Rubinomics: The cult that never quits

Is Jack Lew A Friend to Wall Street?

Like Tim Geithner, the new Treasury nominee may owe his views to Robert Rubin. So don't expect him to pursue much in the way of bank reform.

by Michael Hirsh, National Journal
Updated: January 10, 2013 | 11:27 a.m.

It was a little noted event when last fall, during the height of the presidential election campaign, the Treasury Department released Timothy Geithner’s phone records. To the extent anyone paid attention at all—and let’s face it, almost no one did—financial reporters were struck that the Treasury secretary’s most frequent contact was Larry Fink of BlackRock, the world’s largest money manager and Geithner’s principal conduit to his many friends on Wall Street. But the even more telling name of Geithner’s regular confidants, as the Financial Times noted, was the second one on the frequent-contact list: Robert Rubin.

That might seem odd; after all, it’s been nearly a decade and a half since Geithner worked for Rubin, who is long retired from public life. But Bob Rubin was no ordinary employer. The former Treasury secretary under Bill Clinton all but created Timothy Geithner as we know him today, raising him from a junior Tokyo Embassy staffer to undersecretary of the Treasury in the mid-to-late-’90s, and later sponsoring the still-boyish bureaucrat as president of the New York Fed in 2003 (against resistance from the head of the search committee, Paul Volcker, who according to The Wall Street Journal barked: “Who’s Geithner?”). As he almost always has, Rubin prevailed, and for nearly four years his former protégé has lorded over America’s financial system.

Rubinomics: It’s the cult that never quits. Now the nation is faced with a potential new acolyte. Is Jacob Lew, who is expected to be named Thursday as the replacement for Geithner, yet another Rubinite who will largely follow the policies of his predecessor? Calm, brilliant, competent at everything he’s tried—from the Office of Management and Budget to deputy secretary of State to chief of staff—Lew has smoothly run the White House in the year since William Daley left. He has a reputation for unimpeachable integrity and total honesty, as well as a mastery of the budget that will be critical over the next four years of fiscal fights. But many critics fear that the picture is different when it comes to Wall Street. On financial reform, Lew is a virtual cipher who, in his few public pronouncements, has appeared to toe the Rubin-Geithner line of minimal interference with America’s giant banks.

(More here.)