Antonio Weiss’s nomination to become the Treasury Department’s next Under Secretary for Domestic Finance has generated a bitter, personal fight, pitting Wall Street supporters against progressive reformers. At issue is Weiss’s lifelong career as a Wall Street banker and whether this qualifies him for the position, which, among other things, oversees financial reform, consumer protection, and domestic economic policy. Supporters of Mr. Weiss insist that his Wall Street experience will serve him well in this position, and somewhat humorously try to prove his Main Street credentials by pointing to the fact that he is a publisher of the “progressive” Paris Review. How’s that for a Man of the People?
I am hardly one to think that people who work on Wall Street should be disqualified from government jobs. Earlier in my career, I spent seven years working at the New York Stock Exchange. The understanding of equity markets and securities regulation which I obtained in that job were highly valuable to me in later positions as Assistant Secretary for Financial Institutions at the U.S. Treasury Department and Chair of the Federal Deposit Insurance Corporation (FDIC). Obviously, we do not want to bar people from government just because they worked in the financial sector. But that is not the argument of Weiss’s critics. The real question is greater diversity in Obama’s appointments because it sure seems like the Wall Street Democrats are in charge. Let’s face it, most of this Administration’s financial appointments have not pushed for fundamental change in the way Wall Street operates. And the few that have — notably the CFTC’s Gary Gensler — have been unceremoniously escorted to the door when their terms were up. Indeed, two of the most reform-minded of all the sitting regulators are Tom Hoenig and Jeremiah Norton, who serve, respectively, as Vice-Chair and board member of the FDIC. Hoenig and Norton are known for their tough positions against too-big-to-fail and higher capital requirements for big Wall Street institutions. Ironically, they were proposed to the Administration by the Senate Republican Leadership.
Senator Elizabeth Warren has said “enough is enough.” As a former regulator who served in both the Bush and Obama Administration, I would agree that Wall Street perspectives too heavily dominate internal policy discussions and that a greater range of viewpoints is needed. For instance, why can’t we have a community banker to fill one of the two vacancies on the Federal Reserve Board? Why can’t we have a financial reformer like Tom Hoenig or Jeremiah Norton to fill the other? For that matter, why can’t we have a consumer advocate as Under Secretary for Domestic Finance? There would still be plenty of people among this Administration’s appointees to bring Wall Street perspectives to the table. But it’s a big world out there and decision-making would be greatly enhanced with the addition of those who are capable of understanding life west of the Hudson and south of the Potomac.
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The other troubling aspect of the Weiss nomination is the fact that his firm, Lazard, will pay him some $20 million in stock and deferred compensation once he assumes office. He would not get such a payout if he were to leave for another firm. This is a common Wall Street practice, and the industry defends it by saying it encourages highly talented and experienced financial executives to take government jobs. But such individuals are not joining the government to run the Peace Corp. They are assuming positions where their decisions could have a beneficial impact on their former employers. Only in the Wonderland of Wall Street logic could one argue that this looks like anything other than a bribe. Once upon a time, part of the nobility of joining public service was the willingness to make the financial sacrifice. We want people entering public service because they want to serve the public. Frankly, if they need a $20 million incentive, I’d rather they stay away.
If Antonio Weiss really wants to serve his country, perhaps the first thing he should do is decline the big payout. And if the Obama Administration really wants broader support for this nomination, perhaps they should package it with a few Main Street candidates – like a community banker and a financial reformer – to serve on the Federal Reserve Board. I have no doubt that Wall Street’s perspectives would continue to be heard in the marbled halls of government, but at least they would be balanced by those who worry less about Wall Street interests and more about the rest of the country which Wall Street (and our government) are supposed to serve.
Sheila Bair is a Fortune contributor. She was Chair of the FDIC from 2006 to 2011.