Citigroup chose Obama’s 2008 cabinet, WikiLeaks document reveals
Tom Eley, WSWS, Oct 15 2016
One month before the presidential election of 2008, the giant Wall Street bank Citigroup submitted to the Obama campaign a list of its preferred candidates for cabinet positions in an Obama administration. This list corresponds almost exactly to the eventual composition of Barack Obama’s cabinet. The memorandum, revealed by WikiLeaks in a recent document release from the email account of John Podesta, who currently serves as Hillary Clinton’s campaign chair, was written by Michael Froman, who was then an executive with Citigroup and currently serves as Pindo trade representative. The email is dated Oct 6 2008 and bears the subject line “Lists.” It went to Podesta a month before he was named chairman of Obama’s transition team. The email was sent at the height of the financial meltdown that erupted after the bankruptcy of Lehman Brothers on Sep 15. Even as Citigroup and its Wall Street counterparts were dragging the world economy into its deepest crisis since the 1930s, as the email shows, they remained the real power behind the façade of Pindo democracy and its electoral process.
Froman’s list proved remarkably prescient. As it proposed, Robert Gates, a Bush holdover, became Sec Def; Eric Holder became attorney general; Janet Napolitano, Sec Homeland Security; Rahm Emanuel, White House CoS; Susan Rice, UN ambassador; Arne Duncan, Sec Education; Kathleen Sebelius, Sec Health & Human Services; Peter Orszag, head of the OMB; Eric Shinseki, Sec Veterans’ Affairs; and Melody Barnes, chief of the Domestic Policy Council. For the highly sensitive position of Sec Treasury, three possibilities were presented: Robert Rubin and Rubin’s close disciples Lawrence Summers and Timothy Geithner. Obama chose Geithner, then president of the Federal Reserve Bank of New York. Geithner, along with Bush Sec Treasury (and former Goldman Sachs CEO) Henry Paulson and Fed Chairman Ben Bernanke, had played the leading role in organizing the Wall Street bailout. Rubin had served as Sec Treasury in the Clinton 42 administration from 1995 until 1999, when he was succeeded by Summers. In that capacity, Rubin and Summers oversaw the dismantling of the Glass-Steagall Act, which had imposed a legal wall separating commercial banking from investment banking. Immediately after leaving Treasury, Rubin became a top executive at Citigroup, remaining there until 2009. A notable aspect of the Froman memo is its use of identity politics. Among the Citigroup executive’s lists of proposed hires to Podesta were a “Diversity List” including in Froman’s words:
African American, Latino and Asian American candidates, broken down by Cabinet/Deputy and Under Assistant/ Deputy Assistant level, and a similar document on women.
Froman also took diversity into account for his White House cabinet list, “probability-weighting the likelihood of appointing a diverse candidate for each position.” This list concluded with a table breaking down the 31 assignments by race and gender. Citigroup’s recommendations came just three days after Bush 43 signed into law the Troubled Asset Relief Program, which allocated $700b in taxpayer money to rescue the largest Wall Street banks. The single biggest beneficiary was Citigroup, which was given $45b in cash in the form of a government stock purchase, plus a $306b government guarantee to back up its worthless mortgage-related assets. Obama played a critical political role in shepherding the massively unpopular bank bailout through Congress. The September financial crash convinced decisive sections of the corporate financial elite that the “hopey changey” Democrat candidate would be better positioned to contain popular opposition to the bailout than his Republican rival Walnuts McCain. As president, Obama not only funneled trillions of dollars to the banks, he saw to it that not a single leading Wall Street executive faced prosecution for the orgy of speculation and swindling that led to the financial collapse and Great Recession, and he personally intervened to block legislation capping executive pay at bailed-out firms.
The same furtive and corrupt process is underway in relation to a Hillary Clinton or Donald Trump administration. Froman’s email is one of many thousands released by WikiLeaks from the account of Podesta. Those communications, such as the Froman email, which expose who really rules Pindostan, have been virtually ignored by the media. The pro-Democrat Party New Republic called attention to it in an article published Friday, but the story has received little if any further coverage. The media has instead focused on salacious details of Republican presidential nominee Donald Trump’s sexual activities, designed, in part, to divert attention from the substance of the Clinton campaign-related emails being released by WikiLeaks and other sources. The New Republic drew attention to the Froman memo not because it opposes such machinations, but as a warning to the interests it represents that they must move now to influence the eventual composition of a Hillary Clinton administration. New Republic author David Dayen wrote:
If the 2008 Podesta emails are any indication, the next four years of public policy are being hashed out right now, behind closed doors. And if liberals want to have an impact on that process, waiting until after the election will be too late.
The Most Important WikiLeaks Revelation Isn’t About Hillary Clinton
David Dayen, New Republic, Oct 14 2016
The most important revelation in the WikiLeaks dump of John Podesta’s emails has nothing to do with Hillary Clinton. The messages go all the way back to 2008, when Podesta served as co-chair of Obama’s transition team. And a month before the election, the key staffing for that future administration was almost entirely in place, revealing that some of the most crucial decisions an administration can make occur well before a vote has been cast. Michael Froman, who is now Pindo trade representative but at the time was an executive at Citigroup, wrote an email to Podesta on Oct 6 2008, with the subject “Lists.” Froman used a Citigroup email address. He attached three documents: a list of women for top administration jobs, a list of non-white candidates, and a sample outline of 31 cabinet-level positions and who would fill them. Froman wrote to Podesta:
The lists will continue to grow, but these are the names to date that seem to be coming up as recommended by various sources for senior level jobs.
The cabinet list ended up being almost entirely on the money. It correctly identified Eric Holder for the Justice Department, Janet Napolitano for Homeland Security, Robert Gates for Defense, Rahm Emanuel for CoS, Peter Orszag for the OMB, Arne Duncan for Education, Eric Shinseki for Veterans’ Affairs, Kathleen Sebelius for Health and Human Services, Melody Barnes for the Domestic Policy Council, and more. For the Treasury, three possibilities were on the list: Robert Rubin, Larry Summers, and Timothy Geithner. This was Oct 6. The election was Nov 4. And yet Froman, an executive at Citigroup, which would ultimately become the recipient of the largest bailout from the federal government during the financial crisis, had mapped out virtually the entire Obama cabinet, a month before votes were counted. And according to the Froman/Podesta emails, lists were floating around even before that. Many already suspected that Froman, a longtime Obama consigliere, did the key economic policy hiring while part of the transition team. We didn’t know he had so much influence that he could lock in key staff that early, without fanfare, while everyone was busy trying to get Obama elected. The WikiLeaks emails show even earlier planning; by September the transition was getting pre-clearance to assist nominees with financial disclosure forms.
We certainly want an incoming administration to be well-prepared and ready to go when power is transferred. For Obama, coming into office while the economy was melting down, this was particularly true. But the revelations also reinforce the need for critical scrutiny of Hillary Clinton, and for advocacy to ensure the next transition doesn’t go like the last, at least with respect to the same old Democrats scooping up all the positions of power well in advance. Many liberal pundits have talked about the need to focus exclusively on Donald Trump, and the existential threat he presents, in the critical period before Election Day. And there is a logic to that idea. Trump would legitimately be a terrifying leader of the free world (sic! – RB). But there are consequences to the kind of home-team political atmosphere that rejects any critical thought about your own side. If the 2008 Podesta emails are any indication, the next four years of public policy are being hashed out right now, behind closed doors. And if liberals want to have an impact on that process, waiting until after the election will be too late. Who gets these cabinet-level and West Wing advisory jobs matters as much as policy papers or legislative initiatives. It will inform executive branch priorities and responses to crises. It will dictate the level of enforcement of existing laws. It will establish the point of view of an administration and the advice Hillary Clinton will receive. Its importance cannot be stressed enough, and the process has already begun.
The wing of the Democrat Party concerned about personnel decisions made its opinion known almost two years ago. Dan Geldon, now chief of staff to Senator Elizabeth Warren, met with Dan Schwerin, a top adviser to Clinton’s campaign, in January 2015. According to an email follow-up with Podesta and others, Geldon “was intently focused on personnel issues, laid out a detailed case against the Bob Rubin school of Democratic policy makers.” He was also “very critical of the Obama administration’s choices.” The “Bob Rubin school” is named for the former top executive at Goldman Sachs and Citigroup and first Clinton administration Treasury secretary. It is composed precisely of the kinds of Democrats that the Warren wing opposes on domestic policy, particularly on financial matters. In the Obama administration, that school won out. Froman, chief of staff to Rubin at Treasury, gave options for Treasury secretary that ranged from Rubin himself to Summers and Geithner, two of his key protégés. In another 2008 email Rubin imagined for himself a “Harry Hopkins” position in the Obama administration. The Rubin school dictated the Obama administration’s light-touch policy on bank misconduct (which resulted in no serious legal or fiduciary consequences for the major players) and its first-term approach to the financial crisis (which was defined by a stimulus package that even at the time was criticized for being woefully inadequate, as well as a premature turn to budget-cutting). These are exactly the flaws that Geldon, Warren’s emissary, stressed. According to Schwerin:
(Geldon) spoke repeatedly about the need to have in place people with ambition and urgency who recognize how much the middle class is hurting and are willing to challenge the financial industry.
Around the same time as that meeting with Geldon, the Clinton campaign was setting up a dinner meeting with its economic policy team, Geithner, Summers, and members of the investment firm Blackstone (along with Teresa Ghilarducci, a retirement security researcher). This is a fight over who dominates the Democrat Party’s policy thinking in the short and long term. In 2008, the fight was invisible and one-sided, and the fix was in. In 2016, both sides are angling to get Clinton to adopt their framework. Those predisposed to consider Clinton some neoliberal sap might not agree, but this is actually a live ball. Presidents lead coalitions, and they have to understand where their coalition is and how things change over time. Peter Orszag this week suggested a trade-off: Give the Warren wing its choices on personnel, in exchange for more leeway to negotiate an infrastructure package with Republicans that gives big tax breaks to corporations with money stashed overseas. While that deal needs more detail, it reveals the power the Warren wing has, relative to the Obama era, to make significant strides on appointments. Which side will win? The rank and file can actually have a voice in this, to make it known what personnel decisions would be acceptable or unacceptable. They can’t do it by ignoring evidence or sitting on their hands. The demand to only hold one thing in your head at a time, that Trump must be stopped, would squander this opportunity.