The views expressed in any article published in this blog are the author's own and do not necessarily reflect the views of Joseph Foster or Bob Lupoli.

Monday, February 6, 2012

U.S. Treasury's Revolving Door & Chrysler

Joe: in the article below, more support for the argument I’ve been making about the revolving door. There isn’t a professional, uncorrupted bureaucracy in place that serves America’s interest. By the way the financial geniuses in the U.S. government lost 1.3 billion in Chrysler’s so called investment. (July 2011) -Bob

US Treasury: Manhattan transfer
Rapid staff turnover is raising fears that the department is precariously short of seasoned professionals
Revolving door: clusters of Treasury staff have moved together to financial companies such as Ernst & Young

. . .
Today, among the senior ranks, the revolving door between the Treasury and Ernst & Young is more frequently used than the one between the department and Goldman Sachs – the most famous relationship between finance and politics of recent years. Goldman gave the government Mr Paulson, its CEO, and another senior banker, Mark Patterson, who became Mr Geithner’s chief of staff and now manages the bewildering array of departures and arrivals.

The connection with Goldman – which, through regulatory and congressional investigations, drew more unwanted attention after the crisis than any other – is not extinguished, however. Not only is the bank in discussions with Mr Siewer, the former Treasury official; the traffic runs both ways. In an appointment that largely escaped public attention, the Treasury last year hired Tim Bowler, a Goldman managing director, to work in its capital markets division on reforms such as the ban on proprietary trading, which is causing headaches at his old firm.

Other high-ranking lieutenants have also left, some for big private sector financial roles, raising questions about the ranks of talent that remain. “I look at the people who I thought were really smart and really accomplished during the time I was there – they are all gone,” says another former official. “And I don’t see them replaced by comparable people.” Mr Wolin counters: “This current team is the strongest I’ve seen. Anybody who suggests otherwise simply doesn’t know Treasury or the depth of our talent.”

Jeffrey Goldstein, who was in charge of financial regulation, has returned to his old employer, Hellman & Friedman, the private equity firm. HSBC, the UK-based bank under investigation by US authorities for alleged money laundering offences, has hired as general counsel Stuart Levey, who until last year ran the Treasury’s anti-terrorist finance division.

The Treasury notes that many senior officials, such as Mr Wolin, are still in place. But Mr Geithner’s closest advisers often hold vague and flexible titles such as “counsellor” – and of these many have gone. Lew Alexander has joined Nomura, the Japanese bank; Lee Sachs has set up BancAlliance, a lending platform for community banks; Jim Millstein, a former Lazard banker who led the restructuring of American insurer AIG, has established his own firm, taking a cluster of Treasury colleagues.
Even if the revolving door still exists, the Treasury says it is less damaging than in the past. “This president and this administration have – more than anybody before – put in place rules to make sure that people who leave don’t take advantage of their service in their future work,” says Mr Wolin.

For all the departures, there is one constant: Mr Geithner himself. The Treasury secretary survived a barrage of calls for his head in the first two years, gradually closing the gap between the confident and laconic private persona and his initially lightweight public image.
However, he has stayed this long only at the urging of the president, according to people close to him. Even if Mr Obama wins a second term, his Treasury secretary is likely finally to join the exodus.

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