We see
reports today that the President intends to make the Secretary of the Treasury, Timothy Geithner, the overseer of "systemic risks" to the banking system. This used to be the job of the Federal Reserve, and in fact was the raison d'etre for creating the Fed in the first place.
This is a very bad idea. I know that many are less than happy with Fed Chairman Ben Bernanke, but it is important to look at this from a long term point of view rather than as a function of the personalities currently in the jobs in question.
The Fed Chairman has a key attribute - he is not part of the political apparatus, and once appointed can do as he thinks best, regardless of whether the politician who nominated him likes it or not. He is required to report what he is doing, but Congress and the President have no leverage over him to change his course of action.
The Treasury Secretary, on the other hand, serves at the pleasure of the President, and is a political animal dedicated to shepherding the President's political agenda. This is NOT who we want ensuring the viability of our entire financial system. Though I have my complaints about how Ben Bernanke managed the crisis, can you imagine what would have happened if, say, one of George Bush's cronies had the job of ensuring the viability of our nation's financial system?
To put an even sharper point on it, who would Sarah Palin appoint as Treasury Secretary?
The Republican party has shown itself to be completely beholden to Wall Street interests who clearly don't care what happens to the country so long as they get their bonuses. Are these the people who should be potentially put in line to ensure the viability of the world economy?
If, at some future date, saving the world's economy requires serious pain from Wall Street elites, would a Treasury Secretary really move ahead if contributions to his boss were on the line?
I doubt it. This is a bad idea, regardless of who's president.
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