By Patricia Lee Sharpe
We’ve had lots of fun at Mitt Romney’s expense lately. His verbal ineptitude, unlike George W. Bush’s fairly innocent malapropisms, stems from ideology and the usual tone-deafness of the privileged classes, and he deserves the ridicule. The latest (though only semi-amusing) is watching him trying to position himself advantageously vis-à-vis his rape-justifying fellow Republicans, who worship God, Nature and Fate through violated women. Are these guys—Halloween being mere days away—ghoulish or not?
On an only slightly less macabre note, Romney’s aides, needing names of potential Cabinet appointees for the newly elected Governor of Massachusetts, produced a list that was male, male, male. Not to worry! When instructed to look in the kitchen or wherever for qualified women, the staffers managed to come up with lots of “women in binders.” (Which is a pretty good description of female life under a not- quite-dead patriarchy, actually.)
Evidently New York Times reporter/columnist Andrew Ross Sorkin and his rarefied sources at the elite echelons of American economics and finance are similarly challenged.
Two Major Openings
The new president, whether surnamed Obama or Romney, will have to appoint a Secretary of the Treasury and also, pretty quickly, a new Chair of the Federal Reserve Bank. Tim Geitner has indicated that he won’t serve a second term at Treasury. Ditto Ben Bernanke at the Fed. Naturally any enterprising financial reporter or columnist will be tempted to play seer by predicting the winners (or at least the leading candidates) of the competition for these crucial jobs and often thankless honors.
Where are the Women?
Sorkin’s list of possibles for both openings is decidedly unimaginative. It’s also drearily predictable when it comes to any notion that there may be superbly well qualified women out there in the world of budgets, balance sheets, deficits, taxes, GNP, GDP, marginal this and marginal that, etc. To say nothing of those dirty (in some realms) concepts touching on income distribution and economic justice. The glass ceiling in the U.S. financial world is as shatterproof as promotion ceilings seem to get.
When it comes to the Fed, Sorkin is not only predictably misogynist, he betrays the bias that has made his financial reporting of the banking crisis so cramped. He’s pushing his boy Tim Geitner so strongly that he mentions only in passing the Fed’s extremely capable second in command, Janet Yellen. All Sorkin manages to say about her is that she’d provide “continuity.” Actually, it’s very interesting to look at Geitner and Yellen side by side.
Yellen, Geitner and the Big Problem
Yellen’s pre-Washington service is every bit as distinguished and relevant as Geitner’s. He was President of the Fed’s branch in New York, Yellen of the Fed in San Francisco, positives to be taken seriously. The negatives are as follows: Geitner was and is too close to Citibank, Goldman and other big bank financial players, all of which (and whom) have been coddled throughout the banking crisis; Yellen was part of the Bernanke regime that was disinclined to take action on the housing bubble when disaster might still have been averted.
This would put Geitner and Yellen roughly even as candidates for Fed leadership, if not for one strong negative attaching to Geitner that’s hard to argue away. The Federal Reserve system needs to be insulated from partisan politics (which is not to aim for for some impossible disconnect or total naivete). It would seriously undermine the health of the financial system for anyone to move directly from being Secretary of the Treasury to becoming Chairman of the Federal Reserve Bank, especially if his previous boss had just been re-elected to the presidency. That’s just too cozy for comfort. Yellen, on the other hand, is equally competent, far more experienced in the ways of the Fed and would likely find it easier to steer clear of narrow political considerations in making systemic decisions under a president of either party. Why does Sorkin miss this? Is he biased against females? For Geitner?
Why Was Bair Invisible?
Moving on to the second major opening, I note that Sorkin does not mention Sheila Bair as a highly credible candidate for Secretary of the Treasury under a president from either major party. As head of the Federal Deposit Insurance Corporation, she took issue with an incredibly lenient Tim Geitner and, although she identifies as a “lifelong Republican” and “capitalist,” called for higher bank capitalization, much tougher regulation of securitization and real penalties for arrogant, rule-breaking bankers. Is that why, given Sorkin's sympathy for Geitner during the darkest days of the past decade, he fails to proffer Bair as a candidate for the top Treasury or Fed role? On the other hand, maybe the omission is payback on Sorkin’s part. He’s the only journalist singled out for biased economic and financial reporting in Bair’s hard-hitting, straight-talking memoir of her five plus years as FDIC chief. That’s Bull by the Horns: Fighting to Save Main Street from Wall Street and Wall Street from Itself (2012)
Bair's Wow of a Vita
First, the expertise and experience. (Read this for the more detailed version.) A lawyer by training, Bair was a young staffer for Senate Majority Leader Bob Dole and worked in the General Counsel’s office at the former department of Health, Education and Welfare. She has served as an Assistant Secretary at the Department of the Treasury, a Senior Vice President for the New York Stock Exchange, a commissioner and acting chair of the Commodity Futures Trading Commission and as Dean’s professor of Financial Regulatory Policy for the Isenberg School of Management at the University of Massachusetts Amherst. President George W. Bush appointed her to head the Federal Deposit Insurance Corporation in 2005. Her term ended in 2011. During much of her five years as FDIC boss, she worked with Hank Paulson, Tim Geitner, Ben Bernanke, et. al. to stabilize a financial system that had been undermined by the unrestrained, rule-bending greed of bankers and financiers. Blair was also a highly competent negotiator for the U.S. during the Basel II and III processes which were set in motion to provide international guidelines for bank capital holdings. According to her memoir, she tended to argue for higher capitalization, Geitner for less.
Although she is a self-described “life-long Republican” and “capitalist,” Baird worried, early on, about “the deregulatory dogma that had infected Washington for a decade, championed by Democrat and Republican alike....Regulation had fallen out of fashion, and both government and the private sector had become deluded by the notion that markets and institutions could regulate themselves.” All too often, her efforts to find long term correctives to short term rent-seeking were undermined by figures in the public as well as the private sector, in Washington as well as New York.
I have no quarrel with Sorkin when he envisions Erskine Bowles as a possible Secretary of the Treasury under a re-elected Barack Obama. Bowles served as the Democratic co-chair of President Obama's bipartisan National Commission on Fiscal Responsibility and Reform with Republican Alan K. Simpson. The fact that Congress refused to accept the Bowles-Simpson formula for solving the budgetary logjam in Congress in no way disqualifies Bowles from a shot at the Treasury slot, but Sorkin dismisses him fairly quickly and settles on a more likely Obama nominee: Jacob Lew. Jacob who? As Sorkin puts it, “Mr. Lew is Obama’s chief of staff, which makes him very confirmable,” as if that were the most important qualification for Secretary of the Treasury. Lew does indeed have a distinguished career in financial management, but why was Shiela Bair not mentioned among plausible possible candidates under a Republican presidency, at least? And how disarming, should a Democrat president choose her!
The Compassion Trap
In her memoir Bair spends remarkably few pages addressing the very complicated business of crashing into a very exclusive men’s club, the macho world of economics and finance. But my hunch is that her populism aka her humanity aka a concern for people as well as math is what makes it easy for the powers that be and their journalistic fellow travellers to disvalue her. We can see this deeply human quality if we follow one strand of a major thread in Bull by the Horns:
I will never forget participating in a foreclosure-prevention town meeting....I provided brief remarks...explaining the Treasury program to them....In stark contrast to the arrogance and disdain I confronted on Wall Street, there I [saw] no Armani suits....I saw fear, confusion, and exhaustion...They were caught in mortgages they could not afford, dealing with a complex loan-servicing process they could not understand. There were no flippers or speculators in that room, just people terrified about losing their homes.
A little earlier Bair had addressed the issue of loan modification programs at a meeting of the American Securitization Forum, “a crowd of predominately thirty-something white male Wall Street deal makers.” During the q&a following her talk, she reports, a “gentleman started lecturing me about how it wasn’t possible to help ‘these people,’ referring to subprime borrowers. ‘You give them a break,’ he said, ‘and they will just go out and buy a flat-screen TV.’ "
Why, in that case, Bair asked, had he and others extended loans to such poor prospects? His answer, shockingly, was this: “Bad regulation.”
So there you had it, straight from the heart of U.S. capitalism. It had been okay for the masters of the universe who filled that conference room to shovel out millions of mortgages to people who clearly couldn’t afford them because no one in the regulatory community had told them to stop....so much for the self-regulating market.
As for Bair herself, she shows how these experiences influenced the evolution of her own thinking:
Up to that point, I had approached loan modifications in the abstract, from a macroeconomic standpoint: we needed to get the loans restructured to minimize losses and prevent unnecessary foreclosures that would hurt the housing market. Here I was confronted with the human tragedy of the subprime debacle. I tried to be calm and reassuring, but the desperation in the faces looking up at me made me want to break down and cry.
She didn’t, of course. Officials don't cry in public. But she cared enough about those people to tell us about them and how deeply she felt for them. What ambitious high level male figure would have put such feelings in print, asuming he had such feelings, assuming he’d think that caring about people would be perceived as a strength, not a weakness, for a decision-maker, which I doubt.
Not A Buddy Movie!
Bull by the Horns makes it clear that Bair and Andrew Ross Sorkin did not hit it off very well, but I’m not so sure that Sorkin’s blindness is personal or ideological. It's deeper, and he gives himself away in the framing of his story about filling the top positions at the Fed and Treasury. Look at the beginning. Look at the end.
Here's the clincher for the introduction: “The one-two punch” of openings at Treasury and the Fed is like the need to cast “important” roles in a “buddy movie.”
And here's his conclusion: “Whoever gets these two roles, let’s hope this buddy movie isn’t too much of a thriller.”
With such a frame, there’s not the slightest chance that a female candidate, be she Janet Yeller, Sheila Bair or any other woman, will receive serious consideration.
Did anyone else notice this?