Harpers Ferry, WV
I hear a lot of high-minded chatter among the Left about the "pro-corporate" crimes of the Clintons, despite Bill Clinton's second term being the ONLY time in 2.5 generations that the median working family EVER got a raise worth spit. Most of these crimes are related to their alliance with Robert Rubin and Larry Summers.A healthy part of that one-time-in-45-years "raise" came from the liberalization of Wall Street money that fueled the rapid explosion of the high-tech and Internet revolution. Arguably it also fueled a "bubble", the 2000 recession, and the further, disastrous bubble in mortgage securities that led to the Great Recession of 2007-??I don't buy the accusation, on several levels. In fact, I agree more with Robert Rubin that Glass Steagall is "irrelevant" than I do with Bernie Sanders -- and I am a Bernie supporter!
First: there has been nothing but bubbles ever since Reagan. The Rubin/Summers/Clinton response to the 91-93 recession of loosening up finance capital AND paying down debt "seemed" to perform a short term miracle. Employment and innovation boomed. Employment boomed. Even wages. In addition, Rubin and Summers et al, unlike some doofuses we all know, are EVIDENCE - BASED policy makers, meaning they learn from mistakes, and adapt well: they were very deft and skillful in defending the US economy against the peso and Argentine and Asian financial crises.But the lesson of Piketty is that this bubble phenomenon appears to be endemic to globalized capitalism in this era. Clinton era responses were more RESPONSES to objective developments, rather than directing them. And there is no way to get at the root of the problems unless and until wealth is taxed directly, and globally. Oops -- Summers, Rubin, and Clinton AGREE with most of Piketty's analysis!!Second: given the restructuring of international capital trends toward ever wider and more diverse financial services throughout the world, going back to Glass Steagall's separation of commercial and investment capital is unlikely. Taxing and redistributing the gains is the only remedy. Altering corporate governance of "too big to fail" corps is also required.Third: Guess what? Rubin, and most of the "capitalist" allies of the Clintons AGREE with these remedies!!!!But no -not never-not never will some partner with "a corporate slug". As if they expect some "poof" from the "man behind the curtain" will make 14 TRillion $$ commodity economy just go to bed.But a progressive agenda that can't leverage liberal capital and divide them from the folks that just need to be taken to the woodshed does not have a prayer in hell.Hillary is not Trump. Neither is Robert Rubin, her "worst friend", according to the Left. Indeed, she is close to an incarnation of evidence based policy making. They call that science. In a world of rapidly shifting ideologies, having leaders committed to seeing if the DATA says what the IDEOLOGUES say is a good thing.More later on Hillary and friends on trade, and war and peace.
The Long Shadow of Robert Rubin
By Victoria Finkle
December 10, 2014WASHINGTON — Antonio Weiss was just another obscure investment banker up until last month, when his nomination to the Treasury Department stoked a populist fury that speaks to Democrats' past as much as their future.
The 48-year-old Lazard executive now finds himself part of a larger pattern of influence that dates back, critics say, to Robert Rubin — the prominent Wall Street insider and former Treasury Secretary.
The veteran of Citigroup and Goldman Sachs was a key advisor to President Clinton and his protégés have dominated President Obama's economic team, including former Treasury Secretary Tim Geithner and current Secretary Jack Lew.
Rubin is seen as the godfather of Democratic economic policy that many progressives blame for the financial crisis and the failure of Obama to crack down on Wall Street in its aftermath.
"It's hard not to see a powerful presence," said Arthur Wilmarth, a professor of law at George Washington University. "If you go back to the Wizard of Oz, it's the man behind the curtain."
In many ways, Weiss is an unlikely stalking horse for Rubin. He doesn't appear to be part of Rubin's inner circle, but because of his investment banking background, critics believe he shares what they characterize as Rubin's world view, one with Wall Street at the center.
"It's not so much Weiss himself; it's what he represents," said Cornelius Hurley, director of the Boston University Center for Finance, Law & Policy.
Many progressives trace the Democratic party's focus on Wall Street back to Rubin.
For liberals like Sen. Elizabeth Warren, D-Mass., who has led the fight against Weiss, the financial crisis is rooted in the deregulation of the 1980s and 1990s, led in part by Rubin and his colleagues, like Alan Greenspan, the iconic former chairman of the Federal Reserve Board.
"To a lot of people Rubin's an embodiment of the hubris of the era before the crisis," Hurley said.
Clinton administration officials, for example, pushed for the passage of the Gramm-Leach-Blilely Act, which repealed a Depression-era provision separating commercial banking from more risky activities and codified the merger that led to megabank Citigroup.
"Bob Rubin and his administration blessed the universal banking model and embraced it and said, 'make that happen,'" said Wilmarth.
Critics, including Warren, see this as a crucial moment, one that allowed the biggest institutions to become even larger and more complex, eventually forcing the government to bail them out. (Warren has co-authored a bill to undo Gramm-Leach-Bliley and bring back the old Glass-Steagall Act restrictions.)
Adding fuel to the fire, Rubin decamped from Treasury in 1999, shortly after the passage of Gramm-Leach-Bliley, to join Citigroup, which at the time was the principal benefactor from the law. He has become Exhibit A when progressives talk about the "revolving door" between banks and Washington.
In a speech on Tuesday to advocacy groups, Warren cited Rubin by name, noting that three of the last four Treasury secretaries under Democratic presidents, "starting with Robert Rubin," have been affiliated with Citigroup either before or after their service.
"Democratic administrations have filled an enormous number of senior economic policymaking positions with people who have close ties to Wall Street," Warren said.
"In virtually every economic policy discussion held in Washington, the point of view of the Wall Street banks is well represented — so well represented, in fact, that it often crowds out any other point of view. And that's the context for thinking about the nomination of Antonio Weiss."
It's not just about Rubin's past, however. The former Treasury secretary continues to have a significant sphere of influence that extends to the numerous acolytes he's reportedly helped advance, including Geithner, Lew and Lawrence Summers, Rubin's successor as Treasury secretary under Clinton and later head of Obama's National Economic Council.
Other friends in high places include: Jason Furman, chairman of the Council of Economic Advisors; Peter Orszag, the former director of the Congressional Budget Office and the Office of Management and Budget; Gene Sperling, the former director of the National Economic Council; Sylvia Mathews Burwell, the former director of OMB who now is secretary of Health and Human Services; Michael Froman, the current U.S. Trade Representative; Stanley Fischer, vice chairman of the Fed; and Lael Brainard, a Fed governor.
(Representatives for Rubin did not return a request seeking comment for this article.)
Above all else, sources close to Warren argue that Rubin and his followers put the interests of financial markets first and downplay the challenges facing the middle class.
Critics argue that Obama is repeatedly tapping Rubin's acolytes, ones who don't listen to progressives or their ideas.
"Can you name any candidate who has been put forward by the Obama administration with progressive support other than Janet Yellen?" said Simon Johnson, a professor of global economics and management at MIT.
Indeed, the frustration with Weiss and Rubin stems in part from the feeling among many that reform advocates don't even have a seat at the table in Democratic administrations.
"I don't think reformers would have had a problem with Weiss if Obama's appointments had included more people who are committed to fundamentally changing the way Wall Street does business," said Sheila Bair, the former chairman of the Federal Deposit Insurance Corp., who has raised concerns about the Weiss nomination.
"The administration seems willing to defy its progressives on these nominations, but not its Wall Street patrons. The proof is in the pudding. There are many good people in this administration and there have been incremental improvements. But we still basically have the same system we had prior to the crisis."
To be sure, some observers argued that it made sense for Obama to bring in so many Clinton alumni when he assumed office on the cusp of a financial crisis, because the previous experience was valuable.
"When you start an administration, you do value experience and the guys who were in senior positions at the end of the Clinton administration were available and came with a great deal of experience and knowledge on how the place works and how to do policymaking," said Tony Fratto, a partner at Hamilton Place Strategies and a former Treasury official for President George W. Bush.
Others said that using Wall Street experience or ties to Rubin as a substitute for guessing someone's ideology can be misleading. They pointed to Gary Gensler, for example, a former Goldman Sachs executive and Rubin staffer at Treasury, who became one of the most outspoken progressive reformers when he led the Commodity Futures Trading Commission.
"It's easy to have a discussion about differing regulatory philosophies, but it's problematic when you use as a proxy the philosophy of their former coworkers or bosses," said another former Treasury official.
It's unclear whether the push to tie Weiss to Rubin and stop his nomination will work, but opposition is clearly gaining steam. Sens. Jeanne Shaheen, D-N.H., Joe Manchin, D-W.Va., and Al Franken, D-Minn., became the latest Democrat to announce their opposition to Weiss on Wednesday, following Warren, Sens. Bernie Sanders, I-Vt., and Richard Durbin, D-Ill.
The Independent Community Bankers Association has also weighed in, arguing Weiss is too tied to the big banks.
More than 100,000 progressive voters have signed onto a petition opposing Weiss, launched by activist group CREDO.
"Warren's got a playbook and the plays are working," quipped one financial services executive.
The stakes for the more populist wing of the party extend beyond the final two years of a lame duck Democratic White House — it sends a message to potential players in the 2016 presidential elections, including Hillary Clinton, who is widely expected to run. Reform advocates want her to know that relying on the Rubin crowd will start an intra-party battle, observers said.
"The congressional gatekeepers are trying to keep them out," said Edward Mills, an analyst at FBR Capital Markets. "Elizabeth Warren has an outsized influence on the rank-and-file Democratic base, and she is a force to be reckoned with, as it relates to making sure any national Democrat is not too cozy to folks she would be opposed to."
— Rob Blackwell contributed to this article
John Case
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