Why Geithner and Summers Represent Change at Treasury

Tim Geithner and Larry Summers were the top two candidates for Treasury Secretary in the Obama administration, and today at noon ET we will officially hear that both are joining Obama’s economic team. Geithner will head up the Treasury Department and Summers will be director of the National Economic Council. Having both of these men, rather than having to choose only one, seems to be a great idea and should bode well for future economic policy.

In what might prove to be an important development, we are not installing a CEO into the Treasury Secretary slot. President Bush’s record nominating people for this post has not been very impressive, as two of his former Treasury Secretaries were forced to resign, and the jury is still out Paulson’s effectiveness thus far. What did those three men have in common? They were all corporate CEOs before heading to Washington.

Paul O’Neill was CEO of Alcoa (AA) for 13 years before he left for the public sector. He resigned after 2 years and was replaced by John Snow, who had been CEO of CSX (CSX) for 15 years. Paulson came along in 2006 after running Goldman Sachs (GS) for 9 years. Obviously being a CEO should not exclude you from consideration for the top job at Treasury, but I think it will be interesting to see if it proves to not be the best resume for the job.

Full Disclosure: No position in AA, CSX, or GS at the time of writing, but positions may change at any time

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5 Thoughts on “Why Geithner and Summers Represent Change at Treasury

  1. umoo.com on November 26, 2008 at 3:14 PM said:

    The stocks rallied on the news that Geithner was to be secretary. This is enough evidence of the confidence people have in the tandem to bring about change.

  2. Anonymous on November 26, 2008 at 5:57 PM said:

    Chad, just recently you posted a good article about cause and effect.

    The inability of O’Neill and Snow to perform well during their mandates has likely anything to do with them serving as CEOs at previous periods of their lives.

    Whatever Geithner manages to do will hardly have much relation with him NOT being CEO either.

    At the end of the day, a CEO is a top level manager and that’s exactly what the Treasury Department Chief position is.

  3. Chad Brand on November 29, 2008 at 10:31 AM said:

    I guess I see it differently. Geithner is going to decide how to spend the TARP money. I would not want a CEO in that job, but rather someone who best understands how various uses of that money would likely impact both the economy and the credit markets.

  4. Anonymous on November 29, 2008 at 7:39 PM said:

    Well no argument with your preferences, but they should not exclude CEOs from the list.

    let me put it another way: CEO is a title, right?

    OK, what title should your candidate have?

  5. Chad Brand on December 1, 2008 at 6:26 AM said:

    To me it’s not about title, but about skill set. Given the power the TS will have in implementing the TARP, I don’t think management skills are what is most important, but rather, a strong understanding about which uses of TARP funds would be more likely to work than others.

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