That's $135,000 paid by Goldman Sachs to Summers -- for a one-day visit. And the payment was made at a time -- in April, 2008 -- when everyone assumed that the next President would either be Barack Obama or Hillary Clinton and that Larry Summers would therefore become exactly what he now is: the most influential financial official in the U.S. Government (and the $45,000 Merrill Lynch payment came 8 days after Obama's election). Goldman would not be able to make a one-day $135,000 payment to Summers now that he is Obama's top economics adviser, but doing so a few months beforehand was obviously something about which neither parties felt any compunction. It's basically an advanced bribe. And it's paying off in spades. And none of it seemed to bother Obama in the slightest when he first strongly considered naming Summers as Treasury Secretary and then named him his top economics adviser instead (thereby avoiding the need for Senate confirmation), knowing that Summers would exert great influence in determining who benefited from the government's response to the financial crisis.
That speech would, of course, have been arranged months before April 2008, when no one knew who was going to be the Democratic nominee, and more importantly, when Larry Summers was still widely assumed to be tainted by his disastrous departure from Harvard. Basically, the financial crisis rehabilitated his political career, just as it was killing Bob Rubin's. They weren't paying him an advanced bribe. They were paying him because A) Larry Summers is really, really smart B) He knows a lot about global financial markets and C) Bankers, like everyone else, like to be near famous and powerful people. Larry Summers is the Brangelina of finance.
In fact, Larry Summers is exactly what we ought to want in a Treasury Secretary: a lifelong academic with no vested interests in the financial system. Following his tenure in office, Summers retreated to a University Presidency, not a lucrative job in finance. He went to DE Shaw to make money only after the Harvard debacle, when he (and everyone else) had concluded that there was no possibility he was going to occupy a prominent political role again. There's no reason to think he is guilty of any ethical breach; in fact, he went to great lengths to avoid any potential for one, until it seemed moot.
There are legitimate questions about whether government officials should be allowed to take money by essentially auctioning off the prestige of their office to private sector jobs and speaking engagements--but Greenwald isn't asking them. And there are real problems with the fact that the greatest experts on financial markets are the people who participate in them--but Greenwald doesn't name them. Instead he retreats into the crudest sort of conspiracy theorizing.
But the relationships between business and officialdom don't work that way--they're subtler, and therefore more insidious. The most upright banker in the world cannot overcome the subtle ways his thinking has been shaped by the culture and the people he operated with. The conundrum of the Wall-Street-Treasury nexus is not one that can be cracked by an investigative journalist. It wants a sociologist or an anthropologist to interrogate its insidious operations.
I tend to think Greenwald's heart is the right place, but he gets too aggrieved about small things. If things don't go exactly the way he thinks they should in the timeframe he insists upon, there is always a sinister reason why it didn't happen. He doesn't like the way Obama is handling the economy, so it must be because Summers gave a paid speech at GS a year ago.
He's certainly entitled to ascribe such theories however he wants, but that doesn't mean people won't tire of them. He needs to chill out a bit.
If Greenwald isn't the most obnoxious blogger in the world, he's certainly in contention.
I generally agree with Megan is saying. However, Greg Mankiw did point out today that the NY Times claimed that Summers was doing consulting work for Taconic Capital while president of Harvard which does seems problematic and does weaken the apparent claim that DE Shaw was when Summers started cashing in in finance.
It's well-established Glenn Greenwald is utterly devoid of intellectual honesty, so I wouldn't spend a lot of time worrying about his criticisms. He's sort of a bitchier, less-funny mirror version of Ann Coulter.
Not quite related: The Odyssey on Twitter.
Greenwald ever made a point in 500 words or less? Jesus.
My thought exactly. The para Megan highlights is 50-100 adjectives short of its full Greenwaldian quota.
Perhaps he has hired an editor?
...his post on Larry Summers displays not only ignorance, but a total lack of awareness of any gaps in his understanding.
You were expecting something else from Sock Puppet Boy, Megan?
I totally disagree with the above commenters regarding Greenwald, who I generally find to be excellent. I can understand (though not agree) with arguing that he's consistently wrong, to equate him with Coulter is idiotic.
And while I think that MM's final point (would take a sociologist or anthropologist) is intriguing, I question whether (1) the general consensus was that Summers's political future was zero, and (2) his presumed impartiality with no vested interested in the financial system. It's certainly fair to say that he has no vested interest in any one firm, but my priors (accurate, based on what we've seen the past few months) would be that he's very vested in maintaining the system at status quo ante.
He does exactly the same thing Coulter does: serve up disingenuous red meat to an audience that laps it up. But Ann at least manages to be concise and seems to understand she's not being 100% serious, whereas Glenn uses about 10 many times as words and takes himself so seriously he went around the Internet telling everyone how great he was using various sock puppets.
Instead he retreats into the crudest sort of conspiracy theorizing.
That is, of course, Greenwald's entire schtick. I don't liken him to Ann Coulter, who is more nasty and vicious; rather to Rush Limbaugh, for the self-righteous bloviation driven by an unequal measure of partisan hackitude and pomposity. Though they are both smart and sometimes hide important insights in those piles of ... words.
Megan's last paragraph isn't entirely on point. Certainly the right investigative journalist can delve fruitfully into Summers' background and examine it in the context of the financial industry(ies), regulation, and the like. Where you need an anthropologist is for systematizing and analyzing the structural relationships involved, which is a much bigger project.
Gene, that's only remarkable if you assume that Summers' version of the status quo ante (which isn't really all that quo ante) isn't better than alternatives.
The speaking fee it paid to Larry Summers is just one data point among many indicating that Goldman Sachs has exerted considerable influence over the government's response to the financial crisis. There are other data points: the high speaking fees given to other politically connected individuals (e.g., Bill Clinton, back when Hillary was favored to be the Dem nominee), the presence of Goldman Sachs alumni in key government positions, the long mentor relationship a former Goldman CEO had with the current Treasury Secretary (and former NY Fed president), the alacrity with which that NY Fed president approved Goldman's request to become a bank holding company (versus the negative response to Lehman's previous request), etc.
Meanwhile, while the Ivy League alumni at Goldman have relied on government beneficence over the last year to stay in business, Michigan State dropout and self-made billionaire Andy Beal, who avoided the excesses of the credit bubble, is buying up toxic assets on his own, without any government subsidy. Too bad bankers like Beal don't seem to have any influence on government policy.
Don't look now, but another columnist is engaging in "conspiracy theorizing" about the influence of Goldman Sachs on the government bailout policy. In his MarketWatch column today David Weidner wrote,
As I noted elsewhere ("David Weider Brings the Crazy") today, Weidner is raising the same questions Maxine Waters did last month, when Tim Geithner appeared before her banking committee. At the time, Megan wrote of Waters,
Perhaps we'll have to consider MarketWatch a conspiracy site now?
Thank you for the rare, literal, LOL. I think Megan's point on Summers is valid, but it does nothing to dismiss the previous concerns that I (and many others) have had in Goldman Sachs' buddy-buddy role in the bailout.
Megan has never addressed this in any serious (or specific) fashion (barring batting away softballs thrown by weirdos like Maxine Waters and Glenn Greenwald), but, thankfully, she's getting closer:
Once again, it's not a conspiracy, it's a network.
Once again, it's not a conspiracy, it's a network.
The problem isn't that "the greatest experts on financial markets are the people who participate in them". John Hussman is an expert who participates in the financial markets. So is Andy Beal. I think it would be great if Dr. Hussman and Mr. Beal were advising the government -- after all, these are experts who avoided the huge losses most "experts'" firms suffered recently, and who haven't required any taxpayer bailouts. Who better to offer the government advice: them, or those associated with Goldman Sachs, a firm that likely wouldn't have survived last year without the "run of fortune" David Weidner described? The problem is that Hussman and Beal apparently aren't tied into the Wall Street-D.C. loop.