Has Obama let foxes in sheep's clothing guard America's hen houses?
My last post asks, “Why didn’t Obama hire the Joe Stiglitzes and Paul Krugmans of the world? They’ve got brilliant minds and Nobel Prizes to prove it. And they’re far more objective (and less compromised) than those who helped create the mess, whom Obama hired.” Two other names inexplicably not on Obama’s economic team: Brooksley Born (who fought efforts to turn Wall Street into the world’s largest casino) and Robert Reich.
Frank Rich answers my question:
Citigroup had one highly visible [political] asset that Lehman did not: Robert Rubin, the former Clinton Treasury secretary who sat passively (though lucratively) in its executive suite as Citi gorged on reckless risk. Geithner, as a Rubin protégé from the Clinton years, might have recused himself from rescuing Citi, which so far has devoured $45 billion in bailout money.
Key players in the Obama economic team beyond Geithner are also tied to Rubin or Citigroup or both, from Larry Summers, the administration’s top economic adviser, to Gary Gensler, the newly named nominee to run the Commodity Futures Trading Commission and a Treasury undersecretary in the Clinton administration. Back then, Summers and Gensler joined hands with Phil Gramm to ward off regulation of the derivative markets that have since brought the banking system to ruin…
Not only did Rubin himself serve on the Obama economic transition team, but two of the transition’s headhunters were Michael Froman, Rubin’s chief of staff at Treasury and later a Citigroup executive, and James S. Rubin, an investor who is Robert Rubin’s son.
These banking insiders have strong vested interests in using public money to paper over the derivatives disaster they made possible and to rescue the private banks whose net worth they helped destroy. They’re so invested in re-inventing the status quo ante that it’s hard to imagine them devising creative solutions beyond pouring public money into the private holes they dug. Unsurprisingly, when Obama put them in charge of economic hiring, they hired from their incestuous, even nepotistic, circle of friends.
Posted by James on Monday, February 09, 2009