Larry Summers is gone now. His two years of duty as the head of the National Economic Council are over. He will return to Harvard, where he was once kicked out as President, to become a professor. He will certainly make millions of dollars a year as a consultant to foreign governments, corporations, and financial institutions. Summers is 56-years-old and looks older. Now is the time to save for his retirement.
The speculation is that the Administration will replace Summers with a person more sympathetic to large business, a group that President Obama has alienated. Perhaps he will pick Jeff Immelt, the head of GE (NYSE: GE), or Ivan Seidenberg, the head of Verizon (NYSE: VZ), which just appointed the man likely to be his successor.
The next man to leave the financial arm of the executive branch will be Treasury Secretary Tim Geithner.
There has been speculation for months that he would be asked to leave. The Administration’s unsuccessful attempts to improve unemployment, housing, and economic growth can be blamed on him, although he has been as powerless as anyone else to improve the American economy. But someone needs to be blamed, particularly in the world of politics in which a sitting President will see his party likely lose control over the House of Representatives and perhaps the Senate. Geithner would be a sacrifice to improve relationships with his opponents, particularly if Obama placed a Republican in the job.
A large number of Treasury Secretaries or other senior presidential advisers have come from Goldman Sachs Group (NYSE: GS). But, its current CEO Lloyd Blankfein is associated with Wall Street’s high compensation problems and shifty business practices. The hero of the banking industry, at least for now, is Jamie Dimon, the head of JPMorgan Chase (NYSE: JPM), who is credited with effectively leading his firm through the financial crisis. And then there is John Mack who has stepped down as CEO of Morgan Stanley (NYSE: MS). Mack has held almost every senior job in the investment banking industry and does not have as much to do with his time as when he was a chief executive.
The perception among people who care about whom the Treasury Secretary is has become that anyone is better than Geithner. His failures are as much the fault of the times as they are any decisions he has made. But, he will be gone and gone soon. The only mystery about the matter is who will replace him.
Douglas A. McIntyre