What happened to the global economy and what we can do about it
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The White House is floating, ever so gently, the notion that they are open to nominations for the position of "Tim Geithner's Successor."
It's not clear if they mean this job is likely to be advertised formally sometime in 2012 or 20 minutes after the November midterms. Nor is it obvious if this is a real request for proposals "“ it could be just an effort to make critics "put up or shut up."
Fortunately, there is an entirely plausible successor already in waiting, ready now or whenever the president finally realizes the need to fundamentally change banking policy.
Tom Hoenig, president of the Kansas City Fed, is best known for three things.
There will be objections to be sure.
There's also the question of whether Tom Hoenig would take the job. He doesn't seek it and no doubt doesn't need the hassle and the heartache.
So it would be a question of how he is asked and what powers he is given. With the right job description and enough protection from the very top, Hoenig is not the kind of person who shrinks from the opportunity to help his country back onto safer ground.
He's not a politician and he's not a banker. But he knows the politics of central banking and what bankers "“ of any size and kind "“ get up to.
Joe Kennedy, first head of the SEC, was by all accounts a poacher turned gamekeeper. Tim Geithner sees himself as a gamekeeper, but he is undone by the belief that the principal poachers are decent and honorable folk who mean no ill.
Tom Hoenig is just a plain spoken old-fashioned gamekeeper. Not many of them are left, but you only need one.
By Simon Johnson
Written by Simon Johnson
February 1, 2010 at 8:08 pm
Posted in Commentary
Tagged with Tim Geithner, Tom Hoenig
Last night, I had a dream where I was summoned to the White House to meet with Bernanke and Geithner. All three of us were sitting in a row in an office, Bernanke to my right and Geithner to my left, facing a large and expensive-looking wooden desk.
They told me the desk and office belonged to a “mystery guest”. Eventually Larry Summers walked in and took his seat behind the desk.
They asked me if I had any questions. I asked whether they really knew what they were doing with all the bail-outs and buying $1 trillion+ in MBS with fresh money. “Are you sure the cure isn’t worse than the disease?” I asked.
Summers said that is an interesting question, because before all of the extraordinary measures began, they asked him to explore and report on all of the potential failure modes. Only he deliberately did not do a very thorough job, because — he explained to me — he is such a strong debater that he was worried he would convince everybody else not to proceed.
True story.
Nemo
February 1, 2010 at 8:19 pm
Nemo – In general, I find your postings insightful, clear-headed, and blogfully diplomatic… but your above comment of “I had a dream” and “True story”… to me itsn’t “self-evident”… Are you claiming that Summers is pulling the strings because you have inside knowledge (True) or because it is apparent (as in a dream)??
Either way, the general populace thinks we have skated past the crack in the ice, when in reality we are out deeper in the pond where the ice is thinner.
Teotac
February 1, 2010 at 8:53 pm
I interpret your dream to tell that the issues at stake are way more than what words can heal, even the forceful words of the Harvard Hammer. It is a time for action, is what I would make of your dream.
Nice story. It sure sounds like an accurate dream even if you had not pointed out that it is a true experience.
Dan Palanza
February 1, 2010 at 8:55 pm
Which brings me back to a question I would like to see answered objectively: how do “toxic” MBS asset prices look compared to September 2008? The repeated revisions to the better of the cost of TARP seem to suggest that prices were too low during the panic, but I have not seen a retrospective analysis of whether it was, in fact, liquidity crisis or a massive bank insolvency.
AJ
February 1, 2010 at 8:56 pm
For the record, by “true story” I mean I really had that dream last night. I am making no claims about reality.
P.S. I agree Hoenig would be a fantastic choice to head Treasury.
Nemo
February 1, 2010 at 9:08 pm
That’s the right kind of kool-aid drinking, President Obama should consider—President Obama imagining the audicity of real goverance. Heads up to you, Simon, and readers, another one-on-one interview with Mr. Hoenig scheduled this coming Friday, 02.05.10. with PBS’ Nightly Business Rreport host Susie Gharib. The last interview with him is in archives, dated 11.17.08 (Susie Gharib interviewed Th=”/nbb is der-et=”_blaerviewed Thoy e. /nbr/blog/econte/ima)
Beth
February 1, 2010 at 9:47 pm
You probably ate too much chocolate just before bed time.
Rich S.
February 1, 2010 at 9:57 pm
Yours beats mine. I dreamed that the libertarians and street gangs were having a firefight in my neighborhood (in the mad-max world of tomorrow) and I was training my neighbors to adjust fire with the PVC mortar we made.
Full moon and low atmospheric pressure…
Redleg
February 1, 2010 at 10:53 pm
“With his disarming but no nonsense approach, he is the perfect person to take on the likes of Lloyd Blankfein (Goldman Sachs) and Vikram Pandit (Citigroup) both in the corridors of power and in the nitty gritty of their rather sordid business models.”
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