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November 13th, 2008
10:48 PM ET

Once and future Treasury Secretary?

Program Note: Look for Andy Serwer talking about the housing crisis on tonight's AC360 at 10pm.

Andy Serwer
Managing editor, Fortune

There has been much talk of whom President-elect Barack Obama will name as his Treasury secretary. The guessing game on Wall Street and in Washington, serious stuff even before the election, has become even more intense.

A job that was once a good part ceremonial – with the ultimate perk being your signature on the nation's currency – has become full-time serious. The new Treasury secretary is probably Obama's most significant appointment, and arguably the first significant decision the next president will make.

Fortune believes that former Treasury Secretary Lawrence (Larry) Summers is in the lead to get the job. Summers, who served in the Clinton Administration, wouldn't be a surprise pick. He along with other economic experts, ex-Treasury Secretary Robert Rubin and former chairman of the Federal Reserve Paul Volcker, have advised Obama during the campaign, especially as the economic crisis unfolded. Volcker is said to be highly interested in the Treasury job, but Summers, with support from Rubin, has the inside track.

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Filed under: Andy Serwer • Bailout Turmoil • Barack Obama • Economy • Raw Politics
soundoff (7 Responses)
  1. Joanne, Solvay, NY

    We were once again, lied to....the bailout was for banks, people losing their homes, ...now, it's redirected to bail out industry? I guess I just don't get it.

    November 15, 2008 at 8:25 pm |
  2. Alex (Aliso Viejo, Ca)

    In this time where we have an economic crisis, the lame duck session seems to be very, very, very, very and very long. I think that Secretary of Treasury will be one of the appointments that will be announced as a priority by President-Elect in lieu of our present difficulties.

    As for the change of plans of Mr. Paulson with regards to the bail-out plan, I think the appropriation of funds should be revisited again. We have an economic crisis now instead of financial crisis. I do think helping consumers (American people) is the most important key factor to initiate the business cycle. It is the Christmas seasons too. No matter how much money we infuse on businesses or banks, it will be naught considering there won't be anyone buying the goods. Since they are thinking of revising their plans, why don't they include the auto industry if it is imperative. Moreover, I hope the beneficiaries of the bailout funds are the deserving companies/firms/banks who were responsible in conducting business. Everybody will be asking for a bailout hence accountability , transparency and prioritization should be considered.

    November 14, 2008 at 3:11 am |
  3. Hank

    To the US Congress and all Americans:
    The most educated minds in the world reside in the US. In spite of the advice of the country’s most renowned economists, the “””Bail out was passed by Congress and signed by the President.”””
    The Treasury has given away almost $ 2 Trillion dollars and never once pulled an Audit to correct the cause of the financial losses before throwing our capital away.
    You have just flushed $ 2 Trillion down the toilet and the agencies will continue to fail; steal and send the money off shore.
    The destruction of our Country and our way of life will be from within and was begun over twenty years ago by the skilled con-artists that fooled or bribed our leaders to recind the financial safeguards, eliminate over-sight and punitive damages for securities fraud.
    The American Dream will not be the first or last civilization to be betrayed and destroyed from within.
    Hank from Colorado

    November 14, 2008 at 1:35 am |
  4. J.V.Hodgson

    While treasury is important, it alone does not have the power within the American sysytem of governance to solve the issues, which range far beyond Treasury and the banking system.
    Hedge funds who literally make money out of holding nothing, but speculate on currencies, property, commodities utilising highly leveraged borrowing ( draining the market of credit to real business) are something that must also be addressed, along with Higher margin needs for all those markets, also needing to be addressed are hedge fund managers fees, which mean "greed level" profits have to be made for real investors to get thier equally hopeful "greedy" returns, many of which are never realised as in some cases the first swipe at profits is 20-30% to the managers.
    When 1 man like Soros can bring down what was effectively a reserve currency at the time, that was the first alarm bell, that unfettered dealing (note) not trading as they would like to call it was out of control. These hedge funds led to the property bubble and the consequent after effects, and please do not tell me they were not responsible for the totally unrealistic $147 for Oil, they were simply dealing for money ( wooden dollars in the end) for which main street paid while a few got temporarily rich, and have now lost most of it. They were and remain wooden dollars until you impose simple fundamentals if you do not physically own it you cannot sell it, and you must buy to Trade, not deal = heavier margin deposits and no sale until youhave paid for it 100%. Then watch commodity and Exchange markets etc stabilise.
    Regards,
    Hodgson.

    November 14, 2008 at 12:05 am |
  5. J. Buskey

    THE ULTIMATE ECONOMIC STIMULUS PACKAGE
    GIVE THE POWER TO THE PEOPLE!!!!

    TO OUR CONGRESSPERSONS AND SENATORS

    WE BELIEVE THAT CITIZENS MUST BE CONSULTED WHEN IT COMES TO THE SPENDING DECISIONS OUR ELECTED OFFICIALS IN WASHINGTON, D. C. MAKE ON OUR BEHALF. THAT PROPOSED 700 BILLION DOLLAR BAILOUT FOR WALLSTREET’S ELITE BUSINESSES PRESENTED SUCH AN OPPORTUNITY. IT APPEARS THAT THE BENEFICIARIES OF SUCH A BAILOUT ARE LIMITED TO SPECIFC SHAREHOLDERS AND CREDITORS (FOREIGN AS WELL AS DOMESTIC). IF OUR NATION WERE NOT FACED WITH SUCH WIDESPREAD ECONOMIC CRICES, SUCH A BAILOUT WOULD NOT HAVE BEEN NECESSARY. SUCH A HUGE BAILOUT IS VERY WRONG AND WE BELIEVE THAT HERE IS A VIABLE SOLUTION.

    THAT 700 BILLION DOLLARS COULD HAVE BEEN BETTER USED TO STIMULATE THE ENTIRE ECONOMY INSTEAD OF PROVIDING CUSION FOR THE SHODDY DECISION MAKING OF BIG BUSINESS. THEREFORE, WE BELIEVE THAT THE PEOPLE CAN BETTER USE THAT MONEY TO INSTANTANEOUSLY RESTORE THE HEALTH OF OUR ENTIRE ECONOMIC SYSTEM.

    WE ESTIMATE THAT THERE ARE APPROXIMATELY 200 MILLION PEOPLE IN THIS COUNTRY ABOVE THE AGE OF 18. WHAT WE SHOULD DO WITH THE NEXT 700 BILLION DOLLARS IS AS FOLLOWS:

    A) DIVIDE THAT 700 BILLION DOLLARS EVENLY AMONG THE GAINFULLY EMPLOYED WHO FILED 2007 TAX RETURNS AND NON-WORKING ELDERLY AND DISABLED WHO OWN MORTGAGES. THIS COMES TO APPROXMATELY $350, 000.00 PER INDIVIDUAL. THERE SHOULD BE AN IMMEDIATE 30% TAX LEVIED PER PAYOUT. THIS GIVES EACH ELIGIBLE CITIZEN $245,000.00 TO SPEND LIBERALLY, WHILE SENDING 210 BILLION DOLLARS BACK TO THE GOVERNMENT POT. THOSE COMPANIES TARGETED FOR BAILOUT SHOULD RECEIVE AN EQUAL SHARE OF THIS POT AS A LOAN WITH ZERO INTEREST FOR THE NEXT 5 YEARS TO APPLY TOWARDS THEIR MOST NEEDFUL AREAS.
    B) CITIZENS WILL BE ISSUED A NEW “FEDERAL CARD”, SIMILAR TO A CREDIT CARD, THROUGH WHICH ALL MONIES WILL BE APPLIED, MONITORED AND USED. CITIZENS CURRENTLY APPLYING FOR BANKRUPTCY PROTECTION OR HAVE OUTSTANDING STUDENT LOANS OR OWES BACK CHILD SUPPORT OR OWES ANY STATE OR FEDERAL BACK TAXES SHALL HAVE THESE FUNDS AUTOMATICALLY AND IMMEDIATELY DEDUCTED FROM THEIR ACCOUNT.

    C) BUSINESSES THAT ACCEPT CREDIT AND DEBIT CARDS WILL BE ABLE TO ACCEPT THE NEW “FEDERAL CARD” FOR CUSTOMER PURCHASES AND/OR PAYMENT. EVERY TRANSACTION MUST BE TAX LIABLE, THEREFORE, CITIZENS WILL NOT BE ABLE TO WITHDRAW CASH USING THIS CARD.
    D) TO ELIMINATE HOARDING AND EXCESSIVE ALCOHOL, TOBACCO, OR FIREARMS-RELATED PURCHASES, CITIZEN ACCOUNTS WILL BE INSTANTLY FROZEN AND THE OWNERS OF SAID CARDS MUST MEET WITH APPROPRIATE GOVERNMENT AGENCIES TO EXPLAIN ACTIVITIES.
    E) ALL CITIZENS OWNING MORTGAGES, ESPECIALLY THOSE ON FIXED INCOMES, WILL BE ENCOURGED TO EITHER PAY THEM OFF OR APPLY LARGE SUMS TO MAKE MONTHLY PAYMENTS MORE MANAGEABLE. (INSTANTANEOUSLY SOLVING THE MORTGAGE CRISIS.)
    F) CITIZENS WILL ALSO BE ENCOURAGED TO INVEST IN LONG-TERM INTEREST-BEARING SAVINGS AND INVESTMENT PLANS, I.E. (CHILDREN’S COLLEGE EDUCATION {529}, MONEY MARKET ACCOUNTS, CD’S, ETC.; PUTTING MONEY BACK INTO OUR BANKING SYSTEM AS WELL. CITIZENS WILL ALSO BE ABLE TO AFFORD TO ABSORB THE RISING COST OF HEALTH CARE.

    THIS SUGGESTION WAS EMAILED TO ALL GA CONGRESSMEN BEFORE THE FIRST 700 BILLION DOLLAR WALL STREET BAILOUT WAS OFFICIAL, HOWEVER, ONLY JOHNNY ISAACSON RESPONDED; ALBEIT IN AN UNINTERESTED FORM LETTER.

    November 13, 2008 at 11:42 pm |
  6. Nancy S. Jochens

    With respect to our present Sec. of the Treasury, our anger is somewhat misdirected. Certainly, Mr. Paulson once again trusted the Banks to do what was right. They, of course, could give a care what happens to the rest of us. We should call our loans and spend our money with people who want to be part of the solution.

    So much for unfettered capitalism.

    Nancy S. Jochens
    Kansas City, MO

    November 13, 2008 at 8:26 pm |
  7. jim

    I believe that Obama should make priority number one naming a Treasury Secratery. The quicker he does this will give the nominee a chance to get briefed by Paulson As a UNBIASED independent, Paulson should have been fired due to this financial crisis. He didn't do his job. I cannot believe he is responsible for allocating the Bailout money.

    November 13, 2008 at 7:54 pm |