"it's a serious problem if the only people who can really help craft financial industry policy are the people who profit from the financial industry."

What?

"I'm not sure that Summers could do this without listening to a lot of hedge fund managers."

Hunh?

No need to perpetuate the myth that only Wall Street insiders know how to reform Wall Street. Do you really think Joe Stiglitz and Dean Baker and the dozens of other people who've come up with rational plans to fix the banking crisis crafted their plans with input from hedge fund execs? Of course not, they understand markets and they under power. Hence they understand that you don't try to fix the banking crisis by continuing to give no-strings money to banks and now investors. You don't solicit advice from those who power must be diminished. Maybe more to the point, hedge funds and private equity firms should've had little to the do with the bailout, but now because of the Geithner-Obama-Wall Street-Summers plans, hedge fund managers--including some who are advising Summers--stand to get rich from it.

But there's no reason to think Summers's stint at DE Shaw corrupted him or changed him. He was hired in the first place because he's been a foe or regulation and a pimp for Wall Street for years. Can't really blame him for being who's been years. You can blame Obama for putting the economy in his hands.

Ezra, I think you are being way too kind to Larry. He had choices. He made them. Surely he must have been thinking of a future role in the federal apparatus. He compromised himself. He should be held to account.

Even more alarmingly, his 'shadow advisors' from the hedge fund industry. I can't accept that there aren't contrary voices with knowledge and experience who would be a counterweight to the hedgies and provide at least the appearance of balance. This stinks, at the top of the stinky scale (choose your own stink generator).

Obama is going to get into deep trouble if he doesn't do something to give the voters the feeling that he's listening to lots of views. Ignoring Elisabeth Warren is not a good thing. She would be a great Summers replacement or co-chair even.

Something is rotten in DC, and it's not the Danish Blue.

this may be the worst post Ezra ever wrote.
Finance was a reasonably well-functioning operation from the 1950s until the 1980s, when the neoliberals started working their magic.
Summers had a big part in screwing things up and those who benefited paid him back.

Color me less sanguine about the impact of receiving several million dollars from folks you are now tasked with regulating. I don't see why money would have less influence on Summers than (as you posit) his social and professional relationships with the people who gave him the money. In any event, however, I view this more as a seamless web of financial, professional and social influence whose principal effect is to make Summers less liable to view these guys in a critical light (as no doubt it was intended to do). In addition, although it would be awfully convenient for Summers to claim that his hedge-fund buddies are the only qualified people in the universe to help him, I have my doubts. And, no, I don't think the outcome will be a good one, and it's a disturbing scenario that liberals should be angry about.

Ezra's recent posts seem to confirm that the "inside the beltway" disease is unavoidable.

"I'm not sure that Summers could do this without listening to a lot of hedge fund managers."

Back in the day when progressives criticized the cozy relationship between members of the Bush administration and various industries, we liked to say that there's was a difference between listening to a man, and listening to a man whose paid you a hundred grand.

Gosh Ezra, first you defend beat-sweetners and now rent-an-official ethics. Is this part of a grand strategy for membership in the Village people?

Ezra (and to a lesser extent all the writers at TAP) does not criticize the Obama administration.

Please stop asking him to do so.

Ezra,

You're way off here-- for precisely the reason you mentioned-- the health care analogy.

Take health care as a counter-example. Though health care is also complicated, there are a lot of different pools of expertise. You have insurance industry executives, sure, but also advocates, doctors, hospital administrators, think tank fellows, regulators, academics, nurses, health economists, and many more.

So here's an equivalent financial industry list, without even really thinking.

-- Banks
-- Private equity
-- Institutional investors (as diverse as CalPERS, Harvard, Ford Foundation, etc.)
-- Mutual fund directors
-- Mutual fund companies
-- Regulators
-- Academics
-- "Think tank fellows" (yuck)
-- Economists
-- and "many more"

Obama had a great line during the campaign that health insurance companies can have a seat at the table, just not all of them. There is absolutely no question the same applies to the financial industry.

PS The more important health care analogy point that I've been meaning to say for a while:

Who is the Summers or Geithner of the health care team? Why is an issue as complicated and important as health care relegated two B-list policy "wonks" that have spent most of their career in DC? Why can't health care be led by someone with actual expertise in the field?

Excellent post. Not so excellent title. Hedge fund managers are not bankers, bankers are not hedge fund managers. Different people with different incentives.

Now, since the Geithner paln gives a very valuable private public partnership (with bonus Geithner put) to a small number of hedge fund managers, I sure want to know if they are the same hedge fund managers talking to Summers. However, they are not bankers.

Robert Waldman, to your question, the Times points out that one of his advisors is:

"Laurence D. Fink, the chairman and chief executive of BlackRock, a large money management company that hopes to play a potentially lucrative role in the administration's bank rescue plan."

And as you suggest, under a good plan, hedge fund managers wouldn't be included except maybe on the back end to buy assets back from the government after banks had been broken up.

wisewon is right! at least howard dean is a doctor and has practiced medicine. as governor and as a doctor he would be well aware of inefficiencies and waste in the system.

Robert Waldmann: However, they are not bankers.

Technically true, but not significant. Either way they're welfare recipients.

Well, I had to see what our "official apologist" for the Obama Administration had to say today.

...eeeeh gads, it's like reading the Pravda press releases in the 70's.

Blah...nobody outside wall street can understand wall street? Give me a break it's all basically the sophisticated art of counting.

Well he has to get over that "invisible hand" nonsense. Smart, rational people pursuing their own, unconstrained self interest does not a free market utopia create.

It caused a disaster.