USTR Nominee Froman Called 'One Of The Most Egregious Examples Of The Way The Revolving Door Works Between Gov't And Business'
from the that-doesn't-bode-well dept
After posting a bit about Michael Froman, the new nominee for USTR, I was already skeptical that he’d be any improvement over the predecessor, Ron Kirk. After all, Froman was deeply involved in three of the worst free trade agreements that the US has negotiated over the past few years, which more or less set the model for the ambitious and dangerously misguided ACTA and TPP agreements. However, some others have pointed out that it may be even worse, highlighting a Felix Salmon blog post from 2009, in which he calls Michael Froman out as being an “egregious example” of the revolving door problem we’ve highlighted between regulators and the businesses they regulate.
[Michael Froman’s] one of the most egregious examples — up there with Bob Rubin, literally — we’ve yet seen of the way the revolving door works between business and government generally, and between Citigroup and Treasury in particular.
That’s troubling, to say the least. Salmon points to a Matt Taibbi piece for Rolling Stone that highlights some very questionable activity on the part of Froman, including keeping his job at Citibank while helping to select the economic team for Obama’s first term… the very folks who would be in charge of regulating Citibank.
Leading the search for the president’s new economic team was his close friend and Harvard Law classmate Michael Froman, a high-ranking executive at Citigroup. During the campaign, Froman had emerged as one of Obama’s biggest fundraisers, bundling $200,000 in contributions and introducing the candidate to a host of heavy hitters — chief among them his mentor Bob Rubin, the former co-chairman of Goldman Sachs who served as Treasury secretary under Bill Clinton. Froman had served as chief of staff to Rubin at Treasury, and had followed his boss when Rubin left the Clinton administration to serve as a senior counselor to Citigroup (a massive new financial conglomerate created by deregulatory moves pushed through by Rubin himself).
Incredibly, Froman did not resign from the bank when he went to work for Obama: He remained in the employ of Citigroup for two more months, even as he helped appoint the very people who would shape the future of his own firm….
That piece also talks about Froman’s role in getting Timothy Geithner his job at Treasury, right after Geithner helped craft the bailout of Citibank that basically put all the risk on the Fed and didn’t require any Citi concessions or exec changes, despite their own culpability in making a ton of bad investments.
Geithner, in other words, is hired to head the U.S. Treasury by an executive from Citigroup — Michael Froman — before the ink is even dry on a massive government giveaway to Citigroup that Geithner himself was instrumental in delivering. In the annals of brazen political swindles, this one has to go in the all-time Fuck-the-Optics Hall of Fame.
Wall Street loved the Citi bailout and the Geithner nomination so much that the Dow immediately posted its biggest two-day jump since 1987, rising 11.8 percent. Citi shares jumped 58 percent in a single day, and JP Morgan Chase, Merrill Lynch and Morgan Stanley soared more than 20 percent, as Wall Street embraced the news that the government’s bailout generosity would not die with George W. Bush and Hank Paulson.
I was hopeful that perhaps we’d get a USTR who was in favor of openness and transparency, but it looks like Froman may be the quintessential example of a backroom dealer, who already has a reputation for pushing through bad trade agreements.