Larry Summers is Director of the National Economic Council within the White House, and as former Treasury Secretary (and former President of Harvard) he wields enormous authority. He and Bob Rubin were joined-at-the-hip in the 1998 Asian crisis (along with Alan Greenspan).
Late this Friday -- the time when bad political laundry is aired, to avoid setting the news agenda -- Summers' financial disclosure forms were released. And they ain't pretty, for anyone who has wondered why Obama has been misled on banking reform...
See his full disclosure form here (PDF).
The Wall Street Journal reports that Summers received $2.77 million in speaking fees, much of it from banks, including $135,000 for one speech to Goldman Sachs. Other clients included Citigroup, Lehman Brothers, and JP Morgan (sound familiar?). He received $5.2 million over the past year in compensation for his role as managing director of one of the world's largest hedge funds, D.E. Shaw, with $30 billion in assets.
In response to the WSJ, White House spokesman Ben LaBolt said that:
"from the first days of the administration, we have bolstered accountability over banks" and made other rules changes so that "the influence of lobbyists is curbed [sic], executive compensation is reined in, and firms are required to show how they will preserve or expand lending using government funds. [...] Dr. Summers has been at the forefront of this administration's work to shore up our nation's financial system and to put in place a regulatory framework that will strengthen the financial system and its oversight. [sic]"
A[nother?] White House official added that the speeches:
"long pre-date Summers's work as an official of the Obama administration or even the Obama transition. He was not an adviser to or an employee of the firms that paid him to speak."
"Long pre-date" takes on a new meaning: the last speaking fee was received on November 12th, 2008, a week after the election, and it was from Merrill Lynch. Summers says he tried to decline the engagement when he learned that ML would merge with Bank of America, but (for some reason) he was "unable to," so he donated the $45,000 to charity.
Does anyone really wonder why we have not seen the kind of change on Wall Street that Nobel Prize winners Paul Krugman and Joseph Stiglitz have called for, as have former IMF chief economist Simon Johnson, brilliant NY author Charles Morris, Nouriel Roubini, and others? Why GM's CEO and board are kicked out, but not the banksters? Why TARP and other bailouts are so pro-bank and anti-taxpayer?
Why does anyone credible still express surprise about this?
Summers may be the worst and most flagrant example of a revolving door in the Obama Admin's oversight of banking reform, but he's not the only one. Here are some other snippets from the WSJ article:
National Security Adviser James Jones reported $900,000 in salary and bonus from the right-wing, pro-Republican U.S. Chamber of Commerce as well as director fees from a number of corporations including $290,000 from Chevron Corp.
White House Social Secretary Desiree Rogers collected a $350,000 salary from Allstate Financial as president of the social networking division, as well as $150,000 in board fees from Equity Residential, a real estate investment trust in which she also holds at least $250,000 in stock.
Valerie Jarrett, assistant to the president for intergovernmental affairs, lists (among other receipts) $58,000 to serve on the board of Rreef American REIT II, a real estate investment trust based in San Francisco. The Chicago Stock Exchange paid her $34,444 to serve on its board.
Deputy National Security Advisor Tom Donilon earned $3.9 million as a partner at the law firm of O'Melveny & Myers, where his clients include Citigroup and Goldman Sachs.
Carol Browner, assistant to the president for energy and climate change, disclosed earnings of between $1 million and $5 million from lobbying firm Downey McGrath Group, Inc., where her husband, Thomas Downey, is a principal. She states $450,000 in "member distribution" income, plus retirement and other benefits from Madeline Albright's lobbying group.
Last month, Bill Moyers interviewed Simon Johnson (video, transcript). As Johnson put it:
"It's exactly a web of interest... of the financial industry. [...] There is an unnecessary and excessive deference to the supposed experts: 'You mustn't be too tough on banks.' Those technocrats are wrong. ... There's a small group of people who got you into a disaster, and who were still powerful. Disaster even made them more powerful. You need to come in and break that power. ... Rahm Emanuel and David Axelrod, have pushed for tougher action against the banks. But they didn't prevail. ... Treasury officials are not the ultimate authority. I don't think they're the right people."
[N.B., this is one area where I agree with Rahm.]
As Bill Moyers noted, Geithner has hired Goldman Sachs lobbyist as his chief-of-staff. The new deputy secretary of state was a CFO of Citigroup. Another CFO from Citigroup is now assistant to the president and deputy national security advisor. One of his deputies also came from Citigroup...