Inside Obama’s Economic Brain Trust

Good John Heilemann piece on Obama’s economic brain trust. The Volcker section is particularly well-drawn:

Paul Volcker, you might think, would have some helpful ideas on that topic. On March 13, Volcker met Obama in the Roosevelt Room of the White House. Accompanying him were a half-dozen of Obama’s closest private-sector confidants, all members of the Economic Recovery Advisory Board that the president unveiled in February and that Volcker chairs. There was former SEC chairman William Donaldson, TIAA-CREF CEO Roger Ferguson, private-equity hotshot Mark Gallogly, hotel magnate Penny Pritzker, Yale CIO David Swensen, and UBS Group Americas CEO Robert Wolf.

Afterward, Obama would describe the meeting, with pristine vagueness, as being a discussion of “a wide range of issues, but with some particular focus on the financial markets.” In fact, the conversation revolved almost exclusively around the banks: how to get the toxic assets off their books and whether solving the financial crisis might require nationalizing some of them. Some were pro-nationalization; most were not. But Obama questioned all of them closely on the matter, pressing them for scenarios of what might unfold if the government went that far.

For Obama, the substance of the meeting may have been less important than the optics of it. In the worlds of finance and business, few figures are held in higher esteem than the towering, stoop-shouldered, marble-mouthed Volcker. So it has hardly gone unnoticed that he has lately seemed, ahem, less than thrilled with Team Obama. He has privately complained that Summers has frozen him out of the policy-making process. He has publicly criticized the sluglike pace of filling top jobs at Treasury as “shameful.” With the White House meeting, Obama had a chance to make Volcker happy—and in the process use him as a piece of photo-op arm candy, sending the message that the chairman remains standing, literally and figuratively, beside him.

Was Volcker placated? Maybe only momentarily. “He wants to have a real role,” says someone who knows him. “If they’re gonna call him an Obama adviser, he wants to really advise. He has no interest in just being window dressing.”

And here is a quick clip of how Paul Krugman is apparently viewed:

Obama’s economic advisers wave off such talk. They dismiss Krugman and other pro-nationalizers as engaging in mere punditry, of failing to grasp the mind-boggling practical complexity of nationalizing a bank such as Citi, with its 350,000 employees in more than a hundred countries around the world. Geithner is said to be averse to the idea—though some think Summers may be somewhat more open to it. Last July, in his former Financial Times column, Summers argued that the government should put Fannie Mae and Freddie Mac into receivership, “conserving cash for the benefit of taxpayers.” “All I can tell you,” says one administration official, “is that Larry seems quite happy with this part of the policy portfolio being known as the Geithner Plan.”

Related posts:

  1. Volcker Thinking of Going Fly-Fishing?
  2. Just Let Larry (Summers) Be Larry (Summers)
  3. Volcker vs. Bernanke. Economist Deathmatch.
  4. Larry Summers to Harvard: Brrrzzzzt!
  5. In Remittances, We Trust