Frank Rich is right. Firing Treasury Secretary Timothy Geithner won't
get us out of the economic disaster we're in. But at this time of
righteous rage, deploying Geithner and Lawrence Summers as the
administration's chief economic messengers displays an astonishing
tone-deafness. These are men who, as Rich puts it, " are too marinated
in the insiders' culture to police it, reform it or own up to their
past complicity with it."
Or as The Nation's William Greider explains in Sunday's Washington
Post, the anger roiling the nation could "devour his presidency." Yet
Obama "does not seem to grasp that the tone-deaf technocrats are
leading him into a dead-end."
Action, and action now, to restructure bank bailouts so they benefit
taxpayers-- not preferred shareholders, and classes of creditors,
ranging from foreign bondholders to the counterparties of exotic
derivative contracts-- may be the only way to ensure passage of the
administration's needed recovery and budget programs. That probably
means some form of government receivership, supervision, short-term
nationalization--call it what you will. The real danger is not
nationalization but that Obama and his economic team continues to
muddle through on the financial front. If they do, Obama's job-creation
and public investment programs are at risk; they will be conflated in
the public mind with deeply unpopular bank bailouts, bonuses and crony
capitalist excesses.
As head of the NY Federal Reserve, Geithner was complicit in the
opaque and questionable bailout of AIG. So how then can he effectively
carry out the kinds of policies needed at this defining moment of
crisis and fury? On a more symbolic level, even his training sessions
with elite media and messaging guru Michael Sheehan haven't helped
Geithner become a strong or plausible communicator of whatever that
day's plan is.The country sees a shrinking Secretary--which leads to
loss of confidence.
We deserve a Treasury Secretary who hasn't been a player in Wall
Street's lifestyle of bonuses and legalized corruption. Nobel Prize
winning economists Joseph Stiglitz or Paul Krugman would be strong
choices; yet they are increasingly valuable as watchdogs and
constructive critics working outside the Administration. I've also
thought that Obama would be smart to promote former Economic Policy
Institute Fellow Jared Bernstein, who is currently serving as Biden's
chief economic adviser.
Then there's a novel idea. Why not bring in the man who took on Wall
Street and AIG long before it was trendy? Elliot Spitzer. Call me
crazy. But he foresaw the bubbles and disasters resulting from
deregulatory frenzy and the financial service industry's creation of
toxic credit default swaps and derivatives. As the Sherriff of Wall
Street, Spitzer launched investigations and lawsuits deploying the
creative cudgel of the previously-obscure 1921 Martin Act. Yes, he
acted miserably toward his wife and family and he should pay the price
for that. But some believe Spitzer was taken down by certain "masters
of the universe" seeking vengeance for his aggressive policing of their
financial fraud and corruption.
In his first television interview since resigning as Governor, on
CNN"s Fareed Zakaria's "GPS" program, Spitzer offered a compelling
analysis of how we got into this mess and spoke clearly about the need
for new regulations to rein in Wall Street's "recklessness and greed."
He criticized Wall Street's former masters for their "hot dog cowboy
mentality which leveraged everything up." (And he praised old fashioned
Wall Street types like Felix Rohatyn for not falling prey to that
mentality.)
While acknowledging the outrage of AIG's bonuses, Spitzer focused on
the larger outrage: the use of billions in taxpayer dollars to prop up
AIG and various counterparties, including Goldman Sachs (which received
$12 billion plus of the government's original infusion). He also
castigated the media, including CNBC, for failing to ask the tough
questions, and the SEC and other relevant government agencies for
lacking the will and creativity to do their job. When asked about how
he'd handle the legal issue of retrieving AIG 's bonuses, Spitzer
referred to tort law and the theory of unjust enrichment--along with
other creative ideas--to get justice for taxpayers.
Spitzer took on Wall Street's metastasizing corruption before the
meltdown. He defended consumers' and taxpayers' rights. He speaks with
passion and clarity about what went wrong and what needs to be done to
restore integrity to our system. He is chastened by personal scandal,
yet untouched by complicity in Wall Street's public scandals which have
obliterated peoples' savings and devastated our country.
Spitzer for Treasury Secretary?
