Trouble for another Obama Treasury appointee?

posted at 2:20 pm on March 31, 2009 by Ed Morrissey

Barack Obama may have trouble getting his #2 at Treasury confirmed, and not necessarily from Republicans.  Neal Wolin worked on the Treasury team that drafted the Gramm-Leach-Bliley Act, which Democrats like Barney Frank and Chris Dodd blame for the economic meltdown.  From the Left, Greg Sargent has noticed the connection, but has begun rehabilitating the legislation:

Tim Geithner’s new nominee for number two at the Treasury Department, Neal Wolin, played a key role in drafting legislation in the late 1990s deregulating the banking system, a former Treasury Department official confirms to us.

The law that Wolin helped draft has been blamed by some critics for easing up regulatory pressure on huge financial institutions, tangentially helping create today’s mess — and his role drafting it could come under questioning at his upcoming confirmation hearings.

Our reporter, Ryan Derousseau, came across Wolin’s role in researching our big profile of Wolin at WhoRunsGov.com. Stuart Eizenstat, a deputy Treasury secretary under Bill Clinton, confirmed that as Treasury’s general council at the time, Wolin “provided the technical and legal drafting” for the Gramm-Leach-Bliley Act.

As Ryan writes, the Act hasn’t been directly blamed for today’s meltdown. But it did pave the way for the birth of huge financial companies like Citigroup that were deemed “too big to fail” when their mortgage bets went belly-up and the credit market evaporated. The government, of course, had to bail out these institutions with billions in taxpayer dollars.

That’s quite a change in tone, if the Left picks it up from Sargent.  In the weeks following the crash, Democrats used Phil Gramm as their scapegoat, shifting the blame from the heavy government intervention in the market to the Gramm-Leach-Billey Act.  Democrats to this day insist that the crash came from “deregulation”, and the GLBA had been Exhibit A for that defense of the Community Reinvestment Act and Congressional mandates to Fannie Mae and Freddie Mac to buy and securitize subprime loans, which actually created the false bubble and crash.

Wolin has other problems, which I noted in January when Wolin first joined the Obama administration as Obama’s chief legal counsel on the economy.  Wolin ran The Hartford’s Financial Services Group, and bought a thrift in Florida in order to get TARP money.  Under Obama’s lobbying rules, Wolin should have nothing to do with Treasury’s bailout activities, which calls into question what Wolin will do at Treasury.  Park Tim Geithner’s car?

Republicans ought to go after Wolin when he appears for his confirmation hearing.  Having Democrats on the committee defend his work on the Gramm-Leach-Bliley Act will be quite entertaining, and could help kill the popular meme on the Left that Gramm is responsible at all for meltdown.  I suspect a few Democrats may already be wondering what Obama was thinking in pushing Wolin into this position.

Tags: , , ,

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Republicans ought to go after Wolin when he appears for his confirmation hearing.

Don’t hold your breath.

mankai on March 31, 2009 at 2:25 PM

Yep, it’s definitely Tuesday.

Dukeboy01 on March 31, 2009 at 2:27 PM

I suspect a few Democrats may already be wondering what Obama was thinking

I suspect a lot of Americans may already be wondering what they were thinking when they voted for Obama.

NoDonkey on March 31, 2009 at 2:28 PM

There is no honor among thieves.

Dr.Cwac.Cwac on March 31, 2009 at 2:28 PM

The government, of course, had to bail out these institutions with billions in taxpayer dollars.

Nice line from the article Ed cited. So the legislators, Bush, Paulson, Obama, and Geithner are off the hook. THey had to do the bailout.

WashJeff on March 31, 2009 at 2:30 PM

Waiting in vain for blow back when Tedisco loses.

Remington Steele wasn’t really a private eye either. : ))

Angry Dumbo on March 31, 2009 at 2:30 PM

Check this out. Wolin is a payoff.

Guardian on March 31, 2009 at 2:31 PM

Ed, you’re presuming that he ever thinks about anything that he does.

pcpower1 on March 31, 2009 at 2:32 PM

Republicans ought to go after Wolin when he appears for his confirmation hearing.

Never gonna happen. Did anyone see at least one Republican make any public statements on the outrage over the Boy King and his “firing” of Wagoner?

Didn’t think so.

Knucklehead on March 31, 2009 at 2:32 PM

Best. Transition. Evah.

Y-not on March 31, 2009 at 2:39 PM

The current crop of GOP senators have the collective backbone of a jellyfish. They’ll roll over.

OhioCoastie on March 31, 2009 at 2:45 PM

Vindicating Phil Gramm?

I don’t think that anything can ever vindicate Phil Gramm

MB4 on March 31, 2009 at 2:45 PM

Vindicating Phil Gramm?

no.

sesquipedalian on March 31, 2009 at 2:48 PM

I suspect a few Democrats may already be wondering what Obama was thinking in pushing Wolin into this position.

All will be revealed tomorrow when President Obama gives his speech tomorrow.

Preliminary reports indicate that his speech consists of two words. However, since he will be giving it without a teleprompter, networks are blocking out a half hour to account for all the stammering.

The two words: April Fools!

malclave on March 31, 2009 at 2:48 PM

Gingrich: We should have Singapore-style drug tests for Americans

Freedom, principles, yeah right.

They are having a crazy competition on Fox News.

Unhinged.

getalife on March 31, 2009 at 2:49 PM

Newt is losing it. Dude, stick with the Obama catastrophe, and his Cabal of Corruption.

marklmail on March 31, 2009 at 2:54 PM

getalife! You still goofing around these parts? Obviously you are. Think about your president for just a little while, can’t you? You should be down at the Army or Marine requiters right now. I gave you their phone numbers the other day. Your President needs you in Afghanistan, and maybe Pakistan latter. Don’t let your President down.

MB4 on March 31, 2009 at 2:54 PM

Let Bawney bwing him down! Then wepublicans can uthe the thame logic to bwing down Bawney! Thweet!

robin5280 on March 31, 2009 at 2:55 PM

Well the President is in London and the Fox News crazy competition is just so much fun.

They are trying to be beckers out becking Beck.

Comedy gold.

getalife on March 31, 2009 at 2:58 PM

You know who else was instrumental in getting this act passed so he and his frineds could all leave the Clinton admin and cash in for hundreds of millions?

Tim Geithner’s mentor. This current Clinton Administration II has simply appointed a small Geithner criminal clean-up crew to organize the looting the U.S. taxpayers’ entire store of future wealth as the “solution.” It’s the perfect crime because Americans are so clueless about this stuff they will literally let their nation be destroyed instead of doing basic research and independent thinking.

The dots have already been connected.

In 2000 the Clinton Administration then-Treasury Secretary was a man named Larry Summers. Summers had just been promoted from No. 2 under Wall Street Goldman Sachs banker Robert Rubin to be No. 1 when Rubin left Washington to take up the post of Vice Chairman of Citigroup. As I describe in detail in my new book, Power of Money: The Rise and Fall of the American Century, to be released this summer, Summers convinced President Bill Clinton to sign several Republican bills into law which opened the floodgates for banks to abuse their powers…

At the time Summers was busy opening the floodgates of financial abuse for the Wall Street Money Trust, his assistant was none other than Tim Geithner, the man who today is US Treasury Secretary. Today, Geithner’s old boss, Larry Summers, is President Obama’s chief economic adviser, as head of the White House Economic Council. To have Geithner and Summers responsible for cleaning up the financial mess is tantamount to putting the proverbial fox in to guard the henhouse. …

This is Geithner’s and Wall Street’s Dirty Little Secret that they desperately try to hide because it would focus voter attention on real solutions.

…Every hour the Obama Administration delays that, and refuses to demand full independent government audit of the true solvency or insolvency of these five or so banks, inevitably costs to the US and to the world economy will snowball as derivatives losses explode. That is pre-programmed as worsening economic recession mean corporate bankruptcies are rising, home mortgage defaults are exploding, unemployment is shooting up. This is a situation that is deliberately being allowed to run out of (responsible Government) control by Treasury Secretary Geithner, Summers and ultimately the President, whether or not he has taken the time to grasp what is at stake.

econavenger on March 31, 2009 at 2:58 PM

I thought GLBA was the Gay/Lesbian/Bi-sexual Association.

MarkTheGreat on March 31, 2009 at 3:01 PM

I don’t think that anything can ever vindicate Phil Gramm

MB4 on March 31, 2009 at 2:45 PM

Phil Gramm wasn’t the mastermind of the massive ponzi scheme, despite what you read in the Tallibi’s ignorant Rolling Stone article. He was used by the real players.

econavenger on March 31, 2009 at 3:02 PM

If congress does go after Wolin – it would be a glaring hypocrisy to not then go after Geithner, correct?

robin5280 on March 31, 2009 at 3:08 PM

:(

Wait a minute….I thought that the Gramm-Leach-Bliley Act caused the financial meltdown? Why, oh why, then would the Obama administration ever offer one of the bill’s architects the number 2 spot in the Treasury Dept?

Could it possibly be that the Leftists were lying all along about the effects that the Act had on the financial markets? Hmmm?????

I know! Let’s get DeathToMediaHacks to explain the inconsistency!

DeathToMediaHacks?

rvastar on March 31, 2009 at 3:12 PM

Wait, trouble for a nominee that doesn’t have to do with failing to pay taxes, sleazy divorce, conflict of interest, or pay to play corruption, but rather for having authored a piece of legislation?

How quaint.

rbj on March 31, 2009 at 3:12 PM

Phil Gramm wasn’t the mastermind of the massive ponzi scheme… He was used by the real players

the problem with gramm is called Commodity Futures Modernization Act.

Shortly after George W. Bush was elected president, Congress and President Clinton were trying to pass a $384 billion omnibus spending bill, and while the debates swirled around the passage of this bill, Senator Phil Gramm clandestinely slipped a 262-page amendment into the omnibus appropriations bill titled: Commodity Futures Modernization Act… The essence of the act was the deregulation of derivatives trading (financial instruments whose value changes in response to the changes in underlying variables; the main use of derivatives is to reduce risk for one party).

sesquipedalian on March 31, 2009 at 3:15 PM

Phil Gramm wasn’t the mastermind of the massive ponzi scheme, despite what you read in the Tallibi’s ignorant Rolling Stone article. He was used by the real players.

econavenger on March 31, 2009 at 3:02 PM

Tallibi’s ignorant Rolling Stone article? Getting a little Drama Queen, now aren’t you?

Did you even read the article from “IckyPeople”? It seems very well researched and it is very damning. Do you think they made it all up?

“In recent years, not content with helping destroy the U.S. economy and send us into a recession, Phil Gramm has lobbied Congress and George W. Bush on behalf of UBS to remove remaining state regulations that protect consumers from predatory lending. Gramm was paid an additional $750,000 for his lobbyist work for UBS.

And for the heck of it, let’s also disclose that Gramm and his wife were tied to the Enron scandal when it was revealed that Wendy Gramm wrote an exemption from federal oversite for Enron while she was head of the Commodity Futures Trading Commission. What that means is that Wendy Gramm used her position as the head honcho of a major government agency to stop federal investigations and oversite of Enron’s shady practices.

Wendy Gram then quit the commission and took a directorship with Enron. So Phil and Wendy Gramm each used their government positions to make specific companies richer and remove federal oversite, then quit their government jobs and went to work for those same specific companies (UBS, Enron). After the Enron disaster, Wendy Gramm and other former Enron directors agreed to pay $13 million of their own funds (plus $155 million from their insurance companies) to settle a lawsuit accusing them of insider trading.

The main players in repealing the Glass-Steagall Act – Sandy Weill, Phil Gramm, Robert Rubin, and Bill Clinton, have all continued to rake in ridiculous amounts of money, while the law they enacted contributed to the implosion of the U.S. banking system and our current recession. People are losing their homes, but the likes of Robert Rubin are still earning $40 million dollars a year. Bill Clinton has earned over $100 million dollars since leaving office despite not officially having a job. Sandy Weill apparently broke many federal laws, but didn’t even get a slap on the wrist while pocketing $2 billion.

And then there’s Phil Gramm. The man who may have actually had the most do with destroying the lives of hundreds of thousands of Americans, and affecting millions more, has enjoyed a posh job with a company that directly benefited from his legislation. And in a bizarro-world twist of irony, he may be “rewarded” for destroying our economy by being appointed to save us from himself [this was from when it looked like McCain still had a chance to win].

UPDATE: UBS, the Swiss bank that Phil Gramm now works for, is accused of helping at least 19,000 of the wealthiest U.S. citizens avoid paying taxes by setting up offshore bank accounts to hide their wealth.”

MB4 on March 31, 2009 at 3:22 PM

MB4 – I read the whole thing over the weekend. It is damning for but mostly for the president and his head banker – now bailing out bankers. The “zero balance” needs to be explained. Do you think Phil Gramm zeroed the balance, effectively removing transparency? C’mon – lets get the bigger picture here.

The “eye rolls” from the president and his head banker which by elicited by simple, not to mention fair questions (from democrats in congress I might add) is keen observation by the vile and disgusting Taibbi. The secrecy of what’s going on with AIG is even more disgusting than the sleep-walking Taibbi who happened to do a very good job with the details here.

Don’t forget, AIG who now wants more money after passing it off to OTHER BANKS to boost profitability of the industry in Jan and Feb and then turned around and profited from the move. NOW WANTS MORE

If I caught all that just over the weekend… do you really think the head banker does not know whats really going on? Time for him to explain this and I’d like to learn more about the “zero balance”

robin5280 on March 31, 2009 at 3:46 PM

MB4,

Yeah, of course Gramm played a huge role. But I’m telling you he was nothing, and is nothing now, compared to the real brains behind the operation. They are not elected officials. They control our Treasury and the elected officials, and in return make some of them fabulously wealthy for their troubles.

And yes, I said Taibbi‘s RS article was ignorant and I’ll add biased to that. I was ignorant of his name only. If you think I’m being dramatic though, then please feel free to show me where he mentions Teflon Bob Rubin, Clinton, Summers or Weill.

Don’t bother. They aren’t mentioned.

This is the only hint of a clue he had about the bigger picture:

The real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex. It might not bode well that Geithner, Obama’s Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner — himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm — picked a former Goldman lobbyist named Mark Patterson to be his top aide.


The GOP are total suckers, now twice over:

Geithner and Summers along with Rubin are why this financial crisis will not be satisfactorily resolved, for in order to take the necessary steps to alleviate it all would have to admit their part in causing it and even more pointedly admit that their boss at the time, William Jefferson Clinton, also played a role. It short it would mean that instead of tying this albatross solely around the neck of George W. Bush and the Republican Party they would have top admit that at its root this crisis was a bipartisan affair.

However, if one parceled out blame the way they do in auto accidents, the GOP would bear the majority of it for they supplied the Congressional majority–and even put their names on the bill that caused this mess, the Gramm-Leach Bliley Act. But Rubin and his two sidekicks convinced Bill Clinton that the bill would be a good idea. So on Rubin’s advice, Clinton looked the other way while Citi put its considerable lobbying forces into motion to make Gramm-Leach-Bliley possible, which is why one of the pens Bill Clinton used to sign the bill hangs in a prominent place in the office of former Citi CEO Sandy Weill–the man who created what was once America’s largest financial institution out of a loan-sharking business.

Both Geithner and Summers played a role in this fiasco. Summers was the more prominent for he served as Rubin’s assistant Treasury Secretary before succeeding his mentor, who for his role in making Citi’s mergers legal received a cushy job at Citi as his reward. Geithner at the time was serving as Under Secretary of the Treasury for International Affairs under both Rubin and Summers. Several commentators have noted the closeness of the three.

Greenspan was also in the mix, and the scheme could not have been fully maximized without his assistance. He deserves a medal or something.

econavenger on March 31, 2009 at 3:52 PM

MB4 – I read the whole thing over the weekend. It is damning for but mostly for the president and his head banker – now bailing out bankers. The “zero balance” needs to be explained. Do you think Phil Gramm zeroed the balance, effectively removing transparency? C’mon – lets get the bigger picture here.

robin5280 on March 31, 2009 at 3:46 PM

The article clearly damns others as well as Gramm, and I never said otherwise, but the quote in this thread that I was responding to said -

Vindicating Phil Gramm?

not “Vindicating – fill in somebody else name – ?

MB4 on March 31, 2009 at 3:54 PM

It’s always amusing to me how Leftists love to misrepresent govt process in order to suit their little memes. Seeing their little Glass-Leech-Bliley Act meme blow up, they now switch over to the Commodity Futures Modernization Act…and it’s all the fault of Phil Gramm unleashing the derivatives traders!

Tell us this: what hazardous securities were the credit default swaps in question based in? Mortgage-backed securities. And of those mortgage-backed securities, which type began to implode in 2006? Subprime. Where did this huge explosion of subprime mortgages come from? The Clinton administration, in the form of the CRA and a significant loosening of Fannie/Freddie’s underwriting criteria.

IOW: no matter how hard you Leftists try to shift blame, all roads lead back to the Clinton Administration – at the behest of ACORN – tinkering in the housing markets. Take away that root cause, and you take away all of the problems that followed.

Oh, and contrary to what the Leftists would have everyone believe, Phil Gramm wasn’t able to institute the Commodity Futures Modernization Act by writ. It was actually enacted by a House vote of 377-4, with Democrats voting for it 181-2…it’s the little parts like that they always seem to mysteriously leave out of their rants.

rvastar on March 31, 2009 at 4:07 PM

I understand. My point – not made exactly well – was that vindicating anyone now might already be impossible in this situation. ALL of them have chosen to keep the ball in play. Taibbi has almost done well to explain this but stops just one short of exposing Obama as merely more of the SAME…

But no worries…the vile and disgusting Taibbi has already exposed that there would be no hopey-changy anyway – way back in Novemember:

“For all the excitement that Barack Obama has garnered, and all the talk about a new day in Washington, it would be tragic if the real legacy of his election victory was to finally expose the essentially unchanging, oligarchic nature of our political system. It’s the same old story: Money talks, and bullshit walks. And don’t be surprised if we’re the ones still walking after November.”

I like that one – really pins the tail on the donkey! :-) But really, maybe we all (americans) really are missing the horrific point in this whole story!

robin5280 on March 31, 2009 at 4:18 PM

Shocker.

bluelightbrigade on March 31, 2009 at 4:56 PM

yes, the libtards are going around posting that RS idiotic piece all over the internet to cover what is really going on. idiots that they are

jp on March 31, 2009 at 5:14 PM

Democrats used Phil Gramm as their scapegoat

Hhe only helped the mess by advocating on UBS’s behalf to kill off regulation.

sethstorm on March 31, 2009 at 5:17 PM

Maybe he’ll be in charge of making sure Geithner and other Obama Administration officials and nominees pay their taxes. That’s a full time position in and of itself.

eaglewingz08 on March 31, 2009 at 5:17 PM

Wasn’t that the bill that Bill Clinton signed and that passed the Congress with broad bi partisan support?

Terrye on March 31, 2009 at 5:49 PM

If you are – like me – awakening from a bad dream after reading too many vile and disgusting Matt Taibbi articles, do not give up yet! Here is what you can do until you attend your local tea party on April 15 (taxdayteaparty.com).

** CALL TO ACTION: STOP THE BAILOUTS AND SPENDING **

We MUST act today to contact elected officials in Washington. Please forward this to everyone who will help immediately.

http://www.conservativeoutpost.com/campaign/cta/stop_spending

Follow the instructions. Of course you can contact your congressmen for free but this works well and saves a lot of time if you want to reach more than one by fax (I sent 35 today) which is important to do RIGHT NOW due to how quickly Obama is pushing the spending. We must act JUST AS QUICKLY! Don’t forget thank those who hold strong and do not give in.

robin5280 on March 31, 2009 at 5:52 PM

And I am not sure if it is fair to blame the Gramm Leachy Bliley Act.

I don’t pretend to be a banking expert, but I have already seen and heard so many explanations for all this and how it happened that I beginning to wonder if anyone even really knows.

Terrye on March 31, 2009 at 5:55 PM

In fact the bill passed the Senate 90-8 and was signed by President Bill Clinton.

Haven’t the Europeans always had a system like this? Were there ever barriers between banks and insurance etc over there? Does anyone know?

Terrye on March 31, 2009 at 6:02 PM

I suspect a lot of Americans may already be wondering what they were thinking when they voted for Obama.

Regrettably, I have to disagree. Most of the people I know that voted for Obama are blissfully blinded to everything negative. In fact, most haven’t even heard of anything negative and are just impressed with “how much he is getting done”.

Seriously, I am starting to think that me, everyone on this blog and other like it are a dying breed of people that still posses a little thing called reasoning and logic. We should all get together at one big conference and begin procreating immediately.

watson007 on March 31, 2009 at 7:32 PM

watson:

Like Lincoln said, You can fool all of the people some of the time, some of the people all of the time but you can not fool all of the people all of the time.

A lot of the folks you are talking about fit into category number 1. In truth Obama’s numbers are almost exactly the same as Bush’s were at this time. After 9/11 Bush’s numbers went up to about 90%. after 3 years they were still at 63%.

It takes awhile.

I think in Obama’s case people just do not want to admit they were so wrong. The other day I was talking to someone and she said she liked Obama because he supported stem cell research and would cure cancer. I told her that there was a difference between adult and embroynic stem cells. She was amazed. She had no idea. Obama=stem cell research= cure for cancer= good.

Terrye on March 31, 2009 at 7:40 PM

That guy is wearing the worst toup I’ve ever seen!

Warner Todd Huston on March 31, 2009 at 10:33 PM