To start with last first, we think Jon Corzine would be an incredibly short sighted choice and the market would likely react negatively (Keith would). While Corzine undoubtedly has financial wherewithal given his former tenure as co-CEO of Goldman Sachs, that is also his most substantial issue. The credibility of “Investment Banking, Inc.” is non-existent among the investment community. In addition, the public broadly would likely react very adversely to a Corzine appointment given his Investment Banking background.
Conversely, Timothy Geithner is actually a rather interesting choice. He is currently the 9th President of the Federal Reserve Bank of New York and, in this role, also serves as the Vice Chairman of the Federal Open Market Committee (FOMC). Prior to joining the New York Fed he served as an Under Secretary in Treasury to both Secretary Rubin and Summers, so has ample experience at Treasury. Additionally, he has never been a card carrying member of Wall Street’s elite. The key criticism of Geithner would be, at 47 years of age, whether he has the experience to manage the current crisis.
The other noteworthy candidate being bandied about is Larry Summers. While Larry Summers doesn’t necessarily embody the image of change as he was President Clinton’s last Treasury Secretary, his credentials are impeccable. Summers is the son of two economists and the nephew of two Nobel laureates, Paul Samuelsson and Kenneth Arrow. He was also one of the youngest professors ever tenured at Harvard at 28 years old. He has been the President of Harvard, Chief Economist of the World Bank, and was Secretary of the Treasury under Clinton from 1999 to 2001. He is an ardent supporter of free trade and would offer an immediate voice of credibility and moderation to the Obama administration.
Our vote goes to Larry Summers for another tour of duty as Treasury Secretary given his expertise and leadership background. In our view, Summers gets it. We have long been critical of Hank “The Tank” Paulson. On October 30th 2008 at a forum in Boston, Summers stated, “Frankly, policy has been a day late and a dollar short for 15 months now.” We couldn’t agree more. It is time for proactive economic policy once again.
Daryl G. Jones