While I can't say that I'm surprised (since Obama already had that scoundrel Robert "What Meltdown?" Rubin advising him during the campaign), I am still quite disappointed that Barack Obama has named Timothy Geithner as his choice to be the new Treasury Secretary. Maybe even more disturbing is his choice of Clinton Administration Treasury Secretary Lawrence Summers to be the Director of the National Economic Council in the White House.
Sadly, I agree with Naomi Klein, who said the following on Tuesday's Democracy Now! broadcast:
Barack Obama won this election saying that taking the status quo, staying with the same policies that have been governing the country for the recent past, was actually a very dangerous course ... Obama said again and again during the campaign that the crisis on Wall Street represented the culmination of an ideology of deregulation and laisse-faire trickle-down economics that had guided the country for the past eight years. The truth is it wasn't just eight years during which those policies guided U.S. economic policy. They certainly guided them under Reagan and they certainly guided them under Clinton.
And that's where Larry Summers comes in because Larry Summers was the last Treasury Secretary under Clinton and along with Alan Greenspan and Robert Rubin were really the key architects of the policies of deregulation that created the crisis that we're living now. And those key policies are the killing of Glass-Steagall that allowed a series of very large bank mergers that created these institutions that are "too big and too intermingled to fail" we're told again and again.
The deliberate decision to keep the derivatives out of the reach of financial regulators - that was also a Summers decision. And also allowing the banks to carry these extraordinary levels of debt. 33 to 1 in the case of Bear Stearns.
The above quote comes from a panel discussion. You can watch the video here:
(Discussion begins about 10 minutes into the video.)
During that same Democracy Now! broadcast, columns in The Nation by William Greider and Mark Ames were also quoted and I think they both state rather succinctly why Geithner and Summers are disappointing picks;
On Monday, Geithner was busy executing the government's massive rescue of Citicorp--the very banking behemoth that Geithner and Summers helped to create back in the Clinton years, along with Federal Reserve chairman Alan Greenspan and Robert Rubin, Clinton's economics guru. Now Rubin is himself a Citicorp executive and his bank is now being saved by his old protégé (Geithner) with the taxpayers' money. Geithner has been a central player in the deal-making, from Bear Stearns to AIG to Citi. The strategy has not only failed, it has arguably made things worse as savvy market players saw through the contradictions and rushed out to dump more bank stocks.
Ultimately, Summers was one of the key architects of our financial crisis. Hiring him to fix the economy makes as much sense as appointing Paul Wolfowitz to oversee the Iraq withdrawal.
On this Thanksgiving eve, I'm still grateful that Obama won and that McCain didn't. I'm especially grateful that Bush will soon be out of office. Still, it's a good time to remember that electing Obama was only just a start. We've still got a long way to go and now is no time to rest. Well OK, maybe tonight and tomorrow are a good time to rest but I think you know what I mean. ;)
Update: I just ran across a column by Robert Scheer that echoes and expands upon the message (and title) of this diary: Obama Picks Foxes to Guard Henhouse. I particularly agree with this part of Scheer's column:
This outrageous conflict of interest in which Rubin gets to exploit his ties to both the outgoing and incoming administrations was best described by Washington Post writer Steven Pearlstein: "The ultimate irony, of course, is that just as Rubin and Co. at Citi were being bailed out by the Bush administration, President-elect Barack Obama was getting set to announce a new economic team drawn almost entirely from Rubin acolytes."
As opposed to the far tougher deal negotiated on the bailout of AIG, the arrangement with Citigroup leaves the executives, including Rubin, who brought Citigroup to the brink of ruin, still in charge. Nor is there any guarantee of the value of the mortgage bundles that taxpayers will be guaranteeing. That is because, as candidate Obama clearly stated in his major economics address back in March, the deregulation pushed though during the Clinton years ended transparency in banking.
Why then has he appointed the very people responsible for this disaster to now make it all better? Why not ask him? Heck, yes, it is time for the many of us who responded to his e-mails during the campaign to now challenge our e-mail buddy as to why he suddenly acts as if the interests of Wall Street and Main Street are one and the same.