During the presidential campaign, I heard Mr. Obama talk many times about “change you can believe in.” But what does Mr. Geithner have to do with change?
He’s the pre-eminent careerist of old-time finance, and a basic part of the team that got us into this mess. He was pro-deregulation for most of his career. He went along with failing to rescue Lehman Brothers, a decision now generally considered a catastrophic mistake. He led the Federal Reserve Bank of New York while money-center banks made lethal mistakes of faulty risk management — and he did zero to stop it, as far as is known.
In what sense is he “change you can believe in”? How is he part of the solution, not part of the problem? I know he is a protégé of Robert E. Rubin. But isn’t Mr. Rubin himself the essence of the Washington-New York finance axis of power? He was a fine Treasury secretary while the tech boom made all things new, but Citigroup hasn’t exactly thrived during his tenure. Again, where is the change?
In his column in Monday's Financial Times ("Bernanke and the risk of deflation"), Clive Crook asks who, among Obama's economic picks, will actually be in charge:
He has put together a superbly talented team, but with so many strong-willed members one wonders who is in charge. Lawrence Summers at the National Economic Council? Timothy Geithner at the Treasury? This potentially unstable new duumvirate immediately aroused speculation about Mr Bernanke’s future influence and likely tenure at the Fed – an unhelpful development. If this were not complicated enough, next came the announcement of a new Economic Recovery Advisory Board, headed by none other than Paul Volcker.
Mr Obama has emphasised that he will be in command. He better had be. Yet it remains to be seen whether he can control this group of eminences and communicate his policy with sufficient authority. Unlike John McCain, Mr Obama never boasted of his ignorance of economics but the new president is no more master of these issues than his former rival. Boldness seldom comes out of committee, nor does forthright explanation. He is going to need a chief of economic policy – and it would be good if that person, and everybody else, knew who it was.