Washington’s long con
By Maureen Tkacik
The opinions expressed are her own.
Thereâs a scene in Ray Naginâs Hurricane Katrina memoir from the Monday night after the storm in which twenty or thirty mysterious security guards, toting three guns apiece, suddenly descend upon the bombed out Hyatt city officials are using as a command center and commence measuring perimeters, laying down wires and barking orders. âWeâre here to protect the mayor!â their apparent leader proclaims. âEveryone else leave!â
Nagin watches, âhallucination-likeâ, as his two preposterously outmanned bodyguards give the guards their best âOh, hell noâ glares, then politely asks the guards: âWho are you guys, and who sent you?â He has well-founded suspicions they are Blackwater mercenaries hired by the local business community, but the leader wonât divulge anything, so he and his staffers just keep asking the same questions of every guard they can corner, until the entire team suddenly vanishes en masse, âNinja-like, as quickly and quietly as they arrived.â
Of the unnervingly frequent Bush Administration flashbacks I suffered reading Ron Suskindâs Confidence Men: Wall Street, Washington and the Education of a President, Naginâs staredown of the elite hired guns is the one Obama never manages to repeat.
Instead the whole saga plays out like a more articulate slow-motion rehash of a memorable passage from an earlier Suskind book, in which an earlier inexperienced president in the afterglow of a crisis-fueled electoral victory listens to his economic advisers plot the next six months of tax breaks and âincentive packageâ announcements and finally asks, âWhat are we doing on compassion?â
But Bush was a quicker study than his successor. By the end of Bushâs 2002 meeting with his economic advisers he has mastered the narrative they are concocting: the âspinâ that the economy is bad is not âcredibleâ enough to warrant compassion, but it is saddled with uncertaintyâa malaise he identifies on his very own without cue as resulting from the twin ills of âSEC overreachâ and the threat of Saddam Husseinâs continued rule in Iraq. By contrast, it takes 355 pages for Obama to complete a parallel metamorphosis, from compassion-infused campaigner to unprompted producer of his own brand of Beltway antilogic, by which he informs his advisers in the fall of 2009 he has learned to stop worrying about unemployment rate, since its historical magnitude is merely a rosy indicator of âproductivity gains in the economy.â
By the time Obama reaches this epiphany, however, even Larry Summers is alarmed. In an uncanny rehash of Donald Rumsfeldâs ill-fated intervention to stop Bush from declaring âMission Accomplishedâ in May 2003, he and the long-suffering Christina Romer try their damndest to talk some sense into the president. Ultimately, though, they just end up quittingâRomer because Summers appears to be the only guy with any clout in the Administration who seems capable of taking women seriously and that clout is clearly on the wane; Summers because his hysterically abusive management style has saddled him with the blame for the White House dysfunction whose ultimate orchestrator is much likelier Tim Geithner, whose convincing performance in the âinscrutable invincible shadow masterâ role pioneered by Dick Cheney will shock even readers who already despise the guy.
But itâs Geithner who gets to stay, despite a string of professional actions and inactions that universally invite the question: Who are you? Who sent you here? Who do you actually work for, and what makes him so untouchable he can get a tax cheat a job as overseeing, among other Treasury bureaus, the IRS? Itâs conspicuously not Obama, whose modest directives Geithner greets with a relentless array of variations on the Bush teamâs stony âcompassionâ silence. Thereâs the âslow walkâ, in which a proposal sinks under the weight of excess proposing; âre-litigationâ, in which the hit job gets outsourced to Summers, who prides himself at being able to win any debate no matter what side heâs arguing; outright insubordination, the method to which he resorts when Obama makes the irrefutably reasonable request for a plan to break up Citigroup; and a whole host of vicious cocktails of the three for use on trickier challenges, from the âElizabeth Warren Strategyâ he devised for gradually poisoning the White House career of the beloved bankruptcy law professor who designed the Consumer Protection Service Agency to the unmentioned hit job he did on the presidentâs mortgage relief bill, by which the Treasury Department ended up doling out a whole $2 billion of a $300 billion appropriation earmarked for assisting underwater homeowners.
The deadly mix of arrogance, ruthlessness and impunity Geithner radiates is of a magnitude so at odds with his adolescent physicalityâas Mike Barnicle put it, âhe has the eyes of the shoplifterââthat his public appearances invariably beg the question, who is the Dr. Evil to this clearly overcompensating loser son who is lucky to have more hair than Seth Green? Bob Rubin is just not that bad a guy, nor is Summers, whose larger-than-life obnoxiousness fills page after page of text, adding an amusing sideshow to an otherwise dreary storyâa Fat Bastard, to continue the highly inappropriate Austin Powers analogyâbut ultimately distracting from the greater mysteries of the much more elusive (and not âformerâ) Treasury Secretary. For instance: is there a single public figure with a basic understanding of finance who has demonstrated less concern about the financial system as Tim Geithner? Could Obama have chosen a Treasury Secretary whose judgment seemed more divorced from the so-called âreality-based communityâ than Geithnerâs, without soliciting a nominee from the Cato Institute?
But I digress. Iâd been asking those questions for three years before I read Confidence Men, and a big part of what makes Suskind such a compelling anti-Woodward is that he never loses his incredulity about this; on Tuesday nightâs Daily Show he even suggested that he hopes the book might somehow inspire Geithner to go the way of General McChrystal. I donât know how realistic this is, and hereâs why.
I donât know how common (or possible) this is anymore, but when I worked at the Wall Street Journal ten years ago it was rare for reporters to have time to read the papers (much less blogs, Twitter, Facebook, and other evil things that didnât yet exist.) Thatâs what editors (and whoever was on breaking news duty that day) were for. Suskind seems to have maintained this blissful obliviousness to the chatter that would go on to envelope most journalistsâ careers. Otherwise he might have avoided some of the glaring copy editing errors that have emboldened the professional pageview-cullers to run with the Obama Administrationâs insipid attempts to discredit his narrative: no casual reader of finance blogs would ever mis-identify Erin Burnett as âErin Burkettâ or Fremont Investment & Loan as âFreemont.â Also, Pete Peterson was so obviously not a Reagan appointee. But who the hell cares? I actually felt vaguely ashamed noticing the errors in Confidence Men, because the same obsessive over-consumption of financial crisis porn that rendered dumb flubs like âBurkettâ so conspicuous also accentuated the bookâs much more remarkable trait: I hadnât read any of it before. None of the scenes had been re-purposed from other crisis narratives (a la pretty much every other book on the topic) and more significantly, Suskind wasted no space engaging with whatever aggregate of those narratives he perceived to represent the âconsensusâ about what âcredibleâ players believed to have transpired.
It is the custodians of that consensus who have of course over and over again during the past three years been inexplicably charmed by the likes of Geithner, despite realityâs tireless series of interventions in the self-aggrandizing fairytales he spends so much of his taxpayer-financed time spinning. The Washington media has gorged so hard on the âcounterintuitiveâ fiction of how Tim Geithner, the bailout martyr no populist politician can resist dressing down in congressional hearings, actually saved us all from Great Depression II, that it has relinquished its capacity for legitimate intuition (or really, cognition.) It is only thus impaired that the consensusphere can paint Elizabeth Warren as a messianic cult leader, Wall Street as blameless for our economic malaise, the economyâs most daunting challenge as the failure of our politicians to effectively communicate the importance of deficit reduction, and whatever else serves Geithnerâs mysterious agenda.
Thankfully Suskind has been sniffing around, filling his tape recorder with hard evidence that plenty of insiders with front-row seats on the whole ordeal have watched the crisis and its management play out with all the incredulity of the folks at home whose phone calls drove congress to pass a bill taxing TARP recipientsâ bonus awards at 90%. As Suskind rightly points out of the meltdown itself, âthe truth is that some had seen it coming a mile away. Foresight had not been wanting; it had been ignored.â In choosing to focus as much on the sort of people who respect reality as those liable to go along with Larry Summersâ strict order forbidding the Obama team from admitting he or anyone else in the Clinton economic team âdid anything wrongâ (by repealing Glass-Steagall, deregulating derivatives, etc.),
Suskind hammers home a lesson the Beltway cynistocracy really badly could do us all a favor by growing up and learning already: It didnât need to happen this way. Plenty of smarter, wiser and more fundamentally decent people were standing on the sidelines, doing their best. Regardless of the presidency and regardless of the party. (One of the noteworthy traits shared by more wizened souls Obama chooses not to put in charge is how many were originally appointed-then-marginalized by the Bush White House: namely Sheila Bair, Bill Donaldson and Paul OâNeill.)
Some of the most gratifying voices belong to the legions of finance guys who didnât act like total douchebags, who badly wanted Obama to take their industry down a few notches and channel FDR in the interest of the greater good. For every deluded oligarch whose blood pressure shot up fifteen points at the idea of giving up his bonus in exchange for a federal bailout, someone like Bank of America CEO Ken Lewis attempts to state the obvious: âIf we spend another second talking about compensation we’ve lost our minds!” And for every wild-eyed anti-tax activist brandishing a semiautomatic at a town hall meeting, someone like Merrill Lynch No. 2 Greg Fleming pointing out that âbased on the way things have gone, itâs ridiculous to think that taxes shouldnât go up.â
The Goldman Sachs alumnus appointed to chair of the Commodity Futures Trading Commission, Gary Gensler, tries valiantly to play Joe Kennedy on derivatives reform, cleverly taking advantage when Tim Geithnerâwhom Suskind correctly observes âoften appeared to understand financial markets better than [he] actually didââbotches his confirmation testimony by asserting his support for establishing exchanges for derivatives trading. Even the woefully ill-qualified âcar czarâ, leveraged buyout king Steve Rattner, emerges from Suskindâs narrative looking relatively clear-eyed and humane next to the technocratic inner circle they successfully convince to bail out Chrysler despite the data someone has marshaled to make the case that the automakerâs failure would be ultimately painless. (âThere wasnât one guy in that room whoâd spent any serious time having beers with real workers,â fumes Rattnerâs deputy Ron Bloom, a fellow Lazard investment banking alumnus turned union negotiator.)
What the Wall Street observers seem to believe that the confidence men clearly do not is that the government should not be on Wall Streetâs sideâthat Obama ought to be ready to, in FDRâs immortal words, âinvite their hate.â As BlackRock chairman Larry Finkâon whom Summers nurses an unseemly man crushâpoints out in a moment of candor, giving âconfidenceâ to Wall Street generally involves spreading more misery around to everyone else. âWall Streetâs âconfidenceâ is buying back your shares; that does not add a job. Wall Streetâs confidence is doing a merger; that destroys jobs.â At another point Summers justifies the radically expanding inequality that awards a quarter of the American GDP to just 1% of households every yearâwith a quarter of that in turn being reaped by the top 1% of the top 1%âon the basis that globalization has made markets more efficient, and the âtruthâ revealed in that evermore accurate price discovery process simply hurts, a theorem he calls: âTruth is kind of a disequalizer;â which is to say, âinequality is growing because people are getting closer to what they deserve.â
But radical inequality is actually violently inefficient, and massive concentrations of wealth virtually never migrate organically into the kinds of productive industries that create vibrant sustained economic growth; why risk it with all the precious metals and arbitrage strategies, tax shelters and venal politicians to plow oneâs cash flows into? Iâm not trying to be a firebrand here, those are just the basic facts of financial markets, truths with which Suskind, a Wall Street Journal veteran with more than a decade of basic corporate and financial reporting under his belt, is satisfyingly intimate. He hammers home the lunacy of Geithnerâs single-commandment âFirst, do no harmâ credo for contending with the financial system by reminding readers âWall Street mocks Hippocrates. Doing harm is its business; destruction itself can be quite profitable.â You donât need to have profited from it personally to recognize this, as Elizabeth Warren demonstrates in Suskindâs best scene, a post-interview chat following a Bloomberg TV appearance in which she observes that:
Tim and Larry’s whole plan is just like Argentina in the 1980s. There was this giant hole marked “Banks” and the government just dumped money in that hole, as much as they had, while they lied about it. That’s what Larry thinks: that the US is Argentina!
And at this epiphany, Warren bursts into a dramatic performance of âDonât Cry For Me, Argentinaâ, inspiring a few fellow thespians waiting for the shuttle to join in and a small crowd to build before concluding plaintively that Summers âmight understand things better as a woman.â
I let out a little cheer of solidarity in the bookstore cafe as I read this passage, then texted my sister about it. As Ta-Nehisi Coates pointed out about last weekâs wave of early reports of the many complaints of workplace sexism Suskind had unearthed, the revelations adhere almost suspiciously to âmy worst gut-level impressions of the White House.â
But Suskindâs much more thorough character studies end up corroborating your best gut-level impressions, of all the innumerable well-intentioned individuals who understood in September â08 what so many like them understood in September â01, that this was their chance to do their part to restore a bit of civility to a civilization that seemed otherwise hellbent on setting a world record in rot. And whether you choose to dwell on the depressing fact that they were stymied under a messianic warmongering Republican president the first time around and under a black Democrat with the middle name âHusseinâ the second, or the more hopeful thought that Warren is still 22 years younger than Suskinâs impishly heroic male lead Paul Volcker, the lesson is the same; itâs still on. And the bad guys have been coddled for so long they might very well back down if someone stares hard enough.