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Hellmore
coined a new term for Geithner and his mentor Larry Summers --
"Rubinistas" -- because the pair are often associated with their former
boss at Treasury, Rubin. Neither Hellmore or Stein are making a stretch
to connect Geithner to Rubin (Stein conveniently omits the fact that
Summers also worked for Rubin). However, just because they worked for
Rubin doesn't mean they're tainted by Citigroup's woes. After all, both
of them worked for Rubin long before he joined Citi, and they've had
accomplished careers afterwards. Not that either writer is willing to
concede that point.
Stein wrote of Geithner: 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. What's Stein getting at? Geithner, unlike Rubin, has never worked on
Wall Street, but is a career bureaucrat with stints at Treasury, the
IMF and Federal Reserve (he was briefly at Henry Kissinger's consulting
firm, but that's still pretty far from Wall Street). Even Summers, who
Stein lavishes praise upon, has drifted closer to Wall Street than
Geithner, briefly serving as a managing director at hedge fund D.E.
Shaw & Co. after leaving Harvard University. To make
matters stranger, Stein, after veering off on a tangent about the
dangers of New Deal-esque fiscal policy, pours on the praise for
Summers and the rest of Obama's economic team: On
the positive side, Mr. Obama will have some fine economists on his
staff, including Mr. Summers, the powerful Mr. [Paul] Volcker and
Christina D. Romer of the University of California, Berkeley. They can
help figure out what works and what is fantasy. Talk about fantasy. Stein just loves academic economists, which Geithner isn't. Hellmore at least admits there's a link between Summers and Rubin, not to mention the two men's deregulatory bent in the 1990s. Although Hellmore doesn't note it specifically, it is widely known that Rubin and Summers along with former Federal Reserve Chairman Alan Greenspan quashed attempts to regulate derivatives -- a move that may have exacerbated our current financial crisis. Hellmore's column offers some valid questions about putting a pro-deregulation economist, Summers, in charge of advising the president-elect on how to better regulate the financial system. Still, the Hellmore column elicits cackles from Portfolio's Felix Salmon, who took issue with some of its assertions about both Summers and Geithner as Rubin acolytes. Salmon refutes the notion of Geithner as a "Rubinista" by noting: But if I recall correctly, Summers always stood between Geithner and Rubin on the Treasury org chart. He also pointed out the absurdity of Summers as a Rubin clone: It's
even more ridiculous to think of Summers as a Rubin acolyte -- when
Summers arrived at Treasury, he was already an academic superstar with
a John Bates Clark medal to his name -- and he'd been chief economist
of the World Bank. Prior to Hellmore and Stein's assertions, the common wisdom was that Geithner was a Summers' protege. Salmon rightly concludes about the use of the term: Sometimes, the protégé label is fair: think Paulson-Kashkari, or Rand-Greenspan. But I think it's a bit of a stretch to say that just because Rubin has screwed up at Citigroup, one should think less as a result of Summers or Geithner or [Peter] Orszag. In the end, there are valid arguments and concerns to be had about both Geithner and Summers such as the Big Picture's Chris Whalen's argument about Geithner's role in Lehman Brothers Holdings Inc.'s failure, and Hellmore's concerns about Summers' pro-deregulation past. But associating the two men with Citigroup's troubles is ridiculous guilt by association. - Matthew Wurtzel See Stein's column from The New York Times Matthew Wurtzel is the editor of Dealscape. Categories Deal Video
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Days after President-elect Barack Obama announced his selection of
Federal Reserve Bank of New York President Timothy Geithner as treasury
secretary, a debate flared up about his readiness to oversee the
Troubled Asset Relief Plan. Since then, a veritable chorus of
detractors have begun to question Geithner's viability as a potential member
of the Obama Cabinet. Some include economist and 
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