WEEKS BEFORE HIS ELECTION
Most Important WikiLeaks Revelation Isn’t About Hillary Clinton
by David Dayen / October 14, 2016
“The most important revelation in the WikiLeaks dump of John Podesta’s emails has nothing to do with Hillary Clinton. The messages go all the way back to 2008, when Podesta served as co-chair of President-elect Barack Obama’s transition team.
And a month before the election, the key staffing for that future administration was almost entirely in place, revealing that some of the most crucial decisions an administration can make occur well before a vote has been cast. Michael Froman, who is now U.S. trade representative but at the time was an executive at Citigroup, wrote an email to Podesta on October 6, 2008, with the subject “Lists.” Froman used a Citigroup email address.
He attached three documents: a list of women for top administration jobs, a list of non-white candidates, and a sample outline of 31 cabinet-level positions and who would fill them. “The lists will continue to grow,” Froman wrote to Podesta, “but these are the names to date that seem to be coming up as recommended by various sources for senior level jobs.” The cabinet list ended up being almost entirely on the money. It correctly identified Eric Holder for the Justice Department, Janet Napolitano for Homeland Security, Robert Gates for Defense, Rahm Emanuel for chief of staff, Peter Orszag for the Office of Management and Budget, Arne Duncan for Education, Eric Shinseki for Veterans Affairs, Kathleen Sebelius for Health and Human Services, Melody Barnes for the Domestic Policy Council, and more. For the Treasury, three possibilities were on the list: Robert Rubin, Larry Summers, and Timothy Geithner.
This was October 6. The election was November 4. And yet Froman, an executive at Citigroup, which would ultimately become the recipient of the largest bailout from the federal government during the financial crisis, had mapped out virtually the entire Obama cabinet, a month before votes were counted. And according to the Froman/Podesta emails, lists were floating around even before that. Many already suspected that Froman, a longtime Obama consigliere, did the key economic policy hiring while part of the transition team. We didn’t know he had so much influence that he could lock in key staff that early, without fanfare, while everyone was busy trying to get Obama elected.
The WikiLeaks emails show even earlier planning; by September the transition was getting pre-clearance to assist nominees with financial disclosure forms. We certainly want an incoming administration to be well-prepared and ready to go when power is transferred. For Obama, coming into office while the economy was melting down, this was particularly true. But the revelations also reinforce the need for critical scrutiny of Hillary Clinton, and for advocacy to ensure the next transition doesn’t go like the last, at least with respect to the same old Democrats scooping up all the positions of power well in advance. Many liberal pundits have talked about the need to focus exclusively on Donald Trump, and the existential threat he presents, in the critical period before Election Day. And there is a logic to that idea: Trump would legitimately be a terrifying leader of the free world.
But there are consequences to the kind of home-team political atmosphere that rejects any critical thought about your own side. If the 2008 Podesta emails are any indication, the next four years of public policy are being hashed out right now, behind closed doors. And if anyone wants to have an impact on that process, waiting until after the election will be too late. Who gets these cabinet-level and West Wing advisory jobs matters as much as policy papers or legislative initiatives. It will inform executive branch priorities and responses to crises. It will dictate the level of enforcement of existing laws. It will establish the point of view of an administration and the advice Hillary Clinton will receive.
“Personnel is policy,” Warren said. “But let me be clear — when we talk about personnel… we don’t mean Citigroup or Morgan Stanley or BlackRock getting to choose who runs the economy in this country so they can capture our government.”
Its importance cannot be stressed enough, and the process has already begun. The wing of the Democratic Party concerned about personnel decisions made its opinion known almost two years ago. Dan Geldon, now chief of staff to Senator Elizabeth Warren, met with Dan Schwerin, a top adviser to Clinton’s campaign, in January 2015. According to an email follow-up with Podesta and others, Geldon “was intently focused on personnel issues, laid out a detailed case against the Bob Rubin school of Democratic policy makers.” He was also “very critical of the Obama administration’s choices.”
The “Bob Rubin school” is named for the former top executive at Goldman Sachs and Citigroup and first Clinton administration Treasury secretary. It is composed precisely of the kinds of Democrats that the Warren wing opposes on domestic policy, particularly on financial matters. In the Obama administration, that school won out. Froman, chief of staff to Rubin at Treasury, gave options for Treasury secretary that ranged from Rubin himself to Summers and Geithner, two of his key protégés. In another 2008 email Rubin imagined for himself a “Harry Hopkins” position in the Obama administration, referring to Franklin Roosevelt’s top adviser.
The Rubin school dictated the Obama administration’s light-touch policy on bank misconduct (which resulted in no serious legal or fiduciary consequences for the major players) and its first-term approach to the financial crisis (which was defined by a stimulus package that even at the time was criticized for being woefully inadequate, as well as a premature turn to budget-cutting). These are exactly the flaws that Geldon, Warren’s emissary, stressed. According to Schwerin, he “spoke repeatedly about the need to have in place people with ambition and urgency who recognize how much the middle class is hurting and are willing to challenge the financial industry.”
Around the same time as that meeting with Geldon, the Clinton campaign was setting up a dinner meeting with its economic policy team, Geithner, Summers, and members of the investment firm Blackstone (along with Teresa Ghilarducci, a retirement security researcher). This is a fight over who dominates the Democratic Party’s policy thinking in the short and long term. In 2008 the fight was invisible and one-sided, and the fix was in.
In 2016 both sides are angling to get Clinton to adopt their framework. Those predisposed to consider Clinton some neoliberal sap might not agree, but this is actually a live ball. Presidents lead coalitions, and they have to understand where their coalition is and how things change over time. Peter Orszag this week suggested a trade-off: Give the Warren wing its choices on personnel, in exchange for more leeway to negotiate an infrastructure package with Republicans that gives big tax breaks to corporations with money stashed overseas. While that deal needs more detail, it reveals the power the Warren wing has, relative to the Obama era, to make significant strides on appointments.”
COURTESY of the BOB RUBIN SCHOOL
Previously restricted papers reveal attempts to rush president to support act
Dan Roberts / 19 April 2014
“Wall Street deregulation, blamed for deepening the banking crisis, was aggressively pushed by advisers to Bill Clinton who have also been at the heart of current White House policy-making, according to newly disclosed documents from his presidential library. The previously restricted papers reveal two separate attempts, in 1995 and 1997, to hurry Clinton into supporting a repeal of the Depression-era Glass Steagall Act and allow investment banks, insurers and retail banks to merge.
A Financial Services Modernization Act was passed by Congress in 1999, giving retrospective clearance to the 1998 merger of Citigroup and Travelers Group and unleashing a wave of Wall Street consolidation that was later blamed for forcing taxpayers to spend billions bailing out the enlarged banks after the sub-prime mortgage crisis. The White House papers show only limited discussion of the risks of such deregulation, but include a private note which reveals that details of a deal with Citigroup to clear its merger in advance of the legislation were deleted from official documents, for fear of it leaking out. “Please eat this paper after you have read this,” jokes the hand-written 1998 note addressed to Gene Sperling, then director of Clinton’s National Economic Council.”
Earlier, in February 1995, newly-appointed Treasury secretary Robert Rubin, his deputy Bo Cutter and senior advisers including John Podesta gave the president three days to decide whether to back a repeal of Glass-Steagall. In what Cutter described as “an action forcing event”, he wrote to Clinton on 21 February, telling him Rubin wanted to announce the policy before it was raised by the House banking committee on 1 March. “In order to position Secretary Rubin – rather than any of the regulators – as the Administration’s chief spokesman on this issue, the Secretary intends to discuss the Administration’s position at a speech which will be covered by the press in New York on 27 February,” wrote Cutter on 21 February. “It is therefore necessary to have an agreed-upon Administration position by the end of the day on Friday, 24 February.”
Podesta, who was then staff secretary but went on to become Clinton’s chief of staff, wrote a covering note telling the president that all his senior advisers backed the plan, although he noted the danger that “allowing banks to engage in riskier activities like securities or insurance could subject the deposit insurance fund to added risk”. But Clinton’s advisers repeatedly reassured him that the decision to let Wall Street dismantle regulatory barriers designed to protect the public after the Great Depression simply represented inevitable modernisation. “The argument for reform is that the separation between banking and other financial services mandated by Glass-Steagall is out of date in a world where banks, securities firms and insurance companies offer similar products and where firms outside the US do not face such restrictions,” wrote Podesta.
Podesta worked at the White House as special adviser to President Barack Obama. Sperling stood down as director of Obama’s National Economic Council last month. Along with Cutter, who worked on Obama’s transition committee, all three men were close allies of Rubin, who spearheaded the deregulation of Wall Street before joining the board of Citigroup in 1999. In 2007, he briefly became its chairman. The closeness of Obama’s team to the deregulation policies of the late 1990s is well known and has been criticised by campaigners as a reason for the current administration’s reluctance to institute more aggressive Wall Street reforms after the banking crash. But the new documents cast fresh light on the way the White House was first ushered toward deregulation by the tight group of Rubin allies.
A similar apparent attempt to rush president Clinton’s decision-making occurred later in the process, in 1997. In a letter received by the president on 19 May, Clinton is again given just three days to decide whether to proceed with the deregulation agenda. “The attached memorandum asks you to authorize Treasury to proceed to announce and submit their financial services modernization proposal,” writes Sperling. “Secretary Rubin intends to introduce the proposal in a 21 May speech, and to testify before the House Banking Committee the first week of June.”
In his letter, Rubin reassures Clinton that the issue need not take up much of his attention. “Should you approve our recommendation to move forward, the proposal would be a Treasury initiative, and would not require a significant time commitment from the White House,” writes the Treasury secretary. “I and my staff will manage the process of advancing the proposal,” he adds.
The sense that the president need not concern himself with the detail is amplified by his own staff, who appear happy for him to be pushed along by the Treasury timetable. In a covering note from staff secretary Todd Stern, Clinton is warned: “The attached memo is long, detailed and technical, but you can get the essentials by looking at the first four pages.” Stern adds: “If you agree. Treasury will, tomorrow, put out some advance word on the Rubin speech.”
the CRIMINAL CLASS
BLACK GOLD SLUSH FUNDS