Allow me to posit a case study: Two high-ranking government officials are the subject of multiple newspaper and magazine profiles in the span of a few weeks. The first official resists the attention. He isn’t so much as quoted in any of the pieces, whose authors glumly note his lack of enthusiasm for their projects. By contrast, the second official goes out of his way to cooperate with the profile-writers. He submits to numerous, on-the-record interviews and mounts a detailed defense of his actions. His aides even distribute one of the articles after the fact.

The Wall street Journal reports today that Lee Sachs, a counselor to Treasury Secretary Tim Geithner, will be leaving the administration in April. Since the early days of the transition in 2008, Sachs has generally been the senior Treasury aide in charge of overseeing the administration’s response to the financial crisis.

One of the enduring mysteries about White House chief of staff Rahm Emanuel is why he took the job in the first place. At the time he accepted it, he was the fourth-ranking Democrat in the House of Representatives, a position he’d attained with considerable effort. Two years earlier, Emanuel had chaired the House Democrats’ campaign arm and led the party to a 31-seat majority after a decade of futility.

The Beatles: Rock Band

Guitar Hero

When smug old children of the 1970s such as my friends and I get together, we play a game. We talk about the bands we loved when we were kids; we trade grumbles about the fact that music no longer seems to dominate youth culture, as we nostalgically recall the role that rock had in our past; and we try to guess what happened. I call this a game and not a discussion, because really it is diverting silliness that boils down to a competition to reach an agreed-upon goal--that is, to prove our generation’s superiority to our successors. The winning answers are invariably ones that reinforce an idealized conception of the classic-rock era more than they illuminate the present. They reiterate the dubious truism that rock was so magnificent in the 1960s and 1970s that it demanded attention in a way that no music that followed it could. And they cast as revelations the perfectly obvious point that contemporary pastimes such as video games and digital networking have taken up the social function of music.

Barack Obama has been compared to almost every American President of the last hundred years--favorably to Franklin Delano Roosevelt, John Kennedy, and Ronald Reagan; and unfavorably to Jimmy Carter and George H.W. Bush. I want to put another name in the hat: Herbert Hoover.

In a year when the government enacted one of its largest-ever stimulus bills, guaranteed hundreds of billions of dollars in bank debt, bought hundreds of billions more in mortgage-backed securities, took 60 percent ownership of one car company and put up billions in financing for another, it’s not obvious why you’d dwell on an initiative that basically cost nothing. I nonetheless submit to you that the government’s stress tests—an eight-week effort to vet the balance sheets of the country’s biggest banks—was the single most consequential economic policy of 2009.

There's an interesting back-and-forth between Dan Gross and Tim Geithner in Newsweek's year-end interview issue:

GROSS: There have been, and continue to be, calls for you to go. How do you deal with those?

Interesting nugget in yesterday's Playbook that I meant to highlight at the time:

SPOTTED: Treasury Secretary Tim Geithner and Arianna Huffington (who has been très critical) enjoying red wine and an off-the-record dinner last night at Central Michel Richard.

I wrote a piece last week about how, as recently as six weeks ago, Wall Street was punching big holes through Congress's efforts to regulate derivatives, the financial instruments at the center of last fall's crisis. But, over the last month or so, a variety of progressive groups, working with Commodity Futures Trading Commission Chairman Gary Gensler, the country's chief derivatives regulator, have fought to seal those holes. And it looks like they're about to succeed, at least in the House.

Throughout that effort, I'd heard second-hand that Treasury Secretary Tim Geithner was sympathetic to the more hawkish approach. But it was tough to tell because he'd largely stayed out of the fight. (In fairness, derivatives were only one piece of the regulatory picture, and Treasury and the administration were busy on several others--like new authority to wind down too-big-to-fail financial institutions.) But yesterday Geithner made his most explicit comments about derivatives regulation in months, and they were pretty encouraging. This Dow Jones story has the details:

Earlier today, Treasury Secretary Tim Geithner was up at the House Financial Services Committee testifying on the administration's proposal for dealing with threats to the financial system ("Too Big To Fail," etc.).

Just wanted to engage in a little crass self-promotion for those who come directly to The Stash, or who took the Internet off for Columbus Day: I have a piece in our current issue about the tennis-playing habits of the Obama economic team--Larry Summers, Tim Geithner, and Gene Sperling, et al--which, I half-seriously suggest, can be understood as a metaphor for their West Wing interactions. It turns out most of the group has attended tennis camp together for the last several years:

For the handful of people in charge of saving the U.S. economy, it’s been a grueling season. The last eight months have featured endless back-and-forths, tense stalemates, and spirited confrontations. Larry Summers, the president’s chief economic adviser, has drawn blood with his lacerating quips. Treasury Secretary Timothy Geithner has dropped expletives to signal his frustration. Even their aides have gotten in on the action.

And, in those rare instances when the wonks get a break, they step outside their conference rooms, loosen their ties, and do the same thing all over again. On a tennis court. For years, Summers, Geithner, and a variety of deputies have stared each other down from opposite sides of a three-foot-high net. These tennis relationships have played out on courts from Jackson Hole, Wyoming, to Davos, Switzerland, and on pretty much every flat surface in Washington, D.C. It turns out that tennis is the unofficial sport of the Obama financial team. And, if you want to understand the way its members go at it behind closed doors, it’s worth watching them go at it with tightly strung rackets.

Simon Johnson raises a fair question in response to this AP scoop about the bankers Tim Geithner was in touch with early in the Obama administration. Here's the AP:

The calendars, obtained by the AP under the Freedom of Information Act, offer a behind-the-scenes glimpse at the continued influence of three companies -- Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. ...

In the first seven months of Geithner's tenure, his calendars reflect at least 80 contacts with Blankfein [of Goldman], Dimon [of JP Morgan], Citigroup Chairman Richard Parsons or Citigroup CEO Vikram Pandit. ...

Treasury has a huge financial stake in North Carolina-based Bank of America Corp., but CEO Ken Lewis appears on Geithner's calendars only three times. Morgan Stanley CEO John Mack also appears three times.

Over the past 30 years Wall Street captured the thinking of official Washington, persuading policymakers on both sides of the aisle not to regulate (derivatives), to deregulate (Gramm-Leach-Bliley), to not enforce existing safety and soundness regulations (VaR), and to stand idly by while millions of consumers were misled into life-ruining financial decisions (Alan Greenspan).

This was pervasive cultural capture or, to be blunter, mind control. But when the crisis broke it was not enough. Having powerful people generally on your side is not what you need when all hell breaks loose in financial markets. Official decisions will be made fast, under great pressure, and by a small group of people standing up in the Oval Office. 

If you run a big troubled bank, you need a man on the inside--someone who will take your calls late at night and rely on you for on the ground knowledge. Preferably, this person should have little first-hand experience of the markets (it was hard to deceive JP Morgan and Benjamin Strong when they were deciding whom to save in 1907) and only a limited range of other contacts who could dispute your account of what is really needed.

There's been some teeth-gnashing in the liberal blogosphere over Ryan Lizza's New Yorker profile of Larry Summers, the general thrust of which is that he supposedly went too easy on Summers, particularly on the issue of bank nationalization. Here's Dean Baker over at his American Prospect blog:

In terms of the bank bailout, some of us were worried that we were effectively taxing the whole country to support the rich bastards that put the economy in the toilet. Bank profits now stand at a record share of GDP and the bonuses at Goldman are as big as ever. What did the critics get wrong?

I didn't get into the nationalization debate in my earlier post about Ryan's piece, both because I think he got it right, and because I've pretty much said everything I have to say about nationalization already. But as this is apparently still very contentious, I'd just make a couple points in Ryan's (and Summers's) defense:

1.) Are the optics/politics of having taxpayers subsidize banks back to profitability pretty lousy? Yes, they're lousy. But much worse politics, I think, is a botched attempt to nationalize banks.

2.) Is having taxpayers subsidize banks back to profitability offensive from the standpoint of distributive justice? Yes, very offensive. But much worse from the standpoint of distributive justice is spending a couple trillion dollars to nationalize banks and failing to solve the problem--possibly making it much, much worse.

3.) Were there good reasons to believe that bank nationalization would fail? Yes, extremely good.* In fact, when Larry Summers grilled Tim Geithner on whether his plan was aggressive enough--and whether nationalization might be something worth considering--Geithner came back and laid out all the numerous ways that nationalization could be a fiasco. And Summers, who is not known for his credulousness in discussions of economic or financial policy, was persuaded.

You simply cannot talk to these guys and not appreciate how much some of them wanted to be more aggressive with the banks at various points--Geithner would say as much when he got agitated in internal discussions--but realized they couldn't in good conscience recommend that course to the president. And they were right. (For what it's worth, I say this as someone who initially supported nationalization.)

As I've said before, I admire the Fed chairman's political touch, which he demonstrated again today by making a key concession to Fed critics and skeptics: Apparently Bernanke is now willing to share power for keeping an eye on systemic risk with a council of regulators.

The good news is that the Chinese have decided to try to resolve the dispute between our two countries over their tire exports at the World Trade Organization, meaning "the disagreement may be containable," as the Journal puts it today. (For those just tuning in, the administration announced Friday it was imposing a tariff of up to 35 percent on imports of Chinese tires after the U.S. International Trade Commission found that the tires "disrupted" the domestic market.)

The bad news is that the financial relationship between our countries has created a stubborn underlying tension--driven largely by domestic politics--which the tire back-and-forth has highlighted. The Times Hong Kong correspondent, Keith Bradsher, got at this nicely in his piece yesterday:

I'm coming a little late to Sheila Bair's intriguing Times op-ed from last week, but I think Tim Fernholz basically got it right over at The Prospect: Bair wasn't kvetching about the administration's regulatory proposals--the kind of thing that got her in Tim Geithner's crosshairs a few weeks back. She was taking aim at even more radical proposals for regulatory consolidation, like what Sen. Mark Warner lays out here. 

Basically, the administration wants to fold the underwhelming Office of Thrift Supervision (OTS) into the Office of the Comptroller of the Currency--the two agencies that regulate federal-charted banks--and rename it the National Bank Supervisor. (Under the status quo, big banks and other institutions can essentially pick their regulator. In the run-up to the financial crisis this tended to bring them to the doorstep of the OTS, which was perceived as weak and did its best to live up to those expectations. It "regulated" AIG Financial Products, for example.) Sen. Warner proposes consolidating not just those two agencies, but also the bank-regulatory functions of the FDIC and the Federal Reserve, both of which currently oversee state-chartered banks.

On March 15, Treasury Secretary Tim Geithner and a top lieutenant named Lee Sachs were summoned to the Roosevelt Room for a three o'clock meeting with the president and his chief advisers. For Team Obama, early March had been the psychological low point of the financial crisis. The Dow had sagged to a post-crisis nadir of 6440, with the stock prices of banks like Citigroup and Bank of America stuck in remainder-bin territory.

For those who come directly to The Stash rather than clicking through from the homepage, here are two recent pieces of mine that might be worth checking out. The first is a profile of Lee Sachs, Tim Geithner's top financial markets advisor at Treasury.

The debate over re-regulation of the financial sector has finally, and irreversibly, turned partisan. This helps define issues in ways that may be more familiar and thus easier to understand.

China has arrived ... again. Beijing is growing confident enough in its own power and position in the world that it is increasingly and actively influencing world events. It can choose--and has chosen, in many cases--to play a helpful role in tackling shared threats. But China has also been standing its ground on disagreements with the United States.

There are three views on who exactly is behind financial regulatory reform package that has just been presented. Each view has distinct implications for political dynamics going forward.

Writing in the Washington Post this morning, Tim Geithner and Larry Summers outline a five point plan for dealing with the underlying problems in our financial system, titled "A New Financial Foundation." 

The authors are not completely clear on what they think caused the current crisis, but you can back out some points from their reasoning--and the implicit view seems quite at odds with reality.