Adam: Hi, Frank. So there’s a little commotion about this new book Confidence Men, by Ron Suskind, which is being published on Tuesday. And as it happens, you and I have actually read it! So let's talk about that this week. To give readers a super-fast overview, it’s a book, essentially, about Obama’s economic team during his first two years in office. The news of the book, according to some reports, is that Tim Geithner was insubordinate to the president, pursuing his own pro-banker agenda. Or, according to other reports, that Larry Summers was insubordinate to the president, pursuing his own well, monomaniacal agenda. I’d add that it’s also about Rahm Emanuel being insubordinate to the president, just because. Basically, it’s about the presidency being hijacked by these three guys. And the guys thing is important because they’re pretty awful to women. Anyway, they’re the villains. Paul Volcker, Christina Romer, and Elizabeth Warren are the heroes. Bankers win, America loses. Did I get that right?
Frank: Hi, Adam, and yes, you did! I would point out that among the other heroes are more women (Sheila Bair, Brooksley Born, Maria Cantwell) and at least one man, the Princeton economist Alan Krueger, who also seems to be a serious Suskind source and who has now returned to the White House to succeed Austan Goolsbee and Romer as head of the Council of Economic Advisers. Not that that will do any good. I think the portrait of Geithner is devastating his countermanding of the president's wishes to make a Wall Street object lesson of Citigroup, his nasty "Elizabeth Warren strategy" to silence and neuter the administration's rare genuine reformer. And yet Geithner is the only member of the original economic team still standing in the White House, poised to countermand any other rare independent voice that might yet speak up, like Krueger's.
A: You think the portrait of Geithner is more devastating than the one of Summers? I guess. In that instance you cite, Obama asks to put the dissolving of Citibank on the table, and Geithner simply ignores him, "walking back" the decision, in political parlance. More insidiously, he creates the framework, borrowed from Hippocrates, of "first, do no harm," which effectively cuts off any bold reforms for fear of their potential effects on the market. But Summers is portrayed as an egotistical nut job, single-mindedly determined to get Bernanke's job; when he doesn't get it, he goes bananas. He is supposed to be a conduit for the collective advice of the team, but undermines his colleagues, only passing along advice and information that supports his positions. I was kind of stunned how many officials were willing to go on the record against him.
Peter Orszag relays this eviscerating quote that Summers said to him about Obama during the worst of the economic distress. According to Orszag, Summers says, "You know, Peter we're really home alone. There's no adult in charge. Clinton would never have made these mistakes." Later, Orszag says to Suskind, "Larry just didn't think the president knew what he was deciding. Was this [obstruction of the president's wishes] outright and willful?" In other words, asks Orszag, was Summers saying, "I know more than the president flat-out? That strikes me as ... likely." In an amazing memo, Pete Rouse, who would replace Emanuel temporarily as chief of staff, recommends firing Summers for "Larry's imperious and heavy-handed direction of the economic policy process." Romer says Summers made her feel "like a piece of meat."
In the end, nobody's talking to Summers not even his crony Geithner. Furious that Geithner didn't recommend him for Bernanke's job, he stands Geithner up at a dinner for all the former Treasury secretaries Summers is the only living former secretary not there. Geithner says, "Larry would rather be in Davos than at dinner with me." At least according to Suskind, the only person who could stand Summers was Obama, which in Suskind's telling was a misjudgment that had a rather profound effect on the first chunk of Obama's presidency.
F: I guess I thought Geithner's role was more shocking just because I have become inured to tales of Summers's outrageousness, dating back to his ill-fated presidency of Harvard. Particularly damning in Suskind's narrative is that when Summers says "there's no adult in charge" in the White House, he's actually right and appoints himself as adult in charge, Alexander Haig–style. Summers was in charge, all right, but he behaved like a child and little got done except derailing the president's initiatives he even blocked Obama's agenda of tough climate-change legislation.
But the buck stops with Obama. There's a poignant moment of sorts in December 2008 when the North Dakota senator Byron Dorgan implores the president-elect not to go with his economic team. "I don't understand how you could do this," he tells him. "You've picked the wrong people!" As indeed Obama did, under the tutelage of Robert Rubin, who also tried to finagle a White House guru role for himself, not unlike the perch from which he helped wreak havoc at Citigroup during its subprime orgy. So Suskind's book often reads like Halberstam's "Best and the Brightest," with Summers and Geithner as McNamara and Bundy. But the quagmire isn't a neo-Vietnam like Afghanistan it's the economy, and the casualties are measured in lost jobs. After the stimulus bill passed in February 2009, Suskind writes, "little else happened on the jobs front for a year and a half," with proposals being "talked to death without resolution."
A: I kept flipping back and forth between fury at Obama and I know I'm easy sympathy. So much of the damage comes from the initial decision to hire these guys, a decision he had to make almost immediately after being elected. He was inexperienced, he needed help, they burned him, he let them that's the story in brief. The number of stupefyingly momentous decisions he had to make in those first few months put me in a vicarious panic. There was no obvious path, the way I read it though in your view, I suspect, the choices were clearer. Though we'll never know for sure what other solutions might have worked, the book is a litany of missed opportunities, particularly with respect to financial reform (one banker after another wonders incredulously and anonymously why Obama didn't pin them when they were down). Would some other president have had more success?
One thing you're struck with is how bizarre it is that Obama has this job in the first place. Obama feels that too and it gives him a deluded sense of his own magical powers. "Look, I feel lucky," he says. "Just look at me. My name is Barack Hussein Obama and I'm sitting here." He's cocky, but also kind of amazed. What an astonishing blend of good and bad luck the man has had the unusual cocktail of circumstances that brought him to the White House, and the pretty much impossible situation he faced when he got there. Which is not to say it's not agonizing to watch him, in the book, fail time after time to make the big, bold move the book is a narrative after all, and passivity (or, to be fair, caution), does not become a protagonist.
F: I have sympathy for him, too, and I have heard him express that (charming and genuinely modest) amazement that he ended up sitting in the White House, the most unlikely president imaginable. His turning to Rubin during the transition as he hired his economic team may have been out of some understandable human insecurity. Or was it because he's too easily impressed by the type of elite he met at Harvard? Whatever. But beyond the bad hiring choices, it was also a bad meta-policy choice, period, to put jobs on the back burner for eighteen months while pushing health care.
Suskind also nails, I think, Obama's intellectual blind spot. Indeed, Obama himself nails it, telling Suskind that he was too inclined to search for "the perfect technical answer" to the myriad of complex issues coming at him. What he'd end up with instead is, as Suskind astutely summarizes it, "clever" answers that were "respectfully acknowledging opponents' positions, even those with thin evidence behind them, that then get stitched together into some pragmatic conclusion but hollow." That said, could someone else have done better? Not the out-of-it McCain, not Hillary (an equivocator in her own right and one who would have embraced the same Clinton administration alumni and Wall Street crowd that Obama did). I still believe Obama was our best hope, and I still hope, however quixotically and self-deludedly, that he might learn from his mistakes.
A: The word "clever" surfaces in another context, when Volcker tells Suskind that Obama "seems to feel he had all he needs in the clever Mr Summers. Together they're both so very confident. He's self-confident, too self-confident." It's worth noting how wise Volcker seems at all times and indeed how wise all the truly old folk are. My favorite segment in the book is a gathering of economic mandarins at a dinner for a place called International House, in which Volcker makes a speech honoring David Rockefeller and others of his time and ilk. It's a poignant scene in which the geezers seem just appalled at what a wreck their successors have made of things. John Whitehead, former head of Goldman Sachs, says of the current one, Lloyd Blankfein: "He doesn't get it. He says I'm the CEO of the best financial services firm in the world. And if I'm CEO, I'm its head man. I deserve to be paid more than anybody else. And I'm prepared to fight for it, and boast about it. Because I'm proud of it."
We have only talked about dissension in the government ranks, but the book is also full of invective between and among bankers good guys and bad guys, ones who understand the depth of their own culpability, and ones who don't.
F: Yes, and Suskind to his credit has found some obscure heroes in the banking world along with Volcker. He also celebrates Gary Gensler, a Goldman alum and apostate who, as an Obama appointee, has mounted a lonely fight to crack down on the regulation of derivatives. Of the less appealing bankers, perhaps the bottom in Suskind's account is John Thain, the disgraced Merrill Lynch CEO, who, at the height of the bankers' emergency summit with Hank Paulson in October 2008, when it seemed the entire financial edifice might collapse, asks, "What kind of protections can you give us on changes in compensation policy?" So called financial "leaders" like this, who put their greed before their country (let alone their shareholders) at a time of crisis and whose lax ethics buried the world's economy under an avalanche of toxic "financial instruments," should have to answer to a higher authority than the press.
A: Thain is not just a greedy thug in this book, he's also kind of a fool. There are several pretty thrilling pages in which you watch his No. 2, Greg Fleming, sell Merrill Lynch out from under him, racing against Lehman to make a deal with Bank of America before Merrill collapses and before Thain, who is too blind to see what a mess they're in, catches on. I found the book a surprisingly satisfying read even as it left me in a depressed haze. You? Would you recommend the book?
F: Absolutely. It's the most ambitious treatment of this period yet because Suskind integrates the White House story with the Wall Street story, giving them equal weight rather than downsizing one to serve as the backdrop to the other. He is truly after the big picture, not just the petty stuff. He has no agenda of his own that I can detect, he had enormous cooperation from the White House, and he names sources (and avoids blind quotes) far more than the norm for a book of this Woodward genre. And even for someone like me, who's read most of the overlapping books and reported on some of this myself, there are new revelations and details. A depressing book yes, but savvy and informative. And some of that depression will be temporarily alleviated by the doubtlessly entertaining circular firing squad that is likely to emerge in the next week once Summers, Geithner, Warren, Emanuel, Rubin, Volcker, Orszag, Rouse, Barney Frank (who does not fare well), and perhaps the president get their hands on it.
A: Okay, Frank, many thanks. Until next time.