(This item originally appeared in The Huffington Post, where Froomkin is Washington Bureau Chief.)
Senator Chris Dodd announced on Jan. 16 that he is relinquishing his office. He didn’t really have much choice — the voters of Connecticut were prepared to take it away from him in November even if he had tried to keep it.
And they would have had good reason. After 30 years as a champion of reform, Dodd had violated their trust — on a particularly important issue, at a particularly important moment. First, there was the issue of his consistent enabling of the financial industry in his role as chairman of the Senate banking committee. Then it came out that Countrywide Financial CEO Angelo Mozilo, the kingpin of subprime, had arranged sweetheart mortgage loans for him. And finally, in a sign of where his loyalties lay, Dodd slipped a provision into a bill allowing AIG, the most culpable and irresponsible player of them all, to hand out big bonuses paid for with taxpayer dollars.
Voters had legitimate reason to conclude that he couldn’t be counted on to represent their interests. The denizens of one of the bluest states in the nation were even steeled to vote Republican instead, just to get rid of him — even if that meant replacing him with a political neophyte whose fortune was made in the violence-porn industry known as “professional” wrestling.
Voters get it: Certain actions are disqualifying from public life.
So I can’t help but imagine what would happen if the public were allowed to directly weigh in on the cast of characters who make up President Obama’s economic team.
I’m pretty sure almost all of them would get the boot.
Looking at the massive amounts of money these men — and they are, nearly without exception, men — reaped from the very industry they are now ostensibly charged with reining in, it’s pretty much impossible to see how they couldn’t be deeply compromised. And nothing they’ve done since Obama took office proves otherwise. Heck, very little they’ve done since Obama took office even suggests otherwise.
Obama, in a variety of addresses presumably authored by that self-same economic team, has described modern Wall Street as a “house of cards” and a “Ponzi scheme” in which “a relatively few do spectacularly well while the middle class loses ground.”
If anything is disqualifying from public life, wouldn’t it be gorging on money by exploiting a system you realize is immoral and out of control? Can we realistically trust such people to reform a system that made them filthy rich?
It’s not a secret just how much money these guys made on Wall Street, nor that at least four of them reaped massive bonuses even after they were already working for their new boss, or that one of them was actually one of Goldman Sachs’s top lobbyists in D.C.
But all these men — did I mention they were all men? — received their no-confirmation-needed appointments during Obama’s honeymoon period, when there was a general predisposition to give him the benefit of the doubt.
So the general public still probably doesn’t understand the depth of their indebtedness to the financial industry. Consider this partial cast of characters, and what their 2008 financial disclosure statements revealed:
* Larry Summers, Obama’s chief economic adviser, was paid $5.2 million for his part-time work for a massive hedge fund in 2008 alone. He also took in more than $2.7 million in fees for speaking engagements at such places as Citigroup, Lehman Brothers, Merrill Lynch and Goldman Sachs — including one visit alone that netted him $135,000 from Goldman Sachs.
* Michael Froman is deputy national security adviser for international economic affairs, and a hugely influential White House player with key roles in both the National Security Council and National Economic Council. He made more than $7.4 million at Citigroup from January 2008 to January 2009, including a year-end bonus of $2.25 million that he received just days before coming to work at the White House — though well after he had already served in a key post in the transition. Froman was a senior executives at Citigroup’s Alternative Investment division, which “ran up hundreds of millions of dollars in losses [in 2008] on their esoteric collection of investments, including real estate funds and private highway construction projects, even as they collected seven-figure salaries and bonuses.”
* David A. Lipton, a presidential special assistant who also serves on both the national security and economic councils, made $1.5 million from Citigroup in 2008, managing its Global Country Risk group — another shining Citigroup success. He received a bonus in 2009, right around the time he started work at the White House, of $762,000.
* Jacob J. Lew, a deputy secretary of state, is another key player in international economics. He, like Forman, was at top officer of Citigroup Alternative Investments, earning $1.1 million in 2008 – plus an as-yet undisclosed bonus in 2009.
* Gene Sperling, a top adviser to Treasury Secretary Timothy Geithner, in 2008 earned $887,727 from Goldman Sachs simply for providing “advice on charitable giving.” He also made $158,000 for speeches mostly to financial companies.
* Lee Sachs, another top Geithner aide, “reported more than $3 million in salary and partnership income from Mariner Investment Group, a New York hedge fund.” When he took his new job, he reported that he was still owed a bonus where the value was “not ascertainable.”
* Lewis Alexander, yet another top Geithner aide, is the former chief economist at Citigroup, for which he was paid $2.4 million in 2008 and the first few months of 2009.
* Mark Patterson, Geithner’s chief of staff, was one of the top lobbyists at Goldman Sachs before joining the Obama campaign. He took in what seemed at first glance to be a relatively modest-by-Goldman-standards salary of $637,230 in 2008. But it turns out that was only for three months’ work — he left Goldman in early April. Until then, his title had been vice president for government relations, and he acted as a lobbyist on a wide range of issues including tax treatment of corporate reorganization transactions, nonbinding shareholder votes on executive compensation, and over-the-counter energy derivatives.
That’s just a partial list. And hovering somewhere just slightly offstage is the man who made it all possible, the great role model, mentor, and iconic door-revolver Robert Rubin. Rubin went from running Goldman Sachs to the Clinton Treasury Department and back to Citigroup. As Robert Kuttner wrote at Treasury, Rubin was one of the “key Democratic architects of the extreme financial deregulation that brought the economy to this pass. At Citi, he was one of the grand strategists of the speculation in securitized loans and off-balance-sheet gimmicks that has brought Citi to the edge of bankruptcy.”
Nevertheless, Rubin managed to leave having earned $126 million for his trouble. His proteges now run the country. And Rubin recently had the gall to author an article called How To Make Capitalism Work Again, for Newseek (which had the gall to print it.)
Nothing in or around the article serves to remind readers of his record of being almost exactly 180 degrees wrong on the major economic issues of his time.
And, true to form, his focus is not about the problems facing Main Street, but indulges in the classic “Wall Street” concerns. He worries about too much spending on job-creation, opposes forcing the riskiest derivative contracts onto public exchanges, resists an accounting reform that would require financial institutions to assess their assets based on actual market prices rather than just making things up, and warns against what he calls impractical proposals to break up “too big to fail” banks.
His most pressing concern — what a surprise — is this: “The United States faces projected 10-year federal budget deficits that seriously threaten its bond market, exchange rate, economy, and the economic future of every American worker and family.”
Rubin, like his wannabes and successors who now rule the halls of the White House and Treasury Department, have truly been corrupted — if not by Wall Street directly, then by Wall Street values. These are people who don’t see unemployment or foreclosure as social problems, they see them as financial problems. Their opinions, when they jibe with those of their fellow Masters of the Universe, should not be taken at face value, certainly not by the president — and they wouldn’t be, if the voters had a direct say. They’d be out like Dodd.