Now that we're all incensed with the Obama economic team, is it too late to point out that we should have seen this coming? We keep lavishing rewards on a couple of inveterate bone-heads. a fiscal Laurel and Hardy team that resembles the original in every way but one: there's nothing funny about them. Two men, one red-faced and stout, the other pale, lanky, and with stand-up hair. They are handed plum after plum job, positions of power, influence, and great responsibility – and every single time they screw up, comprehensively, embarrassingly, catastrophically. The smartest move the Obama administration can make right now, both for its own survival and ours, is to hand Larry Summers and Timothy Geithner generous "separation" bonuses in return for their promise to disappear from public life forever.
As Chief Economist at the World Bank, Summers advocated dumping toxic waste in third world countries on the grounds that under populated African nations were chronically "under-polluted." Made Treasury Deputy and then Secretary in the Clinton administration, Summers played a decisive role in dismantling the New Deal era rules that made our banking system safe. When Clinton signed the 1999 law that undid Glass-Steagall and turned our biggest banks into casinos so ill-run that, contrary to all betting logic, the house was the big loser, it was due to Summer's influence. Summers indeed contributed to the drafting of the law. Other Summers innovations, such as preventing the regulation of the derivatives market and pressuring Fannie Mae and Freddie Mac to loosen their lending criteria likewise directly contributed to the present financial collapse.
From Treasury Secretary to President of Harvard was an easy step for Summers. Within months of taking the job he'd infuriated the faculty with his uncollegial ways and driven away professorial star Cornel West. By the time he opined that females were inherently less able to do science than men, he'd created so much ill-will in the community that his few defenders watched powerlessly as he resigned the most prestigious job in education. Instead of well-deserved exile, Summers was made White House Director of the National Economic Council. There he recently distinguished himself by defending the bonuses paid to AIG executives.
Geithner's upward path has been as smooth, and as equally marked by serial incompetence. He served time at the sinister and secretive Kissinger Associates working for the eponymous Nixon era war criminal. Fluttering ever higher he landed at the New York Fed as President, where he earned his $400k a year salary by looking the other way while the giant money-center banks he was supposed to supervise, Citibank for one, gambled away hundreds of billions of dollars on insanely reckless financial market bets. One measure of his performance: when Geithner took over the NY Fed in 2003, Citi was trading at $55. By the time he was elevated to Treasury Secretary, Citi was below five dollars a share. He played a critical role in allowing Lehman Brothers to collapse, the proximate cause of the current crisis, and in bailing out AIG and its counter-parties with hundreds of billions of taxpayer money.
Geithner's performance at Treasury has merely been the continuation of his Fed pratfalls. Instead of trying to solve the financial crisis, he's been working overtime to protect the bankers largely responsible for it. His motto might as well be, "if it's good for Goldman Sachs, it works for me."
The rest of us are paying dearly for his betrayal and the final tab is nowhere in sight. Forget Madoff, who robbed from the rich to give to himself. Summers and Geithner have stolen hundreds of times more, picking the taxpayers' meager pockets to line the fat wallets of the bankers and the insurers. Stealing from the people to enrich the rich? Maybe Geithner and Summers have finally found a job they're good at.