Treasury Secretary Timothy Geithner chose the best possible talent available to be his aides. Many of them came directly from Wall Street’s most well known banks including Citibank and Goldman Sachs. This group, chosen for their economic prowess was hand picked by the Secretary to help advise on how to correct the greatest economic debacle of our era, ironically, they came directly from the same firms that are being partially blamed for the markets collapse. At issue is the fact that these advisors have access and strong influence behind closed doors at the Treasury department but require no confirmation.
The amount of money they wield control over is staggering, however the oversight for these aides is underwhelming and suspect. These six aides whose official title is, ‘Counselor to Geithner’, oversee and determine policy on $700 billion in banking rescue and are heavily involved in crafting executive pay rules as well as revamping financial regulations. Yet they haven’t faced the public scrutiny given to Senate-confirmed appointees, nor are they compelled to testify in Congress to defend or explain the Treasury’s policies.
Defending the policy of appointing advisors Treasury spokesman Andrew Williams said, “the department needs people with a deep understanding of markets and the financial system, especially as it works to fend off the worst recession in half a century. The secretary thought that the best way to utilize their talents was to allow these individuals to provide advice to the secretary on policy issues through appointments as counselor,” He added, “All of Geithners’s counselors are subject to federal ethics rules, including a pledge to avoid contact with their former firms for at least a year.” Many feel that despite these ethics rules this will lead to cronyism and back room deals as the largest banks erstwhile employees form economic policy at the highest levels. In addition, many mock the ethics clause, as it is simply implausible.
The advisors list is a virtual who’s who of Wall Street including: Chief of Staff Mark Patterson the former chief economist at Citigroup and lobbyist for Goldman Sachs. Deputy assistant secretary Mathew Kabaker, worked with private equity firm Blackstone Group LP on domestic finance policy and helped build the Treasury plan to push banks to sell their toxic assets, earned $5.8 million working on private equity deals at Blackstone in 2008 and 2009 before joining the Treasury at the end of January. Much of the compensation was in stock. Other advisors include Gene Sperling, who earned $887,727 from Goldman Sachs last year and over $2.2 million in total and Lee Saks a partner of New York hedge fund Mariner Investment Group, who earned over $3 million in salary and partnership fees last year. Sources on the street think there is no way this group can remain objective when it comes to issues, one in particular that seems glaringly obvious is executive compensation.
The President has promised to change Washington by keeping lobbyists for special interests at a distance and by making decisions in the open. In September, while speaking to financial executives, President Obama warned, “We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.” The unfortunate fact is that this list of Geithner advisors seems very much like its own special interest group for the top tier of American banking firms. They have access, they have influence, they are setting policy and they are doing it all unchecked, behind closed doors. This is far from the promise of the President and makes you wonder, ‘what happened to the transparency we were promised?’