Marketplace Scratch Pad

Bloggers have cookies at the Treasury

Scott Jagow Nov 5, 2009

Thought you might like to read about a somewhat strange meeting at the Treasury Department this week. Treasury officials invited eight financial bloggers to come have a chat.

Don’t worry, they didn’t fly them in or anything. A plate of cookies was as far as the government freebies went.

Among the bloggers who attended: Tyler Cowan of Marginal Revolution, Yves Smith of Naked Capitalism, Michael Panzner at Financial Armageddon and Kid Dynamite.

Steve Waldman at Interfluidity had the most captivating write up about it. He says the Treasury officials wanted to clear some things up: the stress tests were real and not negotiated with banks. The regulatory reform proposals are real and will make a big difference. The people at the Treasury are sincere and hard-working, and they care about the public. The Treasury still anticipates some tough going with the economy, but it is prepared to handle what may come. However bad our problems are, Europe is worse off. Things like that.

The bloggers each asked some questions, and some tough ones by the sound of it, but they didn’t get much in the way of real responses from Treasury officials. Here’s what I found most compelling from Waldman’s account:

This is just my impression, and I may be mistaken, but I got the sense that they do this kind of thing frequently, these rolling meetings with some group of people whom it is important to treat as important, but whose conversation they don’t necessarily value all that much — people who are there to be “brought into the tent”…

Twice Treasury officials commented on how uncommon a group we were, how we asked particularly pointed questions or were unusually bright. To borrow a cliché, I’ll bet they say that to all the groups. One official made use of an expletive early in his discussion, which had the effect of making us feel like insiders, like this was not the sort of canned, guarded conversation one might see on CNN.

Another comment from Michael Panzner, writing for The Huffington Post:

The meeting appeared to confirm the strong grip that Wall Street has on the levers of legislative power. In response to a throwaway remark by one of the bloggers present that discussions about the overly large size of the financial sector relative to the real economy were “not politically correct,” one official suggested the reality was just the opposite, and that a substantial majority of the public agreed with that assessment.

If you take that together with the assertion that the Treasury — and, by extension, the Administration — is fully committed to financial reform, as well as the fact that the Democrats dominate Congress, the implication is that other forces — namely, the moneyed interests and their lobbyists — are standing in the way of necessary change. Nothing new there, I guess.

Waldman also picked up on that idea of relationships and how they can distort or influence people. While he valued getting this opportunity to go inside the Treasury, he
might not want to go back:

Corruption thrives where there is a tension between institutional and interpersonal ethics. There is “the right thing” in abstract, but there are also very human impulses towards empathy, kindness, and reciprocity that result from relationships with flesh and blood people. That, aside from “cognitive capture”, is why we should be wary of senior Treasury officials spending too much time with (JP Morgan CEO) Jamie Dimon.

It is also why bloggers might think twice about sharing a conference table with masters of the universe, public or private. Although the format of our meeting did not lend itself to forging deep relationships, I was flattered and grateful for the meeting and left with more sympathy for the people I spoke to than I came in with. In other words, I have been corrupted, a little.

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