Foxes guarding the White House

When President Obama named his economic team last November, it was nothing but praise from the corporate media. For instance:

... I was thrilled to hear yesterday about the dream-team pairing that will make Geithner Treasury Secretary and Summers a top White House adviser. Geithner is one of the most able technocrats to have risen through Treasury’s ranks, which makes him the perfect pick to run its sprawling bureaucracy; Summers is one of the top two or three economic minds of his generation, which makes him a guy you want in the room with the president.

But, beyond the pairing of person and job, it's the way these guys complement one another that's really key here. [Tim] Geithner is the rare bureaucrat with the smarts and the self-confidence to effectively challenge [Larry] Summers when he’s off base. -- Noam Scheiber for The New Republic

or

Has any incoming Democrat had such a confidence-inspiring menu of choices [in Geithner, Summers and Paul Volcker]? If Mr Obama is spoiled for choice, he may want to grit his teeth and thank Bill Clinton. -- The Economist

What went underreported at the time was the role that Geithner and especially Summers played in de-constructing the regulatory environment that turned seemingly every hedge fund on Wall Street into a casino.

So, it's interesting to see how the last 24 hours or so have unfolded.

We wake up on Sunday to see Summers on the Sunday morning talk shows bemoaning the fact that we can't get rid do anything about those bonuses, 'cause, you see, there are these legally-binding contracts, and we're a nation of laws. His poor little ole hands are just tied.

Summers on CBS's Face the Nation: It is outrageous. The whole situation at AIG is outrageous. What taxpayers are being forced to do is outrageous.

But as the president said in his State of the Union address, you can’t govern out of anger. [Ed: That was your takeaway, Larry?] And if we simply throw up our hands, refuse to deal -- refuse to deal with any of this, well, we’ll have the kind of financial catastrophe that we saw after what happened at Lehman Brothers.

Now, it’s a very complicated situation, but the essence of it is this. Secretary Geithner has negotiated very forcefully with AIG. And he has done everything that is legally permissible for the government to do to limit the payment of bonuses. But where there are contracts, binding contracts that were entered into long before the government put any money into AIG -- we’re not a country where contracts just get abrogated willy-nilly. And if we were to start doing that, there would be potentially very, very destabilizing consequences.

You know, everybody talks about how we got to plan with certitude on which people can rely. Unfortunately, it’s just not a tenable option to start abrogating contracts. What the lesson of this is, is that we don’t really have a satisfactory regulatory regime in place. [Ed: And you would know, now, wouldn't you?] Not a satisfactory regulatory regime to have prevented something like this, and not -- and this is something Secretary Geithner will be pushing very hard in his discussions with Congress -- a so-called resolution regime that will enable, in the event that we see a mess like this again, the government to have the kind of broad legal authorities that would enable a resolution without some of the kinds of highly problematic payments that we’re seeing from a company like AIG.

If you threw up in your mouth a little at that, you're not alone. The President was "choked up with anger" about the "recklessness and greed" indicated by that $165 Million $450 Million in bonuses:



And now, Obama has "ordered" Geithner to "pursue every single legal avenue to block these bonuses."

Seems to me, though, that -- and whatever the mainstream press had to say about it -- Obama shouldn't have hired Geithner and Summers to begin with. I wouldn't be surprised to learn that Summers was motivated to say that there was nothing -- nothing! -- that could be done about those bonuses and their supposed "contractual obligations" to preemptively end whatever debate was occurring behind closed White House doors. At any rate, though, he did the administration no favors by seeming to side with AIG over taxpayers. The Obama White House is fortunate few actually watch CBS's Face the Nation.

It was said that Geithner's and Summers' deep Wall Street ties recommended them for the President's economic team: the two "knew where the bodies were buried." How about having the two, then, pick up a shovel or two and commence with the digging? I rather think that the American people have shoveled all the shit that they need to shovel.