Obama Revolving Door: Geithner deputy to PE firm

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Politics,Beltway Confidential,Timothy P. Carney

The latest winner in the Great Dodd-Frank Cashout is Obama's Treasury undersecretary for domestic finance, Jeffrey Goldstein, who has returned to his old private equity firm, Hellman & Friedman.

Goldstein was a top lieutenant to Treasury Secretary Tim Geithner, and the New York Times describes his work at Treasury thus:

Mr. Goldstein played a leading role in shaping the administration’s financial policies in the wake of the global economic crisis, including implementation of the Dodd-Frank Act overhauling Wall Street regulation. He worked on everything from restructuring the housing market to overseeing the Treasury’s bailout investments in the banks and automakers.

You see what he did there? He went from a private equity firm to Treasury where he oversaw bailout money and helped shape the rules governing his old firm and his old competitors -- then he returned to his old firm. 

The important takeaway here has nothing to do Mr. Goldstein. The lesson is two-fold:

1) Obama's talk about stopping the revolving door was empty rhetoric and when he and his top aides continue to claim he's stopped the revolving door, they are speaking with little regard for the truth.

2) More importantly, the series of cashouts in health-care, green-energy, and other fields illustrate one of the negative effects of an increased government role in the economy (regulations, subsidies, mandates, tax preferences or penalties, etc...): it creates more incentive for private firms to invest in revolvers. 

The list is growing of Obama-adminstration alumni now raking in big bucks in high finance. Here are a few:

  • Treasury Department bailout captain Jim Millstein launched investment firm Millstein & Co., which invests in troubled companies (kind of like TARP did).
  • Obama Treasury aide and Fannie Mae alumnus Damon Munchus left for Cypress Group whose clients include Citigroup, the International Swaps and Derivatives Association, the Managed Funds Association (the lobby group for hedge funds), PricewaterhouseCoopers, Travelers, US Bank, and Wachovia Corp.
  • White House Deputy Chief of Staff Mona Sutphen cashed out to the Swiss Bank UBS.
  • Obama's White House Counsel Greg Craig went to Goldman Sachs.
  • Obama's OMB director Peter Orszag is at Citi.
  • Obama campaign staffer and administration alumnus Oscar Ramirez is a lobbyist at Podesta Group where his clients include Bank of America.
  • Obama's mortgage-subsidy chief David Stephens left FHA to work for the lobby group Mortgage Bankers Association.

That's just from the administration. A bunch of Hill staffers, including the top aides to Dodd and Frank, cashed out to work for firms concerned with implementation of Dodd-Frank.


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