Obama’s “Economic Three Musketeers” deep attack from both sides
Posted by myps | Filed under Figures
- Head of the U.S. National Economic Council, Treasury Secretary Summers and Timothy Geithner are facing criticism from the left and right
President Barack Obama picked Lawrence Summers, Timothy Geithner and Ben Bernanke to lead the U.S. through a major economic tumult, largely because of their experience tackling financial crises.
But what was once an asset is now a liability. All three men are under fire from the left and the right, their futures clouded by the very resumes that helped give them their power.
On Thursday, when Mr. Obama laid out tough new proposals to rein in the size and scope of the nation’s banking giants, Messers. Summers and Geithner stood at his side, along with former Federal Reserve Chairman Paul Volcker. But it was Mr. Volcker who got credit for what the president called the Volcker rule, which would prevent banks that take federally insured customer deposits from making trades and investments for their own accounts to boost their bottom lines.
‘I don’t think Geithner and Summers are falling out of favor; they’re taking a back seat for now,’ said Robert Reich, a labor secretary in the Clinton White House who did battle with more Wall Street-minded members of the cabinet. ‘Economic populism will be in vogue for the next 10 months, as we get to the midterm elections, and Geithner and Summers are about as far from economic populists as you can get.’
Mr. Geithner’s role as president of the Federal Reserve Bank of New York during the financial collapse of 2008 made him Mr. Obama’s first choice for Treasury secretary. The economy was in free-fall during the transition between the Bush and Obama administrations, and the president-elect wanted a secretary who would soothe the markets and give him instant credibility.
Mr. Summers was something of a political lightning rod with the left, but Mr. Obama wanted to keep his campaign economic adviser close. As deputy Treasury secretary and then Treasury secretary under Bill Clinton, Mr. Summers had steered the country through currency crises in Asia and Latin America and the implosion of the hedge fund Long-Term Capital Management.
Mr. Bernanke was appointed Fed chairman by President George W. Bush, but Mr. Obama renominated him last year in large part to keep from rocking global capital markets as the nation was beginning to get its economic footing. He may have been at the helm of the Fed when the crisis was brewing, but his dramatic actions in the face of collapse were widely praised.
But all three have been sullied by the crisis they helped end. White House officials say the criticism is misplaced. Mr. Geithner has never worked at a financial firm. During Mr. Summers’s confirmation hearing for Treasury secretary in 1999, most of the concern centered on his lack of Wall Street experience. His subsequent hedge-fund work was one day a week.
Nonetheless, liberals have castigated Mr. Obama for coddling Wall Street and claim the economic team leaders showed similar favoritism. Last month, Robert Borosage of the liberal Campaign for America’s Future wrote, ‘Time Magazine’s naming Ben Bernanke ‘Man of the Year’ is a little bit like celebrating an arsonist for his heroics in putting out a fire that he set.’
Elected Democrats are more subtle. Congressional aides and Obama economic advisers say it is unlikely that either Messrs. Geithner or Summers will lose their jobs. Such a move isn’t warranted, most say, and it would look like panic.
Beyond a narrow band of activists who have targeted them, Messers. Geithner and Summers aren’t political liabilities, said Tad Devine, a longtime Democratic strategist.
But Democrats do see a marked shift in tone coming from the White House, not only in the sudden prominence of Mr. Volcker but in the full-throated populism of the president, ever since he denounced ‘fat cat’ bankers in December.
Rep. Darrell Issa of California, the ranking Republican on the House Oversight Committee, called on Mr. Geithner to resign in March, and has criticized both Mr. Geithner and Mr. Summers about their alleged roles in the shotgun merger of Bank of America and Merrill Lynch.
But Republican leaders have largely stayed on the sidelines, preferring to talk up hints of a split between Mr. Geithner and the new populist White House.
‘Based on reports today, Secretary Geithner has been raising very real and legitimate concerns about the effect that this faux populist banker tax and other regulations will have on American jobs,’ said Michael Steel, spokesman for House Minority Leader John Boehner (R, Ohio).
Administration officials, including Messers. Geithner and Volcker, denied there is a split.
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