Tuesday, September 09, 2008

Hank in charge

This Times article details who is running the show when it comes to the Fannie and Freddie bailout.

NYTimes: ...“Bush was in charge when it was cut taxes, deregulate, have free trade, etc.,” said Representative Barney Frank, the Massachusetts Democrat and chairman of the House Financial Services Committee. “But then the old paradigm broke down, and it fell, frankly, to more serious thinkers to figure out how to cope with the current reality.”

...Mr. Paulson, a former chairman of Goldman Sachs, joined the White House in July 2006 after an intense courtship by Mr. Bush’s chief of staff, Joshua B. Bolten. He demanded clout and got it, in part because “Paulson did not need the job; the administration needed Paulson,” said Vincent R. Reinhart, a monetary economist at the American Enterprise Institute in Washington.

Mr. Reinhart says Mr. Paulson, like Mr. Bush, would ordinarily resist government intervention. “I think the economy is taking Bush and Paulson to a place where they wouldn’t go on their own,” he said. “In a crisis, you start bending principles, and Paulson bent principles.”

By relying so heavily on Mr. Paulson, Mr. Bush is doing more than bend conservative principles. He is taking himself out of public view in the one area of policy making that matters most to Americans: the economy. Mr. Wehner, Mr. Bush’s former adviser, does not see that as a problem so long as the markets stabilize. And Mr. Frank, the Democratic congressman, said Mr. Bush’s reliance on the Treasury secretary is “one of those things that, historically, will be to his credit.”

Do the people who think Sarah Palin is up to the job of President of the United States think she could have been CEO of Goldman Sachs as Paulson was? ("After all, Alaska is a lot bigger than Goldman Sachs! And, it's closer to Russia! How much oil does Goldman have, anyway? Hey, she does have a journalism degree from U Idaho!") Anti-elitism can only go so far...

Who has more responsibility, the President or CEO of Goldman?

14 comments:

dr. nar said...

You might enjoy this link.

http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&partner=permalink&exprod=permalink

The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac....

Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing.

''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

Anonymous said...

nice Steve...keep having your temper tantrum over Sarah Palin and the Republicans...it only makes non-partisans who read you more likely to vote for them.

All of these candidates have in common that they will need to pick good advisers. So the real question any sane voter asks is "Do I trust the people that will likely be chosen to craft policy?"

Unfortunately for the Democratic party, undecideds like me are scared of the internal divisiveness that the Democrats have put on display since day one of the primaries. We wonder how it will play out in policy decisions...

steve said...

dr. nar: when I put up that post I knew that it was dangerous to quote Barney Frank on GSEs, since he's been a big booster and received a lot of money from their lobbyists. But I agree with his remarks in what I posted.

Anonymous: If Palin became CEO of Goldman I'd short the stock right away and so would you, I bet. I don't believe for one minute that advisors make the individual in charge irrelevant. Capable people choose more capable advisors, and are better able to judge conflicting streams of advice.

Why can't an independent thinker like you just admit they chose someone to appeal to their base who is totally unqualified for the job? I understand why they did it -- for their own partisan good and not the good of the country. I used to admire Senator McCain, but I'm utterly repulsed by candidate McCain.

mock turtle said...

anonymous above wrote:

Unfortunately for the Democratic party, undecideds like me are scared of the internal divisiveness that the Democrats have put on display since day one of the primaries.

----

as opposed to a bunch of sycophants who nod yes to the commander in theif as he leads the country to waterloo

one of the most valuable things our country has going for it is that we fight (with a small f) and argue amongst ourselves in the hopes that a competition of ideas will lead us in a better direction,

the republican party...used to be, and may yet again become a great party, but now they are all about personality, and pretense rather than policy and principles.

sarah palin is a shill in every pejorative sense of the word.

but i'll say this for her
she sure knows how to fly the flag

http://www.kunstler.com/Grunt%20Archive.html

יונתן said...

Steve,
Thanks for your response. I just don't think this game is about IQ. Particle physics, mathematics, even finance to some extent, are about IQ. But not politics.

Great leadership is not reflected in IQ. Voter choice is a personal judgment based on intangibles... I liked Reagan. I didn't like Carter. I would guess Carter had a higher IQ. I don't know much about Sarah Palin, but she is a gifted orator and she might have the common touch. I don't think it matters much.

The Bush family's failings have always seemed to stem from a lack of empathy. Maybe Barbara should have been president.

I grew up in Eugene and I know the world looks different from Eugene. My mother is still enjoying my fathers defined benefit cost of living adjusted pension from the University... Now that I live on the other side of the world it seems to be a much harsher place!!

Enjoy Eugene!

Outis said...

Anonymous: If Palin became CEO of Goldman I'd short the stock right away and so would you, I bet. I don't believe for one minute that advisors make the individual in charge irrelevant. Capable people choose more capable advisors, and are better able to judge conflicting streams of advice.

So, if Obama was made chair of Goldman you WOULDN'T short the stock right away? Where is there any idication that he's any more qualified than Palin for either CEO of Goldman Sachs or President of the USA?

Anonymous said...

Where is there any idication that he's any more qualified than Palin for either CEO of Goldman Sachs or President of the USA?

Are you serious?

Obama is a magna cum laude graduate of Harvard Law School, taught at U of C Law school for over a decade, worked as an associate attorney, etc.

There is no comparison.

steve said...

When Obama took his community organizer job he could easily have instead been hired by Goldman. He has almost the same resume (and, I bet, IQ) as Robert Rubin, frmr co-head of Goldman and Clinton Treasury Secretary: Harvard--HLS vs Columbia--HLS. I don't think Rubin made Law Review, though :-)

Do you think Palin could get an interview at Goldman? Maybe for the secretarial pool.

Anonymous said...

Steve,
You've set up a dichotomy between generic intelligent person and Sarah Palin. I can relate somewhat to your feelings as I voted for Romney, with his accomplishments, high I.Q., and all, but that isn't the choice we face.
It is McCain versus Obama. Worse, Palin is the only one with significant executive experience. I suspect a reflexive reaction against Palin on the part of many due to class as there are too many examples of people landing on the ticket with even less experience; Ferraro, for example, had been a U.S. House rep. for only a little time.
At this level of politics, I'm a bit of a determinist and generally believe the one who exudes leadership qualities, as detected at a visceral level, wins. First-borns are vastly over-represented amongst presidents is an example of this. The primaries, I believe, is where we select based on a mix between leadership and "just like us" qualities (with idiosyncrasies such as R's vote for somebody making his second try while D's never vote for such a person).

Anyways, people *always* are represented well or get the government they deserve.

STS said...

dr.nar:

Former Rep. Oxley had a few choice words in the FT regarding that old battle over regulation of FNM & FRE. It seems he was able to negotiate a compromise with Barney Frank, but got a 'one-finger salute' from the White House.

Dog of Justice said...

When Obama took his community organizer job he could easily have instead been hired by Goldman.

Do you have a reference for this? I was under the impression that he wasn't very successful in New York, and he then made a virtue out of necessity.

(I'd much rather have a President Obama than a President Palin, though!!!...)

steve said...

I think Obama worked as a community organizer (Project Vote or something like that) even after HLS. I think at that point he would have had a good shot at Goldman since he was magna and president of the law review. He did also work at some top tier law firms as an associate.

Thanks for the link to the FT article. Very interesting read, for anyone who wants to know the backstory on the GSEs.

PS A senior Goldman partner emailed to say that they would have wanted to see Obama's LSATs and SATs before hiring him. Whatever happened to Griggs vs Duke Power? :-)

You never know who is reading your blog!

Anonymous said...

hi Steve, I think you greatly overestimate Obama's IQ and the comparison to Rubin is implausible.

Obama got a job after law school at Business International in NYC.

http://en.wikipedia.org/wiki/Business_International_Corporation

The typical level of their hires was nowhere near Goldman Sachs, though I think that given the paucity of academically high-achieving blacks applying for finance jobs, Obama would have stood out and could well have been hired either at GS or similarly prestigious firm.

Obama did not have a comparable track record to Robert Rubin. Rubin got into Harvard when it was tough for Jews to do so, and graduated summa cum laude (honors are common but summa much rarer at Harvard). Obama had a mediocre high school record, went to Occidental College, transferred to Columbia after two years and got a degree but with no indication of honors according to his Wikipedia page. He then went to HLS.

I don't know whether Rubin received honors at YLS. Obama graduating in the top 10 percent at HLS is a substantial cognitive indicator, but probably less so than the summa in economics by Rubin.

steve said...

I think I wrote that his resume was "almost" up to Rubin's.

Summa in econ at Harvard vs magna at HLS? I would say roughly comparable with the edge to the summa.

Obama was a lot more charisma, though :-)

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