Simon Johnson’s appearance on NPR’s “Fresh Air” is very informative on the case for nationalization of failing financial institutions, and what that would entail. He makes the point based on his IMF experience that this is what the IMF—and, indeed, the U.S. government—would be recommending were this occurring in some other country.
Meanwhile, every time someone suggests that it would be nice for the Treausury Department not to be staffed by people with compromising relationships with big-time finance and a history of professional involvement in the screw-ups, you hear some kind of pusback like this from Megan McArdle: “Perhaps we should just give up entirely on the idea of putting someone who, like, knows something about the financial system, in charge of the financial system. Is Dr. Phil available?” Hardy har-har.
And yet, look, we’re only looking to fill a relatively small number of positions. Timothy Geithner needs a Deputy Secretary. And then there’s a need for an Under Secretary of the Treasury for Domestic Finance, an Assistant Secretary for Financial Institutions, and an Assistant Secretary for Financial Markets. There are other positions in the department, but those are the four where you might think that experience with high finance specifically was vitally necessary. It’s only three jobs. And you can’t tell me that there aren’t four people alive in the United States who have experience with finance but lack compromising relationship. Why not Simon Johnson, for example? Give him one of the jobs, and a quarter of your problem would be solved. Indeed, if you even got three non-bankers to fill four of the positions, I think that would create a lot of piece of mind. Nouriel Roubini, to give another name well-known to the blogosphere, seems perfectly well-qualified for a job at Treasury—he’s even worked in the past as a “senior adviser” to Tim Geithner.