Transparency … of a Sort
Though he’s no Joe Nocera, Frank Rich asks some pointed questions and wonders about dirty little secrets:
it’s hard to imagine taxpayers shelling out billions for a second bank bailout unless there’s a full accounting of every dime of the first, and true transparency for the new plan whose rollout is becoming the most attenuated striptease since the heyday of Gypsy Rose Lee.
Another compelling question connects all of the above: why has there been so little transparency and so much evasiveness so far? The answer, I fear, is that too many of the administration’s officials are too marinated in the insiders’ culture to police it, reform it or own up to their own past complicity with it.
The “dirty little secret,” Obama told Leno on Thursday, is that “most of the stuff that got us into trouble was perfectly legal.” An even dirtier secret is that a prime mover in keeping that stuff legal was Summers, who helped torpedo the regulation of derivatives while in the Clinton administration. His mentor Robert Rubin, no less, wrote in his 2003 memoir that Summers underestimated how the risk of derivatives might multiply “under extraordinary circumstances.”
Given that Summers worked for a secretive hedge fund, D. E. Shaw, after he was pushed out of Harvard’s presidency at the bubble’s height, you have to wonder how he can now sell the administration’s plan for buying up toxic assets with the help of hedge funds. It will look like another giveaway to his own insiders’ club. As for Geithner, people might take him more seriously if he gave a credible account of why, while at the New York Fed, he and the Goldman alumnus Hank Paulson let Lehman Brothers fail but saved the Goldman-trading ally A.I.G.
The rest is here.
Quite an old boys network. (Triple sigh.) And to think that Summers was dumped by Harvard for saying that women are not as good at math as men.
As a former HR person who oversaw federal civil service registers early in my career and later hired folks from outside the government, I’m reminded of the fact that when recruiting for the best folks available to fill a position (regulatory or otherwise) at the full-performance level, it is imperative to search sources where such folks are most likely to be found.
Of course, it’s possible to fill positions at trainee levels, but employing agencies didn’t always see themselves as having the luxury to do so.
With Treasury and other enforcement agencies, it obviously boils down to hunting sharks to fill shark-killer positions.
So it takes one to know one? Hmm. Not very promising it is.
What I don’t understand is how what those so-and-soes did could be legal I mean can’t a law just say very generally, “You shall not defraud your customers”, or “You shall not extort added money from customers when they discover you have a Ponzi scheme going”, which is what the investment banks and AIG seem to have done. Or maybe the banks just weren’t smart enough to realize what was happening. Isn’t there something called “due diligence” or something like that?
Joseph
As a former CFO of a Fortune 500 firm, I can tell you that derivatives, credit default swaps and the like are not nearly as complicated as the Treasury department and the popular press would have you believe. There are hundreds maybe even thousands of young lawyers, accountants and economists, not beholden to Wall Street, who are perfectly capable of cleaning this mess up. We really do not really need all these inherently conflicted Goldman Sachs people involved. In fact, when the history of this period is written it would not surprise me to learn that the Paulsons, Rubins, and all the other GS people acting primarily in their own self interest were instrumental, not only in lengthening the crisis, but deepening it as well.
I thought the best thing in yesterday’s NYT was a very short letter to the Editor complaining about the previous Sunday’s remembrances of Bear Stearns by former employees.
The op-eds from them, complained the letter, was all about them and notjhing about the country.
So having technically able folk may be easier than thought, but finding dedicated folk with a sense of duty to a country in need may not.
Surely, we’re between a rock and a hard place now: mounting enormous debt(I guess we should be glad the Chinese will still sop up treasury notes) and the need to infuse capital and move forward on major isues, including health care.
If Wall St. needs a fix of personel, so does D.C. and the never ending ideological pushes for advatage(country be damned.)