Let’s Privatize The U.S. Treasury

Should the U.S. Treasury Department be privatized? Should Goldman Sachs get the contract to operate it?

Some people might ask why we should bother to formalize what has actually been the case informally for years. After all, the last Secretary of the Treasury, Hank Paulson, headed GS before deigning to serve in Washington. And the present occupant of Paulson’s job, Tim Geithner, according to phone logs recently made public, looks to GS almost obsessively when it comes to running his department — a department that has initiated policies that have profited GS mightily in recent years. What would change if GS ran the outfit openly and under contract?

The answer, of course, is the commissions the company would receive directly from the government plus bonuses tied to performance. Until now, many (perhaps most) deals made by the Treasury have not turned out well for the U.S. taxpayer, while working wonders for the bottom lines of surviving Wall Street giants like GS. The U.S. has sunk a ton of money into A.IG., for example, and can’t even reduce the size of some bonuses paid to the division of that company that almost destroyed the world economy. GS, meanwhile, received almost $13 million when A.I.G. was bailed by the public. And just yesterday, when a CIT bankruptcy was announced, the government was projected to lose the $2.3 billion it had sunk in that company while GS was reported to be making $1 billion from the bankruptcy.

Don’t numbers like this mean we need a new bottom line-oriented management at the Treasury? Don’t the same numbers tell you where to look for this new management?

I’m not suggesting anything radical, or worse, liberal. I don’t want real financial reform that would break up companies too big to fail thus making them not too big to fail. Such a simple and obvious approach must be wrong, and would only work to reduce the profits and bonuses of GS and other big Wall Street outfits. I simply want a government department to be run by people who know how to turn whatever comes from Washington not only to their own advantage, but to the advantage to the rest of us, by giving them a monetary incentive to do so.

I also don’t want to undermine the personal well-being of Tim Geithner or his present cadre of Treasury helpers. If a new GS management thinks they are up to making our government’s investments in the economy wax along with those of GS, then keep them on by all means.

Would this innovative approach work? I guarantee it. Indeed, the resulting improvement in our national economy will definitely beat analyst expectations.

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