Obama has named his economics team. Marquee names: Christina Romer at the CEA, Larry Summers to head the NEC, and Tim Geithner of the New York Fed for Treasury Secretary.
All of these people are sterling choices . . . except for Geithner. And Geithner is wrong not because he won't be a good Treasury Secretary, but because he's such a very good president of the New York Fed.
Within the Federal Reserve system, New York is special. New York has been the financial capital of the country as long as we've had a Federal Reserve, and its Fed chief therefore plays an extremely important role in the system. All Fed presidents are equal--but one is a little more equal than the others. You can make a convincing case that the power vacuum at the New York Fed that followed the death of Benjamin Strong in 1928 substantially impaired the response to the emerging crisis.
That makes this a pretty delicate time to lose your Fed chief. I understand the counterarguments--having Geithner in at Treasury means he will hit the ground running. That's why I'm not too worried. Still, I wish that list had Summers at Treasury and Geithner right where he's always been.
Update: Felix Salmon points out that the leaking could have been handled a great deal better. Indeed. The Obama team is unnecessarily (I hope) make it look like they're dithering, testing the waters for popularity rather than competence.
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Megan,
Now that Obama has named his economics team, is your level of regret still mounting?
Just her level of regret about premature expressions of levels of regret. Oh, that's right, that's all the Obama team's fault for dithering. Not.
With all of the ties back to past Clinton administrations, they're clearly putting wet fingers in the air and trying to gauge which way public opinion is going to blow for all of these decisions........and to think we could've had the real thing if THAT's what we'd wanted......
Didn't Romer write a study in the 90s of the right and wrong things Roosevelt did to fight the Depression? Presumably that makes her a good fit . . .
You can make a convincing case that the power vacuum at the New York Fed that followed the death of Benjamin Strong in 1928 substantially impaired the response to the emerging crisis.
However, since the Banking Acts of 1933 and 1935 substantially restructured the Fed, concentrating more power centrally in the Board of Governors, the role of the President of the FRBNY isn't quite as crucial as in 1928-29.
Eriver: Yes, Christina Romer has done some significant research on the Great Depression. When I was in grad school, I attended a seminar at UCLA where she presented one of her papers.
No, yes, I agree, but it's still a pretty central hub in this crisis.
On his performance so far, considering the near total wipeout of all those big financial firms headquartered in his bailiwick (something the man didn't even warn us about, much less try to prevent*) just why do you say Geithner is so great?
*Prevent earlier, that is, not "rescue" after the damage was done.
Do I hear a jealous lament? Everyone agrees he is good at his current role, but thats the thing about moving up, never can be too sure if you can do just as well in a higher position as you did in the previous one.
Maybe I'm crazy, but wasn't a minor plot point in the Clancy novel "Debt of Honor" that the president of the NY Fed was killed in order to exacerbate a financial panic?
Veracitor,
What you seem to misunderstand is that the Fed was not the regulator of investment banks like Bear and Lehman. The SEC was responsible for overseeing investment banks. When it was clear that SEC chief Chris Cox wasn't going to take action when Bear and later Lehman faltered, Bernanke and Geithner stepped in to fill the void -- without waiting for legislative changes.
Of course legislative change now may be unnecessary, since the remaining large investment banks, Goldman Sachs and Morgan Stanley, converted to "commercial" banks (and Merrill sold itself), and therefore now fall under the auspices of the Fed. The SEC remains responsible for the remaining IBs, but most are tiny in comparison and therefore offer no systemic risk to the system should they fail.
Was Citibank an investment bank? Was Washington Mutual? (admittedly not headquartered in NY). Anyway, Biz Reporter, you have yet to explain why we should think Geithner is so great. What warnings did he issue-- what actions did he take-- before the house of cards fell in?
Geithner may be a perfectly good Fed bureaucrat, the sort who is personable as well as ambitious and smart enough to excel at standard assignments in the bureaucracy, always being sure to keep the boat on an even keel, of course...
But, our excellent hostess hailed Geithner as a particularly excellent Fed chief. Pish. I could hand out money to Goldman Sachs as easily as Geithner. I want a "very good [NY Fed] president" to do something special. Like, you know, help avoid handing hundreds of billions over to the already-proved-to-be-utterly-incompetent* existing managers of failed financial firms.
*Incompetent, that is, at running public companies, though very competent at lining their own pockets.
Geithner is just another insider helping to forward the World Bank/NWO agenda to devalue the US dollar so that it eventually collapses, thus paving the way for the Amero. After Obama declares war on Iran or Russia, this won't be far off. It will happen before 2012! Geithner will declare a "Force Measure" and the dollar will be history, just as it happened 150 years ago when the first Rothschild power grab stole American's hard-earned money. Hello? Does anyone read history books anymore????? It's time to wake up, dissolve the FED, reform the IRS, and print our own money--BEFORE IT'S TOO LATE!