And now, introducing the Kickback Czar…
Are you joking? The Obama Administration somehow thought that it was okay to give a pass to Steve Rattner? They thought it was okay to appoint a guy to a key job after he apparently acknowledged to them that he was under investigation for providing a million dollar payment to pension consultant in exchange for ...
Are you joking? The Obama Administration somehow thought that it was okay to give a pass to Steve Rattner? They thought it was okay to appoint a guy to a key job after he apparently acknowledged to them that he was under investigation for providing a million dollar payment to pension consultant in exchange for receiving an assignment to manage a big chunk of pension fund money for New York State?
They thought it was okay in the middle of a justified surge of global disgust with Wall Street to embrace a big time Wall Street player who is smart enough to be arguing the legal technicalities of the transaction but not smart enough to recognize that it might just seem to be sleazy, dubious and a gross disservice to the people who were depending on the State to use appropriate methods and metrics to find stewards for their retirement money? They even thought it was okay when part of the deal involved payments to support a movie called “Chooch.” (What’s worse than bad ethics and bad taste all wrapped up into one sordid exchange? The New York Post called “Chooch” which scored an amazing 00 rating from Rotten Tomatoes “the kind of vanity project that gives amateurs a bad name.”) What’s more they did all this while giving Rattner the job of auto czar for which he had no material auto industry experience? I thought the way high ethical standards worked was that you didn’t just bar people convicted of crimes, you tried to weed out people who had done things that were wrong or contrary to the public interest.
As 30 Rock‘s Liz Lemon would appropriately say: “What the what?” It makes one think that the only thing that would keep her sleazoid colleague Jack Donaghy out of the government was the fact that he is a fictional character… oh, and that the company for which he works isn’t based on Wall Street.
Once again, the Obama personnel team has in one swoop revealed their signature traits of self-righteousness, arrogance and fecklessness. They assert “high” standards but are utterly inconsistent in their conception and application. They bar some qualified people with tiny or modest tax infractions (poor Nancy Killefer, Tom Daschle and a host of others), give a pass to others with identical issues (Tim Geithner) and more broadly imply they can see deeply enough into souls, see what others cannot see, and that we should accept their inconsistencies as a consequence of their special judgement.
As an example of the camel-through-the-eye-of-a-needle standards that have been set for some jobs one incoming official told me his family was asked to provide receipts for a decade-old donation of furniture to Goodwill to satisfy examiners of his tax returns. And yet we know that at the same time they have turned a blind eye when others have little or no applicable experience (from Rattner to Ron Kirk). Some have worked for or closely with disgraced leadership at Citibank, AIG and Fannie Mae.
Some were dredged directly out of the sleazoid politics of Chicago. And some were kept out because they were registered lobbyists even though as one former Clinton cabinet official ruefully noted to me, the cabinet includes former elected officials in 12 of 14 positions-implying that being on the receiving end of money was fine even if giving it was suspect. Is it any wonder they have had a string of embarrassments or that they have had, according to one report from an insider, as many as 10 people turn down the Ambassador to China job… arguably the second most important job in the State Department?
And now this Rattner mess. I don’t care that the investigation has yet to determine whether he knew what he was doing was against the law. I don’t care if it was actually against the law. If what happened is anything like what was described in today’s New York Times and other papers, it was at best contemptible and ethically dubious. It may have been fairly common practice. But it shouldn’t have been. So now, Rattner has to go. Tolerating his missteps — or keeping him on — would be too powerful a statement that the Obama Administration has one set of rules for those close to Wall Street and another set for the rest of the world.
For more on this, see Joe Stiglitz’s interview with Bloomberg News today in which, among other things, he says, “”America has had a revolving door. People go from Wall Street to Treasury and back to Wall Street,” he said. “Even if there is no quid pro quo, that is not the issue. The issue is the mindset.”
In a similar vein, while we’re at it, I don’t know about you but watching Goldman, J.P. Morgan and Citi produce multi-billion profits in the first quarter of this downturn year left me feeling really angry. Either things weren’t so bad and they didn’t need our help or, as I believe is actually the case, they rang the alarm for the crisis they caused, got cheap money from the U.S. government, the pass-through gifts of the AIG deal, taxpayers covered the downside and now their shareholders are capturing the upside.
Soon they will payback their TARP money so they can make sure they don’t miss a single year without obscenely huge bonuses and we will have footed the bill for their heart transplant, transfusion, and restoration to more or less precisely the same freedom to recklessly game the global economy for their own personal gain that they had before (since the administration has been so timid about regulatory and oversight reform). As today’s lead story in the Financial Times notes, perhaps a more odious dimension of this is that these banks would then use the freedoms they gain from being outside the TARP program to gain a competitive advantage over the banks that remain inside the program.
Talk about gaming the system. They use our money to get an edge, make some easy money, repay it at the first opportunity and then work against, in effect, us, the stakeholders in the other banks, the people that came to their rescue. I’m all for getting Wall Street back up on its hind legs, but seriously... and where is the administration on this issue?
If you want another critique of the program beyond the one in the Stiglitz interview, take a listen to Jeffrey Sachs on “Morning Joe” a couple of mornings ago. Remember these are both world class, Democratic Party economists. These are the people who should be manning the barricades for Team Obama and yet just a few months in to this process they feel like they can’t do it. I don’t agree with them on everything, but on this I sure do feel their pain. Specifically, to me, it has been telling that the Obama economic team has really dragged its feet on introducing the sweeping regulatory changes that many — even many on Wall Street — have called for, including the long-overdue creation of a super-regulator in the U.S. to oversee traditional and new investment vehicles and the creation of some global counterpart, essential in today’s integrated international financial environment.
I defended Larry Summers when I felt people unfairly pilloried him for making a good living. I believe Summers and Geithner and the increasingly impressive Ben Bernanke are talented and well-intentioned. But I also believe they have been insensitive to the appearances of coziness with Wall Street that are well illustrated by the Rattner situation-insensitive in ways that undercuts their ability to achieve their goals.
There are too many ties. There is too much in-breeding. There is too much Wall Street group-think. There is not a sufficient diversity of views. There is not a recognition that in times like these with the stakes and the costs to everyone so high, there can be no real or apparent conflict of interest of any time. Rattner, who has long aspired to high office, should have known that at Quadrangle. The economic team needs to get wise to it now.