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The Biggest "De-Regulator" Of Them All

Mike

Well-known member
Rubin protégés change their tune as they join Obama's team
By Jackie Calmes

WASHINGTON: It is testament to former Treasury Secretary Robert Rubin's star power among many Democrats that as President-elect Barack Obama fills out his economic team, a virtual Rubin constellation is taking shape.

The president-elect's choices for his top economic advisers — Timothy Geithner as Treasury secretary, Lawrence Summers as senior White House economics adviser and Peter Orszag as budget director — are past protégés of Rubin, who held two of those jobs under President Bill Clinton. Even the headhunters for Obama have Rubin ties: Michael Froman, Rubin's chief of staff in the Treasury Department who followed him to Citigroup, and James Rubin, Rubin's son.

All three advisers — whom Obama will officially name on Monday and Tuesday — have been followers of the economic formula that came to be called Rubinomics: balanced budgets, free trade and financial deregulation, a combination that was credited with fueling the prosperity of the 1990s.

But times have changed since then. On Wall Street, Rubin is facing questions about his role as director of Citigroup given the bank's current woes. And in Washington, he and his acolytes are calling for a new formulation to address the global economic crisis that Obama will inherit — and rejecting or setting aside, for now, some of their old orthodoxies.

Instead of deregulation, Obama has sworn to usher in a period of re-regulation, to avoid the freewheeling risks that Citigroup and the rest of the financial industry undertook after Rubin, with Summers, helped tear down the regulatory walls between banks, brokerages and insurance companies, and freed them to trade in unregulated and little-understood derivatives worth trillions of dollars. Geithner spent his first years as president of the Federal Reserve Bank of New York seeking ways to at least monitor those markets better.

Obama reaches out to RepublicansU.S. job centers see a growing number of people in needVenezuela voters hand Chávez proponents several key defeatsInstead of balancing budgets, the Obama team will be going deeper into debt for at least two years by spending hundreds of billions of dollars more to stimulate the economy, without concern for deficits, for aid to the jobless, states and cities; tax cuts for workers; and job-creating construction of roads, schools and other public works. Nor, given the downturn, is Obama expected to try to quickly bring in more revenue by repealing the Bush tax cuts for those making more than $250,000.

Summers, who may well end up being Obama's closest economic adviser, has been especially public in calling for a big stimulus package. Many saw his touch in Obama's call this weekend for the stimulus plan to create or save 2.5 million jobs.

"Everyone recognizes that we're looking at deficits of considerable magnitude," said Jared Bernstein, an economist at the liberal Economic Policy Institute. "Whether it's Bob Rubin, Larry Summers or the most conservative economist, that is a widely shared recognition."

Liberals like Bernstein had long had an aversion to the kind of centrist economic policies of the Clinton years, which they felt were too concerned with deficit reduction and not focused enough on investment programs for labor and the middle class.

But Bernstein's past differences with Rubin have so softened that the two men recently wrote a column together about their new common ground on spending, regulation and trade protections for workers.

As for Summers, he has "truly evolved," Bernstein said, based on his reading of Summers's columns in the Financial Times this year. Both men have been advisers to Obama, and at a recent meeting, Bernstein recalled: "I told him, 'Boy, Larry, your views on trade, on income inequality, on stimulus spending, they're approaching ours at EPI.' And he sort of huffed and puffed, and said, 'Oh well, changing circumstances.' "

Yet Rubin critics remain, mostly in Obama's own Democratic Party among liberals and union members who favor even more domestic spending and more protectionist trade policies.

"What worries me is there is not one person in the senior group who is the outsider to this club," said Robert Kuttner, a colleague of Bernstein's at the liberal Economic Policy Institute who has written a book, "Obama's Challenge," about approaches to the economic crisis. "Where is the diversity of opinion in this economic team?" Kuttner asked.

Yet even Kuttner has warmed to some he calls Rubinistas. He praises Geithner for not hailing from a Wall Street investment bank and for being "among the toughest on the need to re-regulate" the financial industry from his perch at the New York Federal Reserve.

Kuttner calls Summers brilliant and notes that he has been out front in proposing big stimulus spending. But he disapprovingly noted that in recent meetings of economists advising congressional Democrats, Summers has argued against restricting banks' ability to issue dividends to stockholders as a condition of receiving federal bailout money.
 

Sandhusker

Well-known member
Before the election, weren't the libs here wailing and moaning about all the problems the deregulators caused and how we needed a "change"? You would think they would be upset for getting hoodwinked....
 

Steve

Well-known member
Big Muddy rancher said:
"director of Citigroup"

The bank that needed a 20 billion dollar bail out TODAY?

The same bank that was trying to buy Wachovia a month ago?

How do you go from getting a bail out.. to trying to buy another bank,... to needing another bailout?
 

TSR

Well-known member
Steve said:
Big Muddy rancher said:
"director of Citigroup"

The bank that needed a 20 billion dollar bail out TODAY?

The same bank that was trying to buy Wachovia a month ago?

How do you go from getting a bail out.. to trying to buy another bank,... to needing another bailout?

And did I not hear they would get or got the money?? I mean do we have stipulations on how they can use that money, with those stipulations being closely monitored? :shock: At the same time we are asking/demanding the big 3 auto makers adhere closely to the guidelines set forth by Congress OR they dont get anything. BTW I am all for those guidelines but guidelines should be for everyone that gets the money.
 
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