For those of us following the current economic crisis, Barack Obama’s most important cabinet choice will be his Treasury Secretary pick. Although nothing to be sneezed it, the position has historically been less prominent than the portfolios of State and Defense, but the news of the last six weeks and the urgency created by the current recession make it critical at this moment. The names being floated in a variety of articles on the Internet are, in rough order of likelihood:
- Tim Geithner, head of the Federal Reserve Bank of New York and a key player in every government action involving Wall Street so far
- Larry Summers, President Clinton’s last Treasury Secretary and a prominent academic economist
- Jon Corzine, former head of Goldman, former senator, and now governor of New Jersey
- Paul Volcker, former chairman of the Federal Reserve
- Sheila Bair, head of the FDIC
- Robert Rubin, also a Clinton Treasury Secretary, also a former head of Goldman, and currently board member of Citigroup
Less likely names floated include Warren Buffett, billionaire investor; Jamie Dimon, CEO of JPMorgan Chase; and Paul Krugman, 2008 Nobel Prize winner in economics and an outspoken liberal columnist and Bush administration critic.
The main thing all of the leading candidates have in common is that they are centrists and pragmatists (not a socialist among them, as far as I can tell). There is no reason to believe any of them would reverse the major steps taken by Henry Paulson so far, although several would likely move more aggressively for mortgage relief and broad-based economic stimulus. This is generally a good thing. While Paulson can be accused of some major missteps, and of so far failing to unblock lending to the real economy, his one achievement has been to restore some confidence to the banking sector, and the impact of a wholesale change in policy direction could be highly unpredictable.
My personal opinion, based on nothing, is that the Wall Street connection rules out Corzine and Rubin, and his comments about women while president of Harvard rule out Summers, so I would bet on Geithner, who has knowledge of Wall Street but does not have the political taint of having made a fortune on Wall Street.