Sam Stein has excerpts from Richard Wolffe's new book on the White House. Here's a somewhat contrarian take on the dynamics between Larry Summers, Tim Geithner, and President Obama as the White House moved toward supporting former Fed Chair Paul Volcker's plan to ban proprietary trading at Wall Street banks.
[Summers'] doubts sat there in the West Wing, blocking the Volcker rule for months. Obama had signaled that he wanted the rule to move forward back in October. The banks were on safe ground again, but could still benefit from subsidized lending by the federal government. That seemed wrong when they could use the money to trade for themselves rather than lend it to customers in the real economy... Biden was an old friend of Volcker's and started to press for the rule to take force. But as the weeks dragged on, Summers rehashed his same old questions and concerns. At one fall meeting with his economics team in the Oval Office, Obama wanted to know why nothing had moved yet. Summers dug in once again, while Geithner - whose media coverage cast him as a supposed ally of Wall Street - wanted to push ahead. Obama noted dryly, "I think I can argue everyone's position now.
I can't say this narrative necessarily surprises me; as I reported after the administration announced its support for the Volcker rule in January, the policy had been in the works for several months and was not merely a sudden political adjustment to a series of electoral defeats faced by the Democrats. Though the Treasury secretary hasn't always been on the same page as progressives, he's not been the bogeyman he's often portrayed as; meanwhile, Summers disappoints here but was always an advocate of the new Consumer Financial Protection Bureau that inspired skepticism in Geithner. Just a reminder that these internal debates are usually more complex than they are reported.
-- Tim Fernholz
