Monday, August 19, 2013

Does the Fed Chair Need to be Ethical?

Yes, argue Laurence Kotlikoff and Jeffrey Sachs in the Huffington Post, and Larry Summers does not meet the standard.

Alan Greenspan presided over the worst monetary disaster in modern history in no small measure because of his lifelong belief in the morality of unbridled wealth seeking. Ayn Rand, Greenspan's guru as a young man, taught Greenspan that the rich and powerful should be unrestrained by the weaker parts of society. Greenspan put that ethically repugnant and na├»ve idea to work, and thereby helped to create the biggest financial crisis in history. 
Robert Rubin, Greenspan's enabler and partner in this disaster, is the reigning champion of the Wall Street-Washington revolving door that has done so much to corrupt both Wall Street and Washington. As Treasury Secretary, Rubin led the fight for financial deregulation that enabled Citicorp and Travelers Group to merge into Citigroup. Within months of leaving the government, Rubin took an enormously lucrative job at Citigroup. Nine years later, having collected a reported $126 million in compensation, Rubin helped to install his many acolytes, including Larry Summers, into the Obama White House where they would oversee the mega-bailout of Citigroup and other Wall Street firms. 
Larry Summers is the third of the Greenspan-Rubin-Summers triumvirate. He, like his patron Rubin, has excelled at the Wall Street-Washington revolving door, also heading for Wall Street in the early 2000s after helping Rubin push through financial deregulation in the Clinton period. Even in the short time since leaving the Obama White House, and knowing that he would be a candidate for the Fed job, Summers couldn't restrain himself from heading straight back to lucrative advisory positions on Wall Street with Citigroup and, reportedly, several other firms. While in the Obama White House, Summers protected the financial industry from attempts to crack down on their recklessly high and unjustified compensation. (For example, see here). Characteristically, when one of Summers' friends and colleagues at Harvard engaged in serious financial malfeasance, Summers shrugged it off, even under oath.
 That is a reference to Summers's deposition in the Harvard-in-Russia mess (see my earlier HuffPo piece, or my older one on the same triumvirate). It is widely known that Sachs and Summers are long-time rivals, but that doesn't change anything stated in this piece.

Can Obama yet be considering Summers?


  1. I ask for your opinion on the following:
    1) Does Obama know all of this about Summers?
    2) Does Summers want the Fed Chair job?
    3) Will Summers be nominated fort the Fed Chair?
    4) If so, will he get it?
    5) If he gets it will he do a bad job?
    (I think I know your answer to that one.)
    6) Why are the Captcha's to get a comment published
    getting harder and harder? Do I need new glasses?

    1. I don't know most of the answers. #2 is a yes, I'm sure. #4 could be a problem, depending on how cranky Congress wants to be. Another possibility is that he would get it but do badly enough that he would not be re-upped (it's a term appointment I believe).

      Those are special Captchas just for you, Bill. My little IQ test to keep you sharp.