investment banking?

Never done that, either.

In fact, Geithner interjected, he’s been in public service his whole career. Silvers conceded and went on with his question. When it came time for John Sununu, a former GOP senator from New Hampshire and another panel member, to take the mic, he assured Geithner that he would never have mistaken him for an investment banker.

Part of Geithner’s appeal to the Obama camp is that it’s pretty hard to accuse him of being a tool of corporate America, a shill for big finance, or whatever alarmist moniker you prefer, since he’s been taking home relatively tiny paychecks of one type or another his whole career. So it’s a little astonishing that this Geithner-as-Wall-Street-servant meme still has life -- and in an oversight panel on the substance of TARP policy, no less. His employment history, apparently, hasn’t stopped critics such as Silvers -- or the Code Pink brigade that showed up to yesterday’s hearing in order to scream at the Treasury secretary about how “we” need a bailout, not wealthy bankers -- from trying to take digs into his integrity. Indeed, the AIG bonuses issue seems to have been a key moment for Geithner’s critics. Take the post-AIG accusation from Rep. Charles Rangel (D-N.Y.) that people like Geithner think it’s “natural” to get “$6 million” bonuses. Or Arianna Huffington’s anti-Geithner diatribe last month, which uses the Treasury secretary’s position on AIG bonuses, among other things, to conclude that he’s a reflection of a chummy, corrupt Washington-Wall Street axis.

But perhaps this isn’t so astonishing, after all. Indicting Geithner by associating him with vaguely defined, almost certainly fictitious corporate conspiracies is a cheap shot. A generous view is that this really is just a policy dispute between the administration and critics who would have Wall Street sink into the Hudson, consequences or no. The AIG episode made it even easier for them to be nasty to a policymaker who doesn’t share their view -- a roadblock in what should be a more sympathetic administration. Even if that’s true, it’s pretty unfair.

I can find plenty of ways to disagree with Geithner, but I find the notion that one can’t agree with him without being entangled in some kind of exploitative corporate cabal particularly galling. I don’t base my assessment of TARP on the size of executives’ bonuses. I think that the government must act robustly to save the financial system but am still wary of rushing to nationalization. And, somehow, I believe all that without being on or from or beholden to Wall Street. I don’t have financial incentives to believe what I do, except insomuch as a growing economy benefits my bottom line, along with most Americans’. So let’s get on with the real debate -- on substance, not associations.

By Stephen Stromberg  | April 22, 2009; 4:51 PM ET
Categories:  Stromberg  | Tags:  Stephen Stromberg  
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The problem is not Wall Street, but the Iron Triangle of Treasury (and its agent, the Federal Reserve), the congresional banking and financial committees, and Wall Street. As in the military-industrial complex (the Iron Triangle in that sphere), people move back and forth between them with the interest group dominant.

Geithner is just a technician. The man with power, Larry Summers, is a class textbook example of the Iron Triangle at work. So are his three most important officials in foreign economic affairs--all VPs of Citi who got big bonuses last year. Summers got $5 million from a hedge fund last year for 1 day a week work, and over $125,000 for a single speech to Goldman. One would wonder why if one did not know.

Posted by: jhough1 | April 22, 2009 8:38 PM | Report abuse

It's just delicious to see the left using tactics on other leftists that prompt columns like this.

In general, the sources cited who are hostile to Geithner are simply hostile to all forms of capitalism. That smarmy know it all lawyer from the AFL-CIO was a pretty good example. The dilemma for the administration is how to manage a country that embraces a system that most of its most rabid supporters despise.

Anyway, it's good to see how Obamamaniacs recoil at the tactics used by leftists on their guy, Mr. Geithner, but are silent when those same tactics are routinely deployed against common enemies, i.e., the dreaded right wing.

BTW, does not being a past President of the New York Federal Reserve BANK not somehow, even remotely, qualify Mr. Geithner as a banker?

Posted by: Curmudgeon10 | April 23, 2009 4:48 AM | Report abuse

When you use the measuring bar of how the economy would have recovered by itself, without outside infusion of money and congressmen, I think most folks will come to the conclusion that first Bush, then Obama almost trifold did absolutely nothing to "fix" the economy. We would be in basically the same recovery mode either way. So all our wondrous leaders did was throw away "our" money and give it to "their" friends.

Posted by: GordonShumway | April 23, 2009 8:58 AM | Report abuse

I'm glad to see any commentary that calls out today's political discourse for "ad hominem" attacks, on either side. Smears and guilt by association are ugly enough in normal times. During a crisis they are a dangerous distraction from actually discussing policy choices.

A large majority of Americans just voted for a president who said, over and over, that people on opposite sides of an issue can honestly differ without demonizing each other or being evil, and that he wanted to reform the process so we could once again disagree without being disagreeable. Sounds like this would have been a good place to start.

Posted by: fairfaxvoter | April 23, 2009 10:25 AM | Report abuse

I do very much agree with those who would question the perspective from which this administration is viewing the solutions to Wall Street's crisis, but I don't agree with Mr. Silvers' approach.

I may be lumped in to the "Obamaniac" group, I am not sure. The bailout approach is the one major disagreement I have with just about everything this administration has done, so far.

To say that "sources hostile to Geithner are hostile to all forms of capitalism" is grossly inaccurate, and an extremely lazy statement to make. About as lazy as Silvers' accusation against Geithner.

I know that I believe in a well-regulated form of capitalism. One that keeps the man on Main Street in focus. I simply think that having those that have been living in the Wall Street fishbowl making the decisions to correct it cannot possibly turn out well.

My only hope is that Obama figures that out.

Posted by: ducbil | April 23, 2009 1:55 PM | Report abuse

You want to debate substance?!?!? Fine! I'd be happy to.
Let's look at Timmy's history a bit. He was there at the FRBNY the entire time that these supposed best and brightest were cooking up the largest insurance scam/ponzi scheme in the history of mankind and did NOTHING to stop it. Never once lifted a finger. For a little background on why this is such an affront, the FRBNY is chiefly responsible for overseeing/regulating the investment banks and is in charge of a staff that is onsite at these banks and are supposed to be aware of the banks' financial conditions all of the time (not just for special stress test events). So this is no minor oversight.
Timmy was also there with Ex Goldman Sachs CEO Paulson when they came up with the fabulous no strings attached $700 billion bank giveaway and was there with Hank and Blankfein (current GS CEO) when they decided to "save" AIG (really GS since AIG owed them $20 billion) costing US over $180 billion.
Now he's in the process of trying to shove the losses on these toxic assets down our throat and enrich the hedge funds and private equity in the process with the PPIP.
I don't care that he's not technically a banker, he's clearly acting in the interests of someone other than the US taxpayer and I think the evidence for it is ample. Considering that all of his policies and actions appear to benefit the banks to the exclusion of almost everything and everyone else, I think its fair to say he's earned the reputation as a Wall Street lackey honestly. I think that's substantial enough.

Posted by: pimpinbenzo73 | April 23, 2009 2:56 PM | Report abuse

geithner claiming to be in "public service" is a lot like OBL claiming to be religous

Posted by: newagent99 | April 23, 2009 2:58 PM | Report abuse

After completing his studies, Geithner worked for Kissinger and Associates in Washington, D.C., for three years and then joined the International Affairs division of the U.S. Treasury Department in 1988. He went on to serve as an attaché at the US Embassy in Tokyo. He was deputy assistant secretary for international monetary and financial policy (1995–1996), senior deputy assistant secretary for international affairs (1996-1997), assistant secretary for international affairs (1997–1998).[5]

He was Under Secretary of the Treasury for International Affairs (1998–2001) under Treasury Secretaries Robert Rubin and Lawrence Summers.[5] Summers was his mentor,[10][11] but other sources call him a Rubin protégé

In October 2003, he was named president of the Federal Reserve Bank of New York.[15] His salary in 2007 was $398,200.[16] Once at the New York Fed, he became Vice Chairman of the Federal Open Market Committee component. In 2006, he also became a member of the Washington-based financial advisory body, the Group of Thirty.[17]


he's definately an insider.

Posted by: newagent99 | April 23, 2009 3:00 PM | Report abuse

I'm always amused by those who attack ad hominem arguments by engaging in them.

While Tim Geithner may not be (by trade or income level) an investment banker, he is not Mother Teresa either. He earned $350K/yr or so during his four years at the New York Fed and I'm not quite sure that either Kissinger and Associates or the Council on Foreign Relations meet most definitions of public service.

The key issue is where his sympathies lie and on what he bases his beliefs for addressing the economic crisis. Managing a depression means making hard choices about who will suffer and what public resources will be devoted to preserving the wealth of which elites. Thus far, the Geithner/Summers team has decided that vast resources should be spent on keeping certain segments of the economy absolutely whole (say the AIG counterparties)while deciding that others will take a huge hit (try labor or GM bondholders)

As Simon Johnson pointed out in "The Silent Coup" the first reaction to a financial crisis is to seek government money to prop up the wealthiest - even when they are the source of the problem. So far, the approach taken by Treasury, whether by intent or bumbling, is to maintain that the sky will fall if bankers and their shareholders are not protected, but that workers, investors, and Main Street will get little relief but while footing the bill for maintaining an incompetent financial oligarchy.

Mr. Stromberg raises the bogeyman of "nationalization." Under Bush I, more than 1200 banks were nationalized. The government didn't try to get into the day-to-day business of banking although they couldn't have done much worse than those running the S&L's; it paid off depositors and sold the banks and their assets. The sales were generally to much more competent operators.In relatively short order, the banking system was back on an even keel, until the repeal of Glass-Steagall and the abdication of the regulatory oversight.

When the government maintains that we can't afford even the slightest disturbance to management of Citi or BoA even though they provide just a fraction of banking services, but that we can do away with the second and fifth largest carmakers,it is reasonable to inquire about its sympathies and its belief systems.

Posted by: revanchist | April 23, 2009 3:32 PM | Report abuse

Geithner et al not too close to Wall Street? You have to be kidding. The people on the Obama administration's economic team looks like a who's who of former Goldman Sachs employees. Of all the people Pres. Obama -- a left-of-center politician -- could've picked to advise him on economic matters, this has to be the most corporate-leaning, free-marketeering he could've picked without having his liberal card revoked. There are two prominent, Nobel-winning, progressive economists (Stiglitz and Krugman) that could have been tapped to at least sit in the room, and they weren't... nor were any economists of their ilk.

What we have at Treasury and in the White House are Robert Rubin proteges. Granted, Geithner never actually worked for a bank, but I don't think anyone would ever charge him with being a tough, hard-charging regulator. I won't even start on Larry Summers. But hey, he's never worked on Wall Street either so that must mean he isn't a big fan of deregulation, corporate tax-cutting and unbridled free markets.

Just because some of these guys never donned the wing tips and actually worked on Wall Street doesn't mean they aren't too close. Intellectually and ideologically they might as well have satellite offices on Wall Street.

Posted by: tonyharris | April 23, 2009 5:37 PM | Report abuse

Fredo is guilty by association because his entire career has been at the NY Fed. If you had done your job of investigating you would know that. In his position there he regulated GS, C, JPM, MS, MER and BSC. They were creators of credit derivative swaps and among the largest securitizers of mortgage backed securities. Both types of securities have been directly responsible for the current crisis.
Then to have ascended to the position of Treasury Sec he has no plan other that to keep banks alive as zombies. If he had the imagination or gravitas he could end the zombie situation by excercising his authority under TARP to liquidate C, WFC and BAC under FDIC rules. Think of what those depositors would mean to community banks not full of toxic assets and their ability to lend. He could further under the TARP declare force majeure on credit default swaps. This would eliminate a toxic asset that is so large that if only 10% of them were to be paid in full the taxpayer would transfer the entire GDP of 2007 to the banking system.
So by his lack of imagination and the clear results of his policies we have zombie banks. This can only benefit his masters not the populace of his country. As such he is guilty by association and action.

Posted by: teddy1 | April 23, 2009 8:21 PM | Report abuse

GEITHNER CABAL forces Freddie Mac acting chief financial officer to commit suicide:

"In its leading personnel, the Obama administration has drawn on the same social layers represented in the Bush administration, particularly those sections of the financial elite most closely tied to the speculative mania on Wall Street. It has gone so far as to retain individuals directly implicated in the financial collapse, like Timothy Geithner, head of the New York Federal Reserve Bank and a key figure in the failed bailouts last year under the Bush administration, now Obama’s treasury secretary.
While enjoying the support of a significant section of American billionaires—Warren Buffett, George Soros, the Pritzker and Crown families of Chicago, and many others—Obama adopted a populist standpoint during the Democratic primary campaign and then the general election, making use of his multicultural background to suggest that he would be responsive to the needs of the working class, young people and oppressed minority groups.
It is noteworthy however that Obama has not brought into high office a single person who could be credibly presented as a representative of popular discontent. His cabinet is drawn entirely from the political establishment. Far from any populist pretensions, the administration has engaged in an incessant pursuit of “bipartisanship,” including the appointment of Republicans to the cabinet and efforts to involve the discredited remnants of the ultra-right in everything from the inaugural ceremonies to the formulation of the stimulus package.
These facts rip to shreds the ongoing efforts of liberals like the Nation magazine to present the new government as an expression of popular opposition to Bush and the right wing. The Obama administration constitutes an effort, on the part of key sections of the ruling class, shaken by the failures of the Bush administration and the financial debacle, to delude the American people with vague rhetoric while the most intense efforts are made to safeguard the position of the financial oligarchy, both at home and abroad.
The Obama administration demonstrates the impossibility of effecting any significant change within the existing political institutions and the two-party system. These are wholly dominated by two forces: the military-intelligence apparatus and big financial interests."

SEE Patrick Martin

Posted by: Sanabitur | April 23, 2009 9:30 PM | Report abuse

The following article in the new Atlantic Monthly is one of the best I've read on this whole economic mess yet, from a former chief economist of the IMF. It explains a lot and fills a lot of gaps.

It's hard to trust anyone in our financial establishment right now. They've formed in the author's words an "oligarchy." The economic shocks we've experienced are almost identical to the ones faced by third world countries. We have to recognize the problem and do something about it, if we're to recover.

Posted by: MNobserver | April 23, 2009 11:19 PM | Report abuse

How about everyone else that both Obama and Geithner have hired? How many waivers to Obama's vaunted "no lobbyists" rule has he signed?

The question isn't whether Obama's team is too Wall Street. It's whether it could possibly be any more Wall Street. The answer to that question is no.

Of course, you can come to any conclusion you like as long as you frame the question just the right way.

Posted by: geezjan | April 24, 2009 9:41 AM | Report abuse

The proof is in the pudding, and you need only look at Treasury's proposal to go for common stock instead of preferred for the bank bailouts. Less benefit to the taxpayers, more benefit to the bankers. Also, look how quickly the administration put pressure to screw the pooch on mark to market accounting standards.

The 95% guarantee to speculators for purchasing poisoned assets is just one more giveaway to the richest few. Meanwhile homeowner relief appears to be languishing. Is it any wonder that so many people see a Goldman Sachs conspiracy?

Posted by: karenykarl | April 24, 2009 10:17 AM | Report abuse

Not only is his admin over run with Wall St types, but he has more clowns (Janet N and Holder for example) then a three ring circus.

And where was the out cry over the little change in the tax law for the banks back in Jan? Oh, since it helped the upscale folks they did not really care.

Posted by: zendrell | April 24, 2009 1:00 PM | Report abuse

Tim Geitner and Larry Summers need to be shown the door. Summers because he is so tied into 'business as usual' at Wall Street. Geitner, because he is ineffectual as a leader and has been 'programmed' to give the 'party line' for the banking industry and continues the complete lack of transparency at the Treasury. Their plan is a farce.

When their is a lack of transparency like this you can guarantee someone is doing something they should not be doing. Look at our past administration,the CIA, the Pentagon, the Justice Department, NSA, and the Treasury. I do not care if you are Republican, Democrat, Libertarian, or Socialist: If you are an American, no one should be in favor of a dictatorship and that is what was attempted. Wall Street is part of that mindset and these two people where trained to think just like them. I prefer strong individuals who will correct the past inadequacies.

Posted by: fcoila | April 24, 2009 2:26 PM | Report abuse

>>It's just delicious to see the left using tactics on other leftists that prompt columns like this.<<
We're not good soldiers, it isn't enough our leaders are Democrats, they have to honest and effective. It the Republicans operated with the same modus, we'd have been spared the last 8 years and the current collapse.

Posted by: dijetlo | April 25, 2009 12:03 PM | Report abuse

To my regret, Obama is just another puppet in the hands of the money changers who run the world. He will obey their every wish no matter how criminal despite the fact that they worked hard to have him defeated.

Posted by: dogsbestfriend | April 25, 2009 2:51 PM | Report abuse

There is a French saying, that "... bourgeous corruption and liberalism - understand each other"...

Why is Obama reorganizing and dismantling the CIA? Your guess is as good as mine, so let's focus on one of Obama's must powerful supporter.

Since the break of Bill Clinton's famous pardon of Marc Rich, radical leftist George Soros international rendezvous, has been under the "watchful eye" of the CIA, according to "The Economist"... Marc Rich - an international commodity swindler - also evaded $48 million in taxes, and fled the United States after being prosecuted, and was pardoned by president Bill Clinton, although other co-conspirator served time. So much for the Clinton's international connection in Obama's foreign affairs, for"... birds of a feather, flock together".

So who is this man named George Soros ? He is a Billionaire and superstar among great international speculators and owns many banks and businesses in Europe as the front man of the Rothschild International Banking Corp.. However, his main office operates in Curacao, and the Dutch West Indies - off the coast of Venezuela...

Born in Hungary migrated later to London where he later change his name Schwartz to Soros. He donated thousands of dollars to the Palestine Liberation Organization... and is a staunch enemy of the present prime minister Benjamin Netanyahu of Israel. And this is where it really gets pretty nasty and complicated....with Obama's "trilateral" middle East policy - molded and enforced by the Clinton's connection...

Finally in 2004, as the front man of MOVE-ON Org. - he stated that defeating Bush was "the central focus of my life," and "a matter of life and death. And all because he was under the watchful eyes of the CIA after 9/11... Consequently this gave birth to the international "Hate Bush Movement".... started by" Move On Org." and carried forth by "Fellow Travelers" and activists at home and abroad...

So the next move is up to the "messianic president Obama"..... under the watchful eyes of the "silent majority" and - the U.S. military...

And this is just one man's opinion, as I see it...

Posted by: hasinc67 | April 27, 2009 12:54 PM | Report abuse

Posted by: libs4palin1 | April 27, 2009 2:38 PM | Report abuse

One "real debate" is about the game of influence peddling. And Geithner is in the game...big time.....

Posted by: josephfranklyn | April 28, 2009 4:40 PM | Report abuse

Why all this ranting about cabals? The excellent German word, Weltanshaung or world-view explains everything. As jhough1 put it, the Iron Triangle of Treasury, Congress and Wall Street has a very familiar ring of the military-industrial complex (as Eisenhower warned) in which steers our defense budget to ever more stratospheric heights.

Posted by: bystander3 | April 28, 2009 5:39 PM | Report abuse

Obama's team is Wall Street! Take a look at the people he has at the most sensitive jobs. They made millions on Wall Street and now they are expected to bite the hand that fed them? As soon as Obama announced that Emanuel, Sommers and Geithner will be part of his administration, only a fool would think that Wall Street will be put on the carpet. It is now obvious that Goldman Sachs is running the American financial apparatus. Most of the Financial analysts know it but have not the guts to tell the American people. Obama was supposed to bring change-he brought with him the media that supported the previous administration. Nothing has changed. Look at the polls that show that people do not have faith in their government to safeguasrd them from the Swine flu>

Posted by: kyprios9281 | April 29, 2009 6:48 AM | Report abuse

"Does that even matter if its policy is credible?"

That's a different problem.

Posted by: dpascover | April 29, 2009 7:25 PM | Report abuse

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