Wall Street’s Control Of Economic Policy Making
Is the notion that the our government’s economic, tax and regulatory policies have largely been created by Wall Street and its proxies in recent decades a liberal fantasy? Here’s some things to consider in this regard.
Robert Rubin, Treasury Secretary for most of the Clinton years, came from a quarter century career at Goldman Sachs, and after leaving government became an adviser to Citigroup and for a time its chairman. Hank Paulson, Treasury Secretary under George W. Bush, who presided over the last inflating burst of the financial bubble and the initial bailout of The Street, had been the chairman and CEO with Goldman Sachs before coming into government.
Tim Geithner, Obama’s Treasury Secretary, headed the Federal Reserve Bank of New York while that institution was failing to prevent Wall Street’s worst misbehavior earlier in the present decade. He not only participated with Paulson in the initial bailout of The Street, not only was on the phone constantly with people at Goldman Sachs in the wake of that bailout according to official phone records, but has been instrumental in blocking any excess profit taxes on banks that have now become hugely profitable because of the bailout. He’s also been the chief obstacle to a transaction tax on stock trading that other world financial leaders see as a way to generate much needed revenue as well as check dangerous speculation.
Larry Summers, about to leave his post as Obama’s director of the National Economic Council, was an Undersecretary of the Treasurer in the Clinton-Rubin years. According to recent reports he has made millions consulting for Wall Street institutions.
Another key policy making post in Washington is the head of the Office of Management and Budget. Jack Lew held that post in the Clinton years. Later, between 2006 and 2009, he became an investment banker on Wall Street. He was just appointed by President Obama to take this same post again. He replaces Peter Orszag, who according to reports in yesterday’s media, may soon take a job with Citigroup,
Lew and Geithner have been delegated by Mr. Obama to work with Congress on settling the dispute over extending lower income tax rates for Americans making $250,000 or more annually. This group includes every single Wall Street banker with whom these gentlemen have had enormous personal and professional contacts over the years.
Eskine Bowles, the White House Chief of Staff under Clinton in 1997-1998, was appointed by Mr. Obama as a co-chair of the president’s National Commission on Fiscal Responsibility and Reform. This body has failed to come up with a single recommendation that would lessen the income of Wall Streeters. Bowles currently sits on a number of boards, including Morgan Stanley’s.
Here’s one conclusion about the relationship between Wall Street and the government key policy makers. Wall Street has a lock on how our economy is run and that is unlikely to change anytime soon because virtually every major policy maker in every administration has such close links with The Street.
Here’s another possible conclusion. In spite of these undeniable, potentially conflict ridden links, these policy makers will pursue policies that benefit society as a whole, even if that comes at Wall Street’s expense.
Which conclusion sounds more plausible?
More from this writer at wallstreetpoet.com.