Treasury hire’s gotta know The Street
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Kai Ryssdal: For the political class the best game in Washington right now is trying to guess who’s going to get which high-level job come this January. We’re not talking about principal deputy secretary of anything here. There’s one job right now that’s first among equals. Commentator John Steele Gordon offers this set of qualifications.
John Steele Gordon: At the beginning of the new administration, the second most important job will be that of Secretary of the Treasury.
So who should get that job? I hope the President-elect chooses someone with long and deep experience in the financial industry, not an economics professor or a career government official.
Theoretic knowledge or expertise at playing the bureaucratic game are all well and good, but what is needed right now is what Henry Paulson had in spades: boots-on-the-ground experience with how the financial system works in the real world. Paulson spent 32 years with Goldman Sachs, climbing the greasy pole all the way to the chairmanship. He knew Wall Street and the banking business inside out. This proved invaluable when the crisis came.
Many blame the private financial sector for the current economic problems. But even if that were true, experience there shouldn’t be qualifying. Indeed, it would be a plus.
When the Securities and Exchange Commission was established in 1934, FDR chose Joseph P. Kennedy as its first Commissioner. Kennedy had made millions manipulating stocks in the anything-goes 1920s and amassed a larger fortune shorting stocks as they plunged into the abyss of the Great Depression.
The left was horrified at Roosevelt’s choice. Newsweek wrote that “Mr. Kennedy . . .former speculator and pool operator, will now curb speculation and prohibit pools.” The Senate delayed his confirmation to see what he would do on the job.
At the end of six months, it quietly and unanimously confirmed him for the excellent job of getting the SEC on its feet. Kennedy, you see, knew where the bodies were buried, where market tactics were good for insiders but not for the system as a whole. Kennedy knew what reforms were needed.
That’s exactly the sort of person we need at Treasury right now: a fox who knows the weak spots in the hen house.
Ryssdal: John Steele Gordon is a financial and business historian. His most recent book is called “An Empire of Wealth.”
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