But reports this morning suggest that Obama might look to name someone from the corporate world, more bluntly, a “Woman CEO,” thus killing two birds — keeping gender balance and placating the business community — with a single stone. Who might that “Woman CEO” (shudder) be? Speculation is centering on Anne Mulcahy, the former head of Xerox.

Would it even be feasible to name such a non-economist to a head economic position? Apparently, yes — the job is more management than heavy academic lifting, which is left to the Council of Economic Advisers, now headed by Austan Goolsbee. Keith Hennessey, a director of the NEC for George W. Bush, explains the gig clearly:

The NEC Director (Summers) runs the economic policy process.  It’s a process management role.  When an economic policy issue needs a Presidential decision, the Director of the NEC manages the process within the White House and the Executive Branch that ultimately results in a Presidential decision.  Policy council staff run many meetings and conference calls.

The NEC Director generally has an advisor role and an honest broker role.  The advisor role is the high visibility one that everyone thinks is fun:  you get to tell the President what you think he should do on every economic policy decision he needs to make.

The honest broker role consumes much of the NEC Director’s time.  Each week the NEC Director and his or her staff of about twenty run dozens of meetings and conference calls of senior Administration officials to discuss and debate policy questions, gather recommendations, and ultimately advise the President.  In my view, the best NEC Directors were the ones who would not impose their own policy views on this decision-making process, but instead would let the 5-20 other senior advisors to the President slug it out.  The NEC Director would make sure the debates were informed by accurate information, solid policy and legal analysis, and rigorous logic and strategy.  If a Cabinet Secretary or a senior White House staffer thinks that the NEC Director is going to prevent the President from hearing his or her advice, or that the NEC Director has his thumb on the decision-making scale, then that Cabinet official or White House staffer will often seek a back channel to bypass the decision-making process and provide unfiltered ex parte input to the President.  The President has to deal with so many issues and so many decisions that if this NEC-led process breaks down, the wheels eventually come off.

In addition to whatever personal skills and abilities he or she brings to the job, most of the NEC Director’s power comes from his or her proximity to the President (physically, bureaucratically, and sometimes personally), from the breadth of his turf, which covers all economic policy, and most importantly from the reality that he or she runs the meetings and controls the paper.  If the NEC Chair is effective and perceived as fair by other members of the President’s economic team, he also gains power from other senior advisors who want to help the NEC policy process succeed, even when they sometimes disagree with the President’s decisions.

Dr. Lawrence H. Summers, Director of the National Economic Council and Assistant to the President for Economic Policy, announced his plans to return to his position as University Professor at Harvard University at the end of the year.

Dr. Summers is the chief White House advisor to the President on the development and implementation of economic policy.  He also leads the President’s daily economic briefing.

“I will always be grateful that at a time of great peril for our country, a man of Larry’s brilliance, experience and judgment was willing to answer the call and lead our economic team.  Over the past two years,  he has helped guide us from the depths of  the worst recession since the 1930s to renewed growth.  And while we have much work ahead to repair the damage done by the recession, we are on a better path thanks in no small measure to Larry’s wise counsel.  We will miss him here at the White House, but I look forward to soliciting  his continued advice and his counsel on an informal basis, and appreciate that he has agreed to serve as a member of the President’s Economic Advisory Board.”

Dr. Summers said “I will miss working with the President and his team on the daily challenges of economic policy making.  I’m looking forward to returning to Harvard to teach and write about the economic fundamentals of job creation and stable finance as well as the integration of rising and developing countries into the global system.”

Dr. Summers overseas the coordination of economic policy making across the Administration, leads the President’s daily economic briefing and has been a frequent public spokesman for the Administration’s policies.

Under Dr. Summers’s leadership, the National Economic Council has been at the center of economic policy making in the Obama Administration.  He served as an architect of the Recovery Act and other job creation measures and the Financial Stability Program.  As co-chair of the President Auto Task Force, he led the restructuring of the U.S. automobile industry.  He has also played a leading role in managing our international economic relationships including China, developing the President’s health care plan, opening the broadband spectrum, and in international climate negotiations.

Summers is the third major economic figure to depart the White House in recent months, following Christina Romer, the head of the Council of Economic Advisers, and Peter Orszag, the head of the Office of Management and Budget. More to come…

I think [Treasury Secretaries Robert Rubin and Larry Summers] were wrong and I think I was wrong to take [to take their advice], because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them and they don’t need any extra protection, and any extra transparency. The money they’re putting up guarantees them transparency. And the flaw in that argument was that first of all sometimes people with a lot of money make stupid decisions and make it without transparency.

Clinton’s admission underscores the basic importance of financial regulation; during the boom and bust, derivatives, worth at least $4.5 trillion notionally, went entirely unregulated.

There was speculation that President Obama might appoint Brainard — a longtime academic economist and Clinton appointee who has been working as a counselor in Treasury for months — over the Easter recess. But the recess appointment would have only lasted until the end of the congressional term. Now, once Brainard’s nomination passes an up-or-down vote, she will be in her position permanently.

• The director of the National Economic Council, Larry Summers, paid lucrative visits to Goldman
• Treasury Secretary Tim Geithner’s chief of staff Mark Patterson was a Goldman lobbyist
• Geithner’s mentor Robert Rubin was a Goldman guy (and now serves at Citigroup)
• Commodities Futures Trading Commission chair Gary Gensler was co-head of finance at Goldman
• The National Economic Council’s deputy director Dianna Farrell did time at Goldman
• Federal Reserve Bank of New York Chairman William Dudley was Goldman’s chief economist for a decade

But one of the most prominent Goldman alumni in Europe today is Mario Draghi, currently the governor of Italy’s Central Bank — and perhaps a key player in Goldman’s backroom deals to hide Greece’s debt.

Draghi is poised to become the president of the European Central Bank, the entity in charge of the Eurozone’s common monetary policy. Despite the fact that he has denied any involvement in the 2000 and 2001 currency trades that hid enough of Greece’s debt to allow it to join the Eurozone, economist Simon Johnson reports that Draghi was, in fact, at Goldman and working on Greek issues in 2002, when Goldman helped sell Greek bonds without informing customers that Greece was hiding its debts.

Will these revelations scuttle Draghi’s chances of ascending to the chairmanship of Europe’s Central Bank? Goldman, and its derivatives, are increasingly unpopular in Europe. But Draghi should take heart: European voters don’t get to decide who heads the Central Bank — and he’ll have plenty of company atop the international banking scene. The head of Canada’s central bank, Mark Carney, is a Goldman alum too.

He added: “In past blizzards, those statistics have been distorted by 100,000 to 200,000 jobs.”

What Summers meant to say was that the additional 100,000-200,000 people who, indeed, are unemployed due to the winter storms might well end up re-employed before too long. Many of those left jobless because of the storms are employed in the construction industry, which will pick up as weather conditions improve, and others were left unemployed when stores or restaurants closed during the storms, which impeded hiring.

However, with long-term unemployment at its highest level since the Great Depression and new statistics out showing that fully 40 percent of those collecting unemployment have been doing so for at least six months (let alone Jim Bunning’s one-man blockade of unemployment benefits for those very Americans), this administration ought to be smarter about focusing on the individuals facing job losses and unemployment. After all, the unemployed currently have a more favorable view of President Obama than those who have jobs — so long as Larry Summers can keep his foot out of his mouth.

Elizabeth Warren, chair of the Congressional Oversight Panel (EPA/ZUMAPRESS.com)

The White House wants it. Senate leaders support it. The House has already passed it. And, in the wake of the worst financial upheaval since the Great Depression, many consumer groups and state regulators say it’s vital if the country is to avoid another economic collapse. Yet the proposal to create a new consumer financial protection agency is, for all practical purposes, dead on arrival in the Senate.

Just call it the public option of the finance reform debate.

[Congress1]Indeed, Republicans are already treating the protection agency like poison. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) may have abandoned his finance-reform talks with Sen. Richard Shelby (R-Ala.), an outspoken foe of a separate agency to protect consumers. But Shelby’s replacement at the negotiating table is Sen. Bob Corker (R-Tenn.), who said recently that, just as Republicans were unanimous in opposing the public plan in the health care debate, so too are they united against an independent consumer financial protection agency, or CFPA — a proposal championed by Elizabeth Warren, head of the TARP oversight panel.

“For Republicans, including me, a free-standing agency is a nonstarter,” Corker told The Hill last week. Instead, Corker wants to carve out a consumer protection unit within a much larger bank regulator being proposed by Dodd.

Yet that idea worries many consumer advocates, who argue that the agency charged with ensuring the soundness of the nation’s financial institutions shouldn’t also be responsible for protecting consumers. It’s not difficult to imagine, for instance, situations in which firms profit from unfair or abusive practices. In those cases, the strategies that bolster the firms’ financial health might do so by taking advantage of the same confused consumers the agency is supposed to safeguard.

“These two missions can conflict,” Travis Plunkett, legislative director of the Consumer Federation of America, said Tuesday at a finance reform discussion hosted by the New America Foundation in Washington. “It would be like putting the Department of Commerce in charge of the EPA. … It would mean that we haven’t learned the lessons of the crisis.”

No matter. Despite the recent Wall Street collapse — a crash that required trillions of dollars in federal help and has left nearly a fifth of the country underemployed — the powerful financial services industry has retained remarkable sway on Capitol Hill. Not only have the nation’s largest firms rebounded to a point where seven- and eight-figure bonuses are again the norm, but they’ve also pumped tens of millions of dollars into K Street to lobby against the Democrats’ reform plans in general and the CFPA in particular.

The industry warns that too much government oversight would stifle innovation and ultimately limit access to the same credit that’s the lifeblood of the economy — not unlike the health insurance industry warning that the public option would ultimately harm the same consumers it’s designed to help. And lawmakers are listening. Not only are Republicans united against the CFPA, but a handful of Democrats — including Sens. Tim Johnson (S.D.), Ben Nelson (Neb.) and Mark Warner (Va.) — are wary as well. That opposition means that the Democrats would have had trouble creating the CFPA even before the surprise victory last month of Sen. Scott Brown (R-Mass.), which has forced the Democrats’ health care reforms to the back burner.

The saga highlights the dilemma facing Democrats in Congress and the White House in the run-up to November’s mid-term elections. On one hand, party leaders want to bolster their populist image; on the other, they’ll have to rally the support of at least a few business-friendly senators to get anything at all through the upper chamber, where 60 votes are required to pass everything. Meanwhile, Democrats also don’t want to alienate the same Wall Street firms that gave heavily to the party in 2008. If the enactment of strict new financial regulations was a foregone conclusion in February of 2009, a year later it’s looking like the Democrats will have to settle for weaker tea.

Another hurdle facing the CFPA, according to some observers, has been the failure of Democratic supporters to sell the importance of their proposal. Tim Fernholz?, writer at The American Prospect, pointed out that most voters have experience with mortgage loans, or car loans, or credit card rates or overdraft fees. The question is: why haven’t CFPA supporters been able to convince those same folks that a consumer protection agency would work to their benefit? “It really should be something that’s politically popular,” Fernholz said.

Jonathan Mintz, commissioner of New York City’s Department of Consumer Affairs, agreed that, despite all the evidence that the industry needs a shorter leash, the Democrats’ messaging has failed to resonate with the public at large. “You can be very specific about the harm that’s being done,” he said. “Suddenly what you’re talking about is a literal problem with a literal solution.”

Not that all Democrats are done fighting for the CFPA. “There needs to be a new agency with new powers for whom this will be a primary mission,” Lawrence Summers, White House National Economic Council director, said last month. More recently, White House Press Secretary Robert Gibbs echoed that sentiment, telling reporters Friday that an independent consumer protection authority remains “a great priority” of President Obama.

Congress is half way there. In December, House Democrats passed a financial reform package that included a stand-alone CFPA. Sponsored by Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, the bill would prohibit certain complex financial products, require greater transparency surrounding terms and rein in misleading marketing campaigns. It received exactly zero Republican votes.

Some state financial regulators warned Tuesday that the industry has evolved quickly, with more and more companies dabbling in the complicated products that few seem to understand. “The fringe sector really isn’t so fringe anymore,” said Sarah Bloom Raskin?, Maryland’s commissioner of financial regulation.

Plunkett agreed, noting that the recent turmoil was caused by a series of regulatory failures that allowed the nation’s financial institutions to make a habit of abusive practices — a “parade of horribles,” Plunkett said, that extended well beyond sub-prime mortgage lending into the realm of credit cards, overdraft fees and payday loans. Because no one agency concentrates exclusively on protecting consumers, he said, they were able to focus elsewhere without much consequence — until it was too late.

“It’s a failure of will,” Plunkett said. “No one had consumer protection as a priority.”

And if Corker and the others have their way, that trend will continue.

Larry Summers was not out to get me. I was not present at the famous interview between him and Cornel West, but in my opinion (Summers) merely used my name in a clumsy attempt to cajole Cornel West into behaving more like a professor, less like a celebrity. Larry Summers was doing many good things at Harvard before his enemies there succeeded in ousting him.

“Conservatives agree that as point person, you failed,” Rep. Kevin Brady (R-Texas) told the Treasury secretary yesterday during a hearing of the Joint Economic Committee. “Liberals are growing in that consensus as well. Poll after poll shows that the American public has lost confidence in this president’s ability to handle the economy. For the sake of our jobs, will you step down from your post?”

Geithner, of course, didn’t budge, arguing that it was Congress that left the new administration “an economy falling off the cliff.”

“Almost nothing of what you said represents a fair and accurate perception of where this economy is today,” Geithner told Brady.

And on some counts he’s right. Since Geithner’s swearing-in 10 months ago, the stock market has rebounded and the investment-banking industry has flourished. Yet little of that high-altitude recovery has trickled down to middle-class America, where homeowners continue to sink and unemployment is at a 26-year high.

That discrepancy has led some liberal Democrats to go after the White House recovery strategy as well. Earlier in the week, Rep. Peter DeFazio (D-Ore.) blasted Geithner and others on Obama’s economic team for hoarding unspent Wall Street bailout money instead of allowing Congress to tap some of it for infrastructure projects — a plan that would help shift the recovery to Main Street.

“Unfortunately, the president has an adviser from Wall Street, Larry Summers, and an adviser from Wall Street, Timmy Geithner, who don’t like that idea,” DeFazio told MSNBC’s Ed Schultz Wednesday. ”They want to keep the money [because] there may be more needs on Wall Street.”

None of this, of course, should come as any surprise. Geithner headed New York’s Federal Reserve Bank for the five years prior to his appointment atop Treasury, forming entrenched allegiances to Wall Street. So if there’s anything new in these latest episodes, it’s only that Congress is finally discovering where the loyalties of the Treasury secretary actually rest.

Short answer: yes.

From the pool report:

One thing to note is that Summers appeared to be nodding off near the beginning of Obama’s remarks. And then he DID nod off, doing the head on
the hand and then head falling off the hand thing. Photogs seemed to be having a field day. All other officials in the room appeared fully awake.