Replacing Summers with a Wall Street millionaire

By Felix Salmon
January 3, 2011
today's WaPo report it seems that the shortlist to replace Larry Summers at the NEC has been whittled down to three men -- Gene Sperling, Roger Altman, and Richard Levin.

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From today’s WaPo report it seems that the shortlist to replace Larry Summers at the NEC has been whittled down to three men — Gene Sperling, Roger Altman, and Richard Levin.

The first thing to note here is that, as Brad DeLong notes, the delay in replacing Summers does not reflect well on the White House’s professionalism and ability to get things done. It’s been over 14 weeks since Summers officially announced his departure, and I’m sure the White House has been looking for a replacement for longer than that. But they’ve left it so long that the position is now unfilled. Writes DeLong:

Either promote Jason Furman to the job, or tell him who he is going to be working for. Keeping your staff positions staffed is the first task of government. It’s not rocket science.

The second notable characteristic of the three is that they’re all multi-millionaires with close ties to Wall Street. None more than Altman, of course, who has his own bank. But Levin is on the board of American Express, which paid him $181,362 in 2009, and where he has shares and “share equivalent units” worth $539,000. Which might not be a huge sum compared to the $1.5 million or so that he’s earning at Yale, but is still more than enough to make him a denizen of Wall Street rather than Main Street.

Finally there’s Sperling, who in some ways is the worst of the three when it comes to grubbing money from Wall Street. The other two have well-defined and easily-understood jobs; Sperling, by contrast, signed up with the Harry Walker Agency and started giving speeches to anybody with cash, including not only Citigroup but even Allen Stanford. He also wrote a monthly 900-word column for Bloomberg for $137,500 a year, which works out at about $13 per word. Then he started “advising” Goldman Sachs on its charitable giving, which advice came very expensively indeed:

Goldman Sachs paid Sperling $887,727 for advice on its charitable giving. That made the bank his highest-paying employer. Even Geithner’s chief of staff Patterson, who was a full-time lobbyist at the firm, did not make as much as Sperling did on a part-time basis. Patterson reported earning $637,492 from Goldman Sachs [in 2008].

As Ezra Klein says,

His duties at Goldman Sachs were primarily on a $100 million charitable project to help raise the skill levels of poorer women in developing nations, but in some ways, that makes the transaction more peculiar: You tend not to get paid that much for offering guidance to charitable endeavors. It is very hard to believe that Goldman Sachs wasn’t attempting to buy influence with a politically savvy economist who had good relations — and would later go to work for — the incoming Democratic administration.

Noam Scheiber does his best to defend Sperling, but is far from persuasive—the general picture he paints is of a man whose heart might be in the right place but who never seems to get anything done. The last time he was at the NEC he sat quietly by while Treasury pushed through various deregulatory measures; within the Obama administration his main claim to fame seems to be the bank tax, which never actually got enacted.

More generally, Sperling has done nothing to counter the general impression that he’s one of many Rubinites in the administration, in the context of a political atmosphere where one of the few points of agreement between the right and left is that the departure of Summers can and should be taken as an opportunity to finally put as much distance between Obama and Rubin as possible. As Mark Thoma says,

A break from the Wall Street connected side of the Clinton administration would have political value. Even better, no matter the choice, would be to show through action that the administration is, in fact, determined to reduce the chances of another meltdown by being tough on the financial sector. But, so far as I can tell, that doesn’t seem to be the direction Obama intends to go.

The problem, of course, is that Wall Street became so big and so pervasive over the course of the boom that it’s hard to find people to run the NEC who haven’t been paid large sums by banks at some point. And even if they are relatively pure on that front, there’s every reason to expect that they’ll pull an Orszag and start taking millions of Wall Street dollars the minute they leave. Obama can try to distance himself from Wall Street, but it isn’t easy.

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