Monday, 24 November 2008

Obama's Treasury Secretary

Tim Geithner is an Obama man through and through. In temperament that is. Calm, razor sharp, diplomatic, consensual, the qualities that lend themselves to working with the President-elect. The announcement to be made today that Geithner will be Treasury Secretary with his former mentor, Larry Summers working alongside him as Chairman of the National Economic Council marks a heavyweight economic team to deal with heavy economic times. The National Review had a good biographical piece on him a couple of weeks ago.

People will know Larry Summers as former Treasury Secretary under President Clinton and Deputy Treasury Secretary in the Robert Rubin years (and current FT columnist.) Does this mean a return to the fiscal and economic conservatism of those years? No, the Rubinites are not quite so Rubinite anymore (see James Crabtree in the latest edition of Prospect.) In fairness, Rubin never had to contend with anything of the magnitude of the current economic crisis so quite how he would have responded is not clear. Just look at the change in posture of our own Prime Minister which will be confirmed in a breathtaking Pre-Budget Report today; a moment that could define the next election.

Actually, that Rubin instinct will become invaluable further down the line. These times, given the rapid and bold response that we've seen both sides of the Atlantic, should not continue indefinitely. While a new regulatory impulse will be needed to help to avoid or diminish the impact of future crises of this nature, a more fiscally conservative approach will become inevitable, even critical, as the economy recovers.

Geithner's regulatory experience as President of the Federal Reserve Bank of New York, his experience in the Clinton/ Bush I Administrations and his sharp end focus on the current financial crisis in both the Bear Stearns and Lehman Brothers emergencies should be invaluable.

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