Great observation from Jeremy Grantham of GMO.
One can only admire Bob Rubin’s ability to retain influence and have his protégés in powerful positions. Rubin is the guy who was last seen exhorting Citibank to take more leverage and keep swinging.
His man Summers has proven he has some bite. He runs no risk of being on any of the many lists of people who gave clear warnings of potential financial disaster. And dozens did. Summers was
emphatically not a whistleblower. He did not rail against falling financial standards. What he did, with his allies Greenspan and Rubin, was beat back a heroic attempt in late 1998 by Brooksley Born, then boss of the CFTC in Chicago, to supervise OTC derivatives.
Obama appointed Gary Gensler to lead the CFTC. Gensler has a good reputation, but was hired into Treasury by …you’ve guessed it … Robert Rubin.
And as for Tim Geithner! He was, if anything, a cheerleader, and wrote in support of the new era of “Great Moderation.” He, however, was not picked by Rubin. No, he was picked by ummers, who was picked by Rubin. These guys are very, very loyal!
What a missed opportunity this all is. Obama was given a mandate that could have included some serious bottom kicking. We could have quickly taken quite a few steps down the long road leading to a credible financial system deserving of respect. The time to do that was now.