I have a massive amount of respect for Larry Summers. I think that he is one of the smartest economists of his generation and many others, and whatever our policy differences on various issues, he certainly has my admiration for trying as long as he has to hold the line against excessive statist intervention in the economy and against protectionist forces trying to disrupt the consensus on free trade.
That’s why I am really sorry to read this:
Lawrence H. Summers, the top economic adviser to President Obama, earned more than $5 million last year from the hedge fund D. E. Shaw and collected $2.7 million in speaking fees from Wall Street companies that received government bailout money, the White House disclosed Friday in releasing financial information about top officials.
Mr. Summers, the director of the National Economic Council, wields important influence over Mr. Obama’s policy decisions for the troubled financial industry, including firms from which he recently received payments.
Last year, he reported making 40 paid appearances, including a $135,000 speech to the investment firm Goldman Sachs, in addition to his earnings from the hedge fund, a sector the administration is trying to regulate.
The White House released hundreds of pages of financial disclosure forms, which are required of all West Wing officials. A White House spokesman, Ben LaBolt, said the compensation was not a conflict for Mr. Summers, adding it was not surprising because he was “widely recognized as one of the country’s most distinguished economists.”
Well, that he is, and I don’t have a problem with people in the public eye trying to get rich–one of the things that keeps smart and talented people out of government is the need to make enough money to raise and support a family and be comfortable, after all–but how could it not have been a conflict of interest for Summers, who was widely rumored last year to get a top policymaking position in the Obama Administration, to have taken lavish payments from companies who were recipients of bailout money from the TARP program and who knew that they would have to deal with Summers in the event that Obama won? Am I to actually believe that these companies did not think to themselves “gee, it sure would be smart to get Larry to make a speech, collect a healthy fee, and then remember us fondly when he goes to Washington to work on economic policy” when they scheduled his speeches and appearances? The supposition is silly beyond belief.
Liberal stand-bys like the Huffington Post and Greenwald are outraged. As indicated above, I would hate to see Summers go down, because I think that economic policy will be worse in his absence; who actually thinks that Tim Geithner will be able to play with the big boys and girls for all that long, and who really wants to trust people like Jared Bernstein to step into the void? But there is no way to be able to ignore the fact that Summers’s conflict of interest represents a huge problem for the Obama Administration.
Another vetting failure? You bet. Will it throw policy into chaos? Absolutely. There is nothing good in this picture.