Obama should tap a Wall Street ace to replace Geithner

Picking Jack Lew would tell the Republicans that Obama is serious about emphasizing deficit reduction and tax reform. But is that a message that really needs to be delivered through the selection of a Treasury secretary?

By The Fiscal Times Nov 14, 2012 4:17PM
The Fiscal Times logoBy Suzanne McGee

Wanted: One good man, or woman, to serve as the Obama Administration’s next Secretary of the Treasury.

Like the presidency itself, the position likely will have scores of candidates eager and willing to fill it, lobbying for it with varying degrees of decorum and diplomacy. The problem is the same as that confronting the presidency itself: finding all the qualities that a Treasury Secretary needs in the shape of a single person.

The ideal candidate has to be adept at fiscal policy formulation, able to transform ideas into coherent and logical legislation or concepts that can be executed within the Treasury Department itself. He or she needs to have the trust of the president in order to be effective in shaping financial policy.

Moreover, he’ll need to have the diagnostic skills equivalent to those of the world’s best physicians at the Mayo Clinic, to understand just when the economy requires a light touch of stimulus or the hint of restraint. She also needs to command the respect of other participants in the financial system, whether those individuals oversee the economic and financial affairs of other nations or head the banks that serve as the arteries transporting capital throughout the economic system.

At any time, it’s tough to find the perfect individual for this role, and this year it is likely to be almost impossible. The incumbent, Timothy Geithner, is widely expected to be the first member of Obama’s first-term administration to submit his resignation (let’s not count forced departures like that of CIA honcho David Petraeus in that list) and that resignation will come hard on the heels of a fiercely fought campaign that revolved squarely around two radically different views of the economy and government’s role in it.

The man widely rumored to be the president’s top choice, Jack Lew, is an accounting geek and a veteran of Washington’s budget battles who has served both Obama and Clinton as budget director and now is the president’s chief of staff. Clearly, he commands Obama’s trust and has the president’s ear – a key ingredient in the mix. But he may well be a controversial choice when it comes to the Republicans, who claim he is partisan, and despite an earlier stint at Citigroup, he’s seen as more of a Beltway insider than a denizen of Wall Street.

Picking Lew – a smart, savvy negotiator described as an honest broker – would, pundits say, tell the Republicans that Obama is serious about emphasizing deficit reduction and tax reform. But is that a message that really needs to be delivered through the selection of a Treasury secretary? For starters, Obama has little choice but to come to grips with these matters. Then there is the fact that some on the Republican Party’s right wing likely will simply refuse to engage with those negotiations in any manner, and will refuse to believe that the president is acting in good faith.

Obama has a chance here to mend his strained relations with the financial community. Wall Street, which supported the president in his first run for office, largely turned against him during his first term and ended up backing Republican challenger Mitt Romney. And as the president sits down today to talk about the fiscal cliff with the CEOs of companies such as American Express, General Electric and PepsiCo, it’s hard not to notice that Wall Street leaders will be absent from the discussions.

Who on Wall Street could fit the bill in Washington? Goldman Sachs CEO Lloyd Blankfein may be a registered Democrat, but after his company emerged as the poster child for bad behavior within Washington and among Democrats, he switched his informal allegiance.

Similarly, the relationship between the president and JPMorgan Chase CEO Jamie Dimon has become more strained since the two tangled over how much regulation was appropriate for the financial sector in the aftermath of the crisis, with Obama pushing hard for Dodd-Frank and the Volcker Rule, and Dimon insisting that the array of new agencies and rules charged with overseeing Wall Street will add to complexity and costs. The public pushback likely ended any chance that Dimon will get the nod – even if it were a job he wanted.

One of the handful of loyal Wall Street Democrats said to be willing to take on the task is BlackRock CEO Larry Fink. His firm rode out the financial crisis with style and emerged as one of the winners; he also played a key role in crafting a solution the problem of the toxic waste like subprime loans and other distressed assets on banks’ balance sheets. Another private sector candidate whose name has been heard is Roger Altman, a former Lehman Brothers banker who decamped to found boutique investment bank Evercore Partners. Altman has navigated Washington’s shark-infested waters before, having served as a deputy undersecretary at Treasury back in the Clinton era.

Either of these men would command a degree of respect among most of the constituencies with which the new Treasury secretary will have to work. Two women’s names also have been mentioned: Sheryl Sandberg, chief operating officer of Facebook, and Sheila Bair, former head of the FDIC. Sandberg would demonstrate that the president wants to rebuild his ties not only with Wall Street but with business, although she wouldn’t be viewed with the same degree of gravitas as Fink, for instance, not having run a business within the financial sector itself.

Sheila Bair told me after a brief press conference at last month’s National Association for Business Economics that despite the strong views she has formed about what policies should be followed to make the financial system stronger (hint: “too big to fail” pops up often) that she has absolutely no interest in returning to Washington in an official capacity. Even if she did, her recent book, Bull by the Horns, with its criticism of the banks and of policymakers, likely has made that impossible. Meanwhile, Obama’s decision not to back the deficit reduction plan developed by Erskine Bowles, Bill Clinton’s former chief of staff, in collaboration with Republican Alan Simpson, would undermine Bowles’s credibility in his job from day one.

In a perfect world, we could combine the characteristics of three or even four of these candidates and come up with a single individual who will somehow – miraculously – be able to work with all the various and warring constituencies and grasp the issues at hand, from the fiscal cliff negotiations at home to the risks associated with Europe’s ongoing fiscal crisis and the need to build a constructive relationship with China. Sadly, that’s not an option. Given that the president is operating at a disadvantage, heading into negotiations with roughly the same kind of people he has already failed to reach agreement with, it might be better to pass up someone like Lew in favor of an equally intelligent Washington outsider like Fink who will be able to command a degree of respect, even if it is reluctant, from the other side of the aisle. That is, if Fink is willing to take the job.

Suzanne McGee is a columnist at The Fiscal Times. Subscribe to The Fiscal Times' FREE newsletter.

More from The Fiscal Times:

Nov 16, 2012 11:59AM
Another wall st. A$$. Don't we have enough banker representation in government already?? How about separating money from politics..now that would be a change I could believe in.
Nov 16, 2012 7:30PM
NO MORE BANKERS.  Enough already.  These are the same criminals who broke our economy.
Nov 16, 2012 1:02PM

MICKEY82&GREYGHOST;Face it you`re both Obama haters that are sour pusses that

can`t admit that Mitt(corporate raider)Romney lost fair and square.If you could actually

read and open your eyes you`d realize Obama is  a great family man, leader and

President who can and should be respecten 100% foe his countless accomplishments.

Nov 15, 2012 2:42PM

Wake up America!

It seems nothing has change, we just finish an election, and we have to listen to Ryan the liar advancing his wonderful ideas of how handle the coming Fiscal Cliff, this guy needs to realized, Mr.Obama is President. We just herd Mr.Boehner give his talk a few days ago about the Fiscal Cliff, and other economic situations he thinks he has the answer how to it fix, as usual! The things he said that infuriated many of us much was his statement that he wishes the elections had turned out another way, we thought it was an improper remark for the Speaker of the House to make, indicating one more time his personal feelings rather than showing a professional dedication to his job, lacking the vision to work fruitfully for the citizens of the USA. He’s contending us one more time in his own personal hypocritical super bully hero attitude! He has a recurrent amnesia problem like Mr. Romney had, and seems to be having troubles learning, and accepting from the American people the facts after the election. Sir, Mr.Boehner? Are you there in the House of Representatives? We just elected Mr. Obama as your President for another four years. We all truly hope you and your followers not trying to perpetuate the same old anxious lyrics coming from the mindless abusive House of Representatives, following yours and theirs perpetual intransigency and mental aberration in insisting in no tax increase for the rich, and emphatically suggesting cutting the entitlements programs. Your wrong ideology shows all of you wanting to sink our old citizens deeper in a hole of hunger, and miser their health care. Come to your senses, all of people in Medicare have earned their Medicare after years of dutiful work, but remember as you try your dirty tricks on them one more time, as you all well known for a long time, the SS is not a part in any of these talks, so make sure not to monkey with it! Keep holding back America, and fighting for the very rich, while 46 million Americans are in poverty, and I promise, we will never ever forget all of you in the House of Representatives. Be smart, work for the people that have waited over four years to overcome your permanent intransigency in helping the American people, we put you there; it’s your responsibility to the people!

Nov 16, 2012 11:21PM
Gomer Pyle would be a better man that Geithner.
Nov 24, 2012 6:03PM

The Fiscal Cliff has many faces, and one of the faces is the perpetual opposition of Senator McCain to all the beneficial things president Obama wants to do for the economy, also the House of representatives is full of very antagonistic Tea party, and Republicans members that seems to have an a hearty pleasure in wanting to destroy Obama, and all of us the people!

The one that needs to retired is Senator McCain for his continues attack on the Obama’s administration, and his poor judgment in foreign policies since all the blunders he perpetuate in fomenting the Iraq war, and now his new attack trying to annihilate our Ambassador for the UN, Susan Rice.                                

The topic of discord about our UN Ambassador Susan Rice came up frequently in the news lately. The complaint coming from Senator McCain and Senator Graham saying   she purposely concealed information about the Bengahzi attack, and expressing their feelings she was not qualified to present the report to the American people. It was well understood by all listeners when she first gave the report it was only to inform the American public of the riots events at that time in Benghazi, and no more. When Mr. McCain said Miss Rice was not qualified to give the report of the attack, we got very upset to his wrong interpretation, much later to become and unjust persecution, and relentless discredit of the performance of our UN Ambassador. As it was confirm later, she was faithfully doing her assignment in the light of the unclassified document given to her of the situation in Benghazi at the time! The whole USA, knows well of Senator McClain erroneous selection, and protection of Sara Palin when running for VP, she evidently had the poorest qualifications for the job, she may have created a permanent irreparable damaged to our country had she been elected as a VP. With all our honest respects to the Senator, he has made other mistakes during his brilliant career. We think the Senator true motives for the creation of this newly pre meditated havoc over the unpredictable Benghazi attack is his dislike for our president Mr. Obama, and it’s is clearly showing. This worthless loss time the Senator is putting on a lackluster efforts in the persecution on the innocent UN Ambassador should stop, he should be concentrating eagerly on helping the America workers get fruitful paying jobs, and reducing the trillion of dollars Deficit Budget by helping increasing the tax to the very rich that have made millions with the sweat of the long oppress middle class since the Bush presidency!

Nov 24, 2012 6:07PM
As we all know, The Best Way to Rob a Bank is to Own One. This is a government of the bankers, by the bankers, for the bankers, dedicated to the proposition that the moneychangers deserve to be rich.

Bankers have deployed their financial weapons of mass destruction, also known as derivatives. This derivatives game is a Heads I Win (big bonuses for bank executives), Tails You Lose (taxpayers fund the bailouts). Bankers are extorting bailouts from the Federal Reserve and federal government under the threat of Mutual Assured Destruction.

The solutions for banking are:

1) Ban derivatives.

2) Break up the Too Big To Fail (or Jail) banks.

3) Re-insitute the Glass Steagall act, which separated investment banking from commercial banking which insured depositors (FDIC).

Find a Secretary of the Treasury who understands these things.

Nov 20, 2012 1:52AM
A Banker? One of the incompetents who needed hundreds of billions in taxpayer
bailouts. The Wall Street bankers, who after melting down their banks due to 
complete incompetence, got a bailout, and then awarded themselves with huge
bonuses because they were bailed out. No thanks - the last thing we need is another
self described master of the universe. These bankers talk a mean game on CNBC, but 
in the real world - they do not know the difference between their hype and reality. 
Nov 16, 2012 4:12PM

I dont care who won the election fair and square. His policies are what they are. Democracy doesnt guarantee good government. I grew up in LA and know a lot about poor and corrupt government elacted by the people.

Hitler, Mussolins, and Stalin all came to power by winning elections. Lately Hugo Chavez also.

Nov 21, 2012 3:39PM
Or better yet, how about bernie madoff running the treasury.
Nov 21, 2012 3:32PM
Isnt that like putting the rats in the grain barrel ?



another person who does not understand reality in charge.


Look reality is simple if everyone in the US makes $100,000 a year or more everything is just fine there are enough tax revenues coming in to pay for government and everybody has enough money to live on.


When you have have the population out of work and 1/4 of the population making $14,000 a year (minimum wage) and the rest trying to make $250,000,000 a year off the other 3/4ths of the poplution making nothing you are going to have $2 trillion dollar deficits like we are now.


Our government is the most corrupt it's been in years. Elected officials stealing money left and right and sidewise. Why do you think government workers now make on average $250,000 a year and have great pension plans and health benefits??? They gave themselves those salaries and benefits.


While the rest of us have minimum wage jobs and no benefits.


Yep we have turned into a Banana Republic and our ship is sinking fast.


The bright Wall Street boys have opened up the flood gates to loaning investors trillions of dollars for multi family dwellings which is causing a bubble in the housing market and a crash just a year away once those projects are finished and they can not fill the $2,000,000 penthouses they are building right now at $200,000 a unit to sell at $2,000,000.


Yep they forget that Americans are not making enough money to buy $2,000,000 penthouses. So while the real estate investors buy up these properties in hopes of flipping them for 10 times their cost the last ones on the band wagon are going to lose all their money.



Nov 16, 2012 5:58PM

Anyone notice the post office and FHA announcing their need for bailouts yesterday? These are our fine govt run enterprises at work again. HA

Wait until the feds can figure out how to bail out states unfunded pensions to continue to buy votes from public unions. Current estimate is that it currently amounts to 4.2 TRILLION =and growing.

Nov 16, 2012 4:23PM

Also natural blonde, have you tallied the announced layoffs since the election? If you have surely you realize the pie from which socialists feed is shrinking while the current admin is proposing mega increases in spending.

I meant to keep a list of these anouncements but failed to do so. I know it is already  well into 6 figures and climbing only 1 week after the elections. An entitlement class raiding a bank with no money will not be happy.

18,000 Hostess Bakery Brands being pink slipped today.

It is what it is and the ultimate power is still in the hands of them that got, not them that want it.

Nov 15, 2012 11:24AM

Sheila Bair would be an excellent choice but her honesty and directness have probably disqualified her.

Washington wants WS insiders that go along to get along. A tough monetary/fiscal hawk wouldnt last long.

Nov 20, 2012 4:41PM
It amazes me that these absolute imbeciles are allowed to write such claptrap. We can only assume that Suzanne McGee is a Wall St. sex slave. What other rational explanation is there? Gordon Gecko for Treasury Secretary? Really! Anybody who is chosen to please a bunch of Republo- Nazi know- nothings would be guaranteed to produce another GFC (global financial crisis) and the next series of multi- trillion- dollar bankster bailouts. Yeah, just what we need! As for the Obummer's "bargaining position", all he needs to do between now and Jan. 2 is - NOTHING! Then, the Bushian tax cuts expire and Obummer will be able to talk of tax cuts, not increases, in addressing the Fiscal Cliff. If the Obummer really wanted to appoint a Treasury Secretary with a brain, he would appoint Nouriel ( the Great) Roubini! Michael Hudson or L. Randall Wray would be even better, but they probably wouldn't want the job, either.
Nov 26, 2012 2:50PM
Wall Street Ace?  The problem is that these card sharks have that extra ace in their sleeve, ready to screw anyone who they wish to use and abuse.  They takes their golden retirements and we get the fools gold egg.
Nov 15, 2012 3:46PM


We are awaiting impatiently the coming Fiscal Cliff confrontation with the President versus the House of Representatives. It’s imperative the rich pay a little more money to improve our economy, and to pay our Fiscal Debt. Fiscal changes our citizens want now to make America a better place to live, to pay our Nation Bills to correct the deficit! And then, of course! Mr.Obama, may needs to get ready to clip for last time, Mr.Boehner wings. We think, one way or another, Mr.Bohener, Ryan, Cantor will return to the old times tricks of bartering one goods for another, like many times before, but we aren’t going to be the losers this time, all that past abuse was very, very humiliating to our citizens, you, and all your followers Tea Party and Republican Members in the House, so much poor of conscience, and careless for the future of our country. You, and the full House members have obstructed the President too much, too many times, much too far! Mr.Bohener, keep playing hero, telling the president how to fix the Economy, listen, one more time it’s getting old, and we, all of us, millions of us, are awaiting impatiently for the fairness created by our president with this new Congress. We are here, all of us, late at night, awaiting in front of our TV sets, the final results of the efforts from yours/our president Obama, to dismantled the infernal machine of your House of Representatives budget locks, and cut your engines power, with all of you aboard members, all of yours live gifted millions of dollars provided by the sweat and work from our backs, in our great nation of purposely induced by you all, a systemic cruel land of hunger of the American people. You all Tea party and Republican members are the abusers, continuous negation to work for the people, by the people, and only for the people, and in 2014, we will let all of you feel the powerful winds of anger from all the guts of the millions American citizens that will not take it again from you, or anyone like you! We have too much hunger in our country, and you need to help now!

Nov 18, 2012 2:52AM
obama has allready sold his soul to the bankers. did it in his first few weeks in office.
Nov 15, 2012 7:53PM
typical hypocrite! he hates wall street! liar! like everything he fing says!
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