Confidence Men: Wall Street, Washington, and the Education of a President

Confidence Men

Wall Street, Washington, and the Education of a President

---

By Ron Suskind

HarperCollins

Copyright © 2011 Ron Suskind
All right reserved.
ISBN: 9780061429255

---

Chapter One

September 17, 2010
President Barack Obama dances lightly down the four
marble steps to the Rose Garden and across the flagstones to a waiting
lectern. He still glides, elegant and purposeful, in that tall man's
short-step—a ballplayer returning to the court after a time out.
Today, September 17, 2010, he has committed to putting some "points
on the board," in the sports parlance of Rahm Emanuel, his chief of
staff. The president needs to show the country that he hasn't lost his
game, the ineffable confidence, the surety of stance and delivery that
propelled a man with little political experience to scale cosmic heights
and to realize what felt, on Election Day, like democracy's version of the
moon landing.
Through recent history, America has considered itself something of a
providential miracle, a country that kept finding reasons to believe in its
Manifest Destiny. That faith, sorely tested over the past several decades,
found itself restored with dizzying ebullience when Barack Obama and
his beautiful family stepped onto the stage in Chicago's Grant Park as
America's First Family. It was a sensation of such intensity as to startle
many across the country and around the world into believing in the
promise of America, the original and long-burning beacon of the democratic
ideal.
The legacy of that moment is ever more found in the lengthening
shadow it casts. In the nearly two years since, Barack Obama, like an
archangel returned to earth, has been forced to walk the flat land and
feel its hard contours. What, if anything, it has awakened in him remains
unclear—at present, he is clearly struggling to get his bearings. And yet
it is impossible to see the president and not search out signs of that man
from Grant Park, who strode so boldly across history's confetti-strewn
stage.
On this warm late-summer afternoon, with Congress out of session,
Obama has convened the press to announce the launch of a new agency,
the Consumer Financial Protection Bureau. It has been designed to
protect American consumers from the predations of the financial ser,vices
and banking industry, which over the past ,couple
of decades has grown
vast and insatiable by inventing, for the most part, new ways to market,
sell, and invest in debt.
The woman standing awkwardly at Obama's left hip, Harvard Law
School professor Elizabeth Warren, has become the nation's town crier
on the subject of bankruptcy and debt. In the two years since the
economic crisis, she has emerged from nowhere to trumpet the story of how
debt was turned into a velvety weapon, how engorged financial firms
deceptively packaged it, sold it as securities, and extracted usurious profits
from American consumers, especially those in America's once-vaunted
middle class. The notion of a consumer financial product agency, a
freestanding, independently funded entity like the Federal Communications
Commission, was originally hers, unveiled in an article she published
in the spring of 2007. The truth is that no one much cared for the idea,
until her unheeded concerns turned up at the center of the worst financial
meltdown since the Great Depression.
So today is a long-delayed victory for Warren—almost. Somehow
nothing in the Rose Garden is quite as it seems. The president praises
Warren, whom he says he met at Harvard Law School, as though they
are old friends. They're not, and Warren only became a professor at
Harvard Law the year after Obama graduated from it. In fact, over the past
two years, while Warren has seen herself lionized on magazine covers
and in prime-time interviews as a leading voice for tough, restorative
reforms, the president seems to have been studiously avoiding her. Part of
the problem, clearly, is that she has been acting the way ,people
expected
and hoped that man from Grant Park would.
This has caused discomfort not only for the president, but also for
his top lieutenants, including the boyish man in the too-long jacket at
Obama's right hip, bunched cuffs around his shoes, looking more than
anything like a teenager who just grabbed a suit out of his dad's closet.
That's Treasury secretary Tim Geithner, looking sheepish. Only those
in his inner circle at Treasury, though, can precisely read what's behind
that expression: a string of private efforts across the past year to neutralize
Warren. The previous fall, Geithner huddled with top aides to develop
what one called an "Elizabeth Warren strategy," a plan to engage
with the firebrand reformer that would render her politically inert. He
never worked out a viable strategy—a way to meet with Warren without
drawing undesirable comparisons—and so, like the president, he didn't.
What the Treasury Department did do, unbeknownst to Warren, was
embrace demands from the banking industry to create a bureau under the
condition that Warren would not be allowed to lead it. But as the financial
reform bill moved to a vote in early summer, industry lobbyists were
so aggrieved at the idea of an agency—they felt it unsupportable under
any conditions—that they didn't bother to call in their chits on Warren.
In fact, they played it just so. The industry managed to get the
proposed agency shrunk into a bureau that would live under the auspices of
the Federal Reserve, the government's greatest mixed metaphor of public
purpose and private self-regard, representing as it does the dual interests
of a sound monetary policy and the health of the banking industry.
Beyond that, the bureau's rules can be vetoed by a two-thirds majority of
a panel of other financial regulators—an indignity of institutionalized
second-guessing known to few other agencies.
But after financial regulatory reform legislation passed in July, the
prospect of Warren at the bureau's helm quickly grew into a movement:
complete with Internet write-in campaigns, online petitions, flurries of
editorials, and even a viral rap video—certainly a first in the history of
appointing government regulators.
Warren would seem the easiest of choices. Since his earliest days on
the campaign trail, Obama had spoken passionately about restoring
competent government, and with it competent regulators. With the midterm
elections less than two months away, he could have used a confirmation
battle over Warren to draw a much-needed distinction between his
administration and those, mostly Republicans, who dared to side publicly
with America's big banks and financial firms. Warren's celebrated ferocity
looked tailor made to revive Obama's vast grassroots campaign network.
Like an encamped army with nothing to do, the foot soldiers of the
campaign had fought among themselves a bit, eaten the leftover rations,
and then drifted back to private life. Field commanders still in touch
with the White House signaled by midsummer that a Warren confirmation
battle would rally the troops and, according to one, "at least show
what we stand for." On the other side was the financial ser,vices
industry,
which hurled nonspecific attacks at Warren, claiming she was arrogant,
disrespectful, and power-hungry. It had begun castigating Obama as
"anti-business," a charge the industry asserts would be definitively
confirmed by the appointment of Warren.
In mid-August, Warren was finally called in to meet with the President.
Obama began their sit down saying, "This isn't a job interview."
It wasn't. The president had already decided what he was going to do,
in a managerial style that had become his trademark: integrating policy
options and political prognostication into a prepackaged solution—,announced
before the game even started.
Combatants over a Warren nomination will never take the field. Shuffling
papers on the lectern in the Rose Garden, Obama says, with a few
passive locutions, that Warren will be on the search committee to find
someone to run the bureau:
"She was the architect behind the idea for a consumer watchdog, so
it only makes sense that she'd be the, um ..." He stumbles briefly, as
though the text is pulling him off balance... "She should be the
architect working with Secretary of Treasury Geithner in standing up the
agency." He adds that she'll be an adviser to both him and Geithner and
"will also play a pivotal role in helping me determine who the best choice
is for director of the bureau."
That's basically it. None of the troops are energized, and anyone who
feared the financial debacle might produce a true innovation, a rock star
regulator, is left unruffled.
The press conference ends with reporters shouting as the president
turns to leave. One yells above the rest, "Why didn't you put her up for
confirmation?"
A moment later the president walks from the Rose Garden to the basement
of the White House. Having finished with Geithner and Warren,
he strolls unaccompanied, free of handlers and Secret Ser,vice,
through a
long subterranean hall on his way to the Situation Room.
"Hey, Alan, how you doing?" he pipes up, spotting Assistant
Secretary of the Treasury for Economic Affairs Alan Krueger coming the
other way. Krueger carries an additional title, held over from the nineteenth
century: chief economist of the United States.
"Just fine, Mr. President," a somewhat surprised Krueger responds.
"In fact, today's my birthday."
The two men stop to chat for a moment at the entrance to the White
House mess. The president has grown to appreciate Krueger's input over
the past eighteen months. A Prince,ton
professor and frequent stand-in
for Geithner at Obama's morning economic briefing, Krueger is something
of an oddity in the upper reaches of government: he's an actual
researcher. Typically, high-ranking economists do their substantive,
elbows-deep research in the earlier stages of their careers. Not Krueger.
Not only had he been publishing groundbreaking studies up until joining
the administration in January 2009, but he had also gone so far as to
commission targeted research over the past year, using Prince,ton
funds and
resources when he found the government's research apparatus too slow.
The current economic crisis, he felt, was too thorny and too unusual
not to study with fresh eyes and first questions. Characterized by both
rock-bottom interest rates and a catastrophic de-leveraging spiral, the
crisis defied most historical precedents from which actionable policies
might be drawn. And the White House needed nothing so much as a
stream of creative remedies, one right after the next.
The administration undershot the crisis, convincing itself by the
summer of 2009 that the economy had turned the corner and, at the
same time, recognizing that it would be a jobless recovery of stunning
disparities, with restored GDP growth alongside fast rising unemployment.
In fact, internal administration projections in June 2009, when
unemployment was at 8 percent, noted that joblessness would average
a whopping 9.8 percent in 2010. Krueger and others began to work
furiously to find innovative ways that the government might stimulate
job growth. Being a close friend of both National Economic Council
chairman Larry Summers, who was his graduate adviser at Harvard,
and Office of Management and Budget director Peter Orszag, whom he
mentored at Prince,ton,
made Krueger one of the few ,people
to whom
both of Obama's top economic advisers deferred. All to no avail.
After the stimulus bill was passed in February 2009, little else happened
on the jobs front for a year and a half. Proposals were talked to death
without resolution; the few that were adopted tended to lack a coherent
political strategy to make them legislative reality. The day before, the
Census Bureau had announced that poverty had hit a fifteen-year high.
Even the Wall Street Journal's editorial page had bemoaned that middle
class incomes dropped a stunning 5 percent between 2001 and 2009, a
lost decade laying claim to the country's worst economic performance
in half a century. Unemployment stood at precisely the 9.8 percent the
administration's prognosticators had foretold.
Obama, who was at the center of this dispiriting process, tried to keep
things light and breezy in the hallway with Krueger. He seemed improbably
ebullient, wanting to talk.
"So, how old?"
"A little older than you," Krueger says. "Just turned fifty."
Obama steps back, appraisingly.
"Fifty? You're looking pretty good for fifty."
He means it. Krueger notices for the first time that the president, a
year his junior, has really aged in office, bits of gray hair now sprinkling
his crown, wrinkles growing around his eyes. Krueger is about to say,
"Well, my job's easier than yours," but he catches himself and instead
goes with "You should see me on the basketball court." Maybe this will
win him an invitation to one of Obama's famous five-on-fives.
None forthcoming, and Obama closes it out. "So what are you doing
for your birthday?"
"Going back to Prince,ton,"
Krueger says. He's a breath away from adding: soon for good.
He's through with D.C. He has decided to return home a day after
the midterms, exhausted for sure, but more than that, tamping down the
sense of missed opportunity. As the two men part, he can't help but wonder
if Obama feels the same way. How could he not?
Waiting in the Oval Office are Jann Wenner, the founder of Rolling Stone
magazine, and his executive editor, Eric Bates. They have been there for
an hour, since just before the Elizabeth Warren event, waiting and
preparing for an interview with the president. Rolling Stone, failing to score
an Obama interview since the campaign, has nonetheless gone through a
renaissance in the past two years, dealing some of the most forceful
criticisms of Wall Street and Washington and the collusion between the two,
with targeted shots directed at both Goldman Sachs and Obama himself.
So, for the president, today is all about forcefully answering the charge
from the progressive community—and a great many independents—
that what got him elected has not been evident in his governance. The
administration's strategy is to emphasize that the distance between the
hopes of Grant Park and the trimmed ambitions of legislative pragmatism
is not a fissure, rupture, or acquiescence, but rather the hard reality
of governing in a partisan era. All the better for those words to appear in
an organ of criticism, which is why Rolling Stone was chosen.
Obama enters his famous office and compliments Wenner, the stylish,
aging hipster, on his colorful socks: "If I wasn't president, I could wear
socks like that." Then he settles himself into a wing chair between marble
busts of his heroes, Abraham Lincoln and Martin Luther King, Jr.
Obama is ready to rebut criticisms head-on. But the questions today
do not pose much of a challenge, beginning with standard fare about
the state of the economy he inherited and Republican obstinacy that,
the president notes, reared up a day before his inauguration even, when
he learned that the Republican Caucus would vote as a bloc against the
stimulus package...

(Continues...)

---

Excerpted from Confidence Men by Ron Suskind Copyright © 2011 by Ron Suskind. Excerpted by permission of HarperCollins. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

---