In the fall of 2007, when the U.S. economy first seemed in peril, I began answering reader queries here on the Business Desk. I still do so occasionally, but this page has expanded to include posts from eminent economists, "far-flung correspondents," and a variety of voices that have intriguing and/or useful things to say about economics, broadly defined. Please feel encouraged to respond to any and all of them.
Are Geithner and Summers Too Close to Wall Street?
City & State:
Question: Are Timothy Geithner and Larry Summers too close to the players that produced this economic crisis -- so close that they will not have the vision, values, or mindset that will allow them to take the difficult steps that must be taken if the United States and world are to recover? This is my concern.
Paul Solman: And a very reasonable concern it is. The Geithner-Summers-Wall St. argument cuts two ways. One: Their proximity is a plus, in terms of knowledge, insight, "you can't play that trick on us." Think rum-runner Joseph Kennedy as FDR's head of the SEC.
The other way to look at the G-S-Wall St. nexus is yours: suspicion that they suffer from what you might call "The First National Bank of Stockholm Syndrome" or "pre-regulatory capture." In other words, they understand the plight of Wall St. so well, they're all too sympathetic. As author and former editor of Mother Jones magazine Jeffrey Klein wrote on the Huffington Post when Geithner was nominated:
"As head of the New York Fed, Geithner was Washington's eyes and ears on Wall Street before this crash. He saw and heard nothing coming. From crisis day one, Geithner confused the financial health of the big bankers with the financial health of the country."
I thought he was being harsh, perhaps. I still hope I was right. Geithner is a career civil servant, after all. That's more than most of us can say. And if Summers was really suffused with the ethos of Wall St., he could have made a lot more money than he did, or is making now.