I'm giving him another month [UPDATED]

Posted By Daniel W. Drezner Sunday, March 8, 2009 - 5:10 AM

When Paul Krugman and Megan McArdle agree on Obama/Geithner's lackluster reaction to the economy, that's usually a good sign to go long on duct tape and shotguns. And this Brad DeLong post doesn't make me feel much better -- because I think he has the political economy just about right.

Still, I'm going to wait a month before allowing my freaking out flag to fly. Why? Because in the time that Barack Obama has been forced to react in real time, I've noticed two tendencies:

He tends to take his own sweet time in making decisions;
Those decisions have usually worked for him.

So maybe a month from now Treasury will actually have some appointments besides Geithner, and markets will be more certain about what Obama is planning to do. If these things don't happen, however, I have every confidence in my commenters saying, "I told you so."

UPDATE: OK, now we're seeing some movement! This Reuters story lists three incoming nominees at the assistant secretary level. It also explains the dithering at the more senior levels:

On Thursday, sources said former Securities and Exchange Commissioner Annette Nazareth withdrew from consideration to become a deputy Treasury secretary for personal reasons and that she would remain in her private securities law practice.
In addition, Geithner's choice for international affairs undersecretary, Caroline Atkinson, also pulled her name from consideration. Atkinson, a senior official at the International Monetary Fund, has decided to remain at the institution, a person familiar with the decision said.
Both Nazareth and Atkinson had been vetted for the jobs but had not been formally nominated.
Lee Sachs, also currently a counselor to Geithner, is widely considered a top contender for undersecretary for domestic finance, but also has not been formally nominated.

One wonders if the reasons for the withdrawal have to do with the people involved or the rigors of the vetting.

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Tim Geithner is only one man

Posted By Daniel W. Drezner Thursday, February 26, 2009 - 10:11 PM

During the first month of the Obama administration, there have been a few proposals coming from the Treasury Department, and it's safe to say that markets have not been too thrilled about them. A large part of that is because the proposals are so vague and opaque that even Felix Salmon is having difficulty interpreting them.

To be fair to Geithner, however, it's not like he has a lot of help. Check out this Treasury web page listing all of the political appointees at Treasury.

ABC's Matthew Jaffe reported in fuller depth on this problem earlier in the week:

Treasury has not moved quickly enough to fill key positions -- such as deputy secretary, various undersecretary posts, and general counsel -- which may have contributed to a lack of details in Treasury's plans, which in turn caused a dive in the stock market.
"If the secretary had a full staff he would've been in a stronger position to work out the details, so I'm sure that has been part of the problem," West said....
Some analysts believe Geithner is suffering from the lack of a complete staff at his disposal.
"It's an overwhelming job even if you have a full staff, and that's certainly not yet the case," said Rob Nichols, president of the Financial Services Forum.
Nichols, a former Treasury spokesman, estimated that right now Geithner "probably has 10 or 20 percent of the political appointees around him that he ultimately will have."
"Treasury is not moving fast enough," West said. "Given all of the enormous economic and banking challenges that we face, we really need a full team on the field."

The story gives a couple of possible reasons -- the new ethics rules, difficulties with vetting -- but they don't really pass the smell test. What I don't understand is why the Obama White House is not making this staffing issue its first, second, and third priorities right now. Given the gargantuan tasks facing Treasury right now, I guarantee that the deputy and undersecretary positions at 1500 Pennsylvania Ave. are far more important than the Secretary of Commerce.

I woked at Treasury during the last transition, when it took close to six months to get the Deputy Secretary confirmed. It was.... a difficult time, to say the least. And that was when countries like Argentina and Turkey were in trouble -- not all of the the OECD and the BRICs.

Paul Volcker is pretty angry about this -- as well he should be. But the person he should be angry at is his boss.

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The choice for Treasury

Posted By Daniel W. Drezner Thursday, November 6, 2008 - 4:18 PM

Noam Scheiber has an excellent story in The New Republic profiling the two leading candidates to be Treasury Secretary -- former Secretary Larry Summers and current chairman of the New York Fed Tim Geithner. It's mostly about Gethner, but it contains this priceless example of the hubris, brilliance and abrasiveness of Summers:

Summers's brilliance made him simultaneously exhilarating and exhausting to work for--a whirlwind of intellectual energy fueled by an endless supply of Diet Coke. "I remember once giving him a memo that was three pages long," recalls Steve Radelet, a onetime Harvard economist who worked for both Summers and Geithner. "I'd worked on it for days and days. He read it in a minute and a half. He looked at me, saying, 'I don't agree with your argument. But, if I were making your argument, I could have made it better. Here's how.' "

I heard a boatload of stories like this when I was at Treasury. I should also add that I heard nothing but good things about Geithner. Based on what I know and hear about both men, my slight preference would probably be for Geithner, but on policy grounds I don't think there is a bad choice to be made between these two. Politically, I see that there's already an effort to spike Summers. Over at the Huffington Post, Max Blumenthal is claiming that Summers' authored a controversial World Bank memo advocating environmental dumping in the developing world. Regardless of the intrinsic merits of this position, Blumenthal's allegaion is horses**t. To read what actually happened, click here. Hat tip: Ben Smith. UPDATE: Fortune's Andy Serwer thinks Summers has the inside track.

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Open Fannie Mae/Freddie Mac thread

Posted By Daniel W. Drezner Monday, September 8, 2008 - 1:05 PM

Comment away on the government takeover of Fannie Mae and Freddie Mac. If you think I have something substantive to say about the economics of it, you'd be wrong -- I'm still puzzling over what the government will actually do. Instead, I will simply note some rather odd political effects:

Here's a fun counterfactual: step back for a minute and think about what would be happening right now if John Snow was still the Treasury Secretary instead of Henry Paulson. That's a scary f$#&ing thought, isn't it? For someone who ostensibly accepted the job during an administration's lame duck years, Paulson's been rather... vital, no? If you were a conspiracy theorist -- which I'm not -- you'd almost have to wonder if Bush officials, when they approached Paulson, let him know that a financial storm was a brewin'.
The effect on the presidential campaign seems obvious to me -- isn't it going to be very, very hard for the GOP to bash Obama as a big government liberal when a Republican administration takes over two of the largest financial institutions in the country with the support of the Republican candidate for president? It's not like this is a completely new phenomenon, but still.

Comment away. Readers are also encouraged to provide a complete list of U.S. companies that are "too big to fail" -- i.e., so vital to the economy that the U.S. government will bail them out regardless of what happens. UPDATE: Skimming at what's been reported, I am cheered by the fact that one of the goals of the takeover is to make sure, long term, that Fannie Mae and Freddie Mac will not be "too big to fail" in the future.

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