President Obama’s best chance for turning around the economy is to make sure that Paul Volcker, Federal Reserve Chairman prior to Greenspan, is in charge of needed economic reforms. Although Tim Geitner showed promise when nominated Treasury Secretary, he looked more like Michael (Katrina) Brown than a competent leader in his first press conference. He may indeed be nothing more than a figure head for unregulated hedge and private equity funds. After all, the Chairman of the New York Federal Reserve Bank– where Geitner came from– was formerly with Goldman Sachs, and now works for a leading private equity fund.
Geitner actually proposed that these unregulated hedge and private equity funds could be a key part of the solution to the current financial mess, a mess they created. While Volcker is calling for immediate registration of hedge and private equity funds with the SEC, Geitner and Summers, both of whom have strong ties to these funds, are silent on the issue.
One has to ask how long the markets, in particular the equity markets, will wait for transparency and integrity to be restored before sending a strong message to President Obama. Below is an excerpt from a Bloomberg article summarizing Volcker’s concerns with respect to Summers and Geitner’s inaction.