Austan Goolsbee as staff director and chief economist; William H. Donaldson, SEC Chair, 2003-05; Roger W. Ferguson, Jr., president and CEO, TIAA-CREF; Robert Wolf, chairman and CEO, UBS; David F. Swensen, CIO, Yale University; Mark T. Gallogly, founder and managing partner, Centerbridge Partners L.P.; Penny Pritzker, chairwoman, Pritzker Realty Group; Jeffrey R. Immelt, CEO, GE (parent company of NBC News); John Doerr, partner at Kleiner, Perkins, Caufield & Byers; Jim Owens, chairman and CEO, Caterpillar Inc.; Monica C. Lozano, publisher & chief executive officer, La Opinion; Charles E. Phillips, Jr., president, Oracle; Anna Burger, chairwoman, Change to Win; Richard L. Trumka, secretary-treasurer, AFL-CIO; Laura D'Andrea Tyson, dean, Haas School of Business at the University of California at Berkeley; Martin Feldstein, professor of Economics, Harvard.
The first troubling aspect of this board is that it has been created at all. The President already has a full Department of Treasury and of Commerce to deal with economic issues. Besides this, the Council on Economic advisors, created in 1946, is also supposed to advise the President. Then, there is the National Economic Council as well as the Domestic Policy Council. If this isn't enough, the Federal Reserve is also always available for counsel.
All of these folks are mandated by law to be selected and most are also then approved by the legislature. Yet, that doesn't seem to be enough advice for President Obama. So, he has created yet another set of advisors. Once again he has a set of advisors that operate out of the scope of the normal government apparatus. Furthermore, this new council has no specific mandate and so their mandate is whatever it wants, or can make.
One troubling aspect of this council is that all will keep their so called day jobs. This includes being Chief Executive Officer of such companies as General Electric and Caterpillar. Will their dual roles also create a conflict of interest? Only time will answer that questions. Such advisory boards are not new and they have traditionally been filled with such potential conflicts. In the prior administration, the President took all sorts of heat for VP Cheney's Energy Task Force. That board was also full of folks that represented varying interests within energy. As such, it is unclear if their advice was tainted by conflict or if it was legitimate.
The two names here that should raise serious eyebrows are Jeffrey Immelt of GE and Penny Pritzker of Pritzker Realty. GE is a conglomerate with tentacles nearly everywhere, including media. Will NBC News, CNBC, and MSNBC, now have tainted coverage because their collective boss is now a part of the administration? Furthermore, Immelt's record is rather sketchy. He took over from Jack Welch, one of the most legendary CEO's of all time, but since GE's stock and business has done a nosedive. The stock price is down nearly 70% since he took over in 2000. Furthermore, their credit division has nearly blown up. NBC has fallen hard during his tenure, and both CNBC and MSNBC continue to be mired in mediocrity. Immelt's record is anything but a record of someone who's advice the President ought to take.
Then there is Penny Pritzker. President Obama, when he was still a candidate, took some heat for his relationship with Pritzker. Pritzker was a majority owner in Superior Bank. Superior Bank wound up being closed down in 2001 for making far too many sub prime loans that went bad. In many ways, Pritzker, and her bank Superior Bank, is a pioneer in the sub prime crisis. In fact, Pritzker was at one time a favorite for the job of Commerce Secretary. She pulled out because of fears that her association with this bank would cause problems in her confirmation. There are no such problems now since this council needs no confirmation.
It remains what if anything this council will do. Yet, between its unclear mandate, its inherent conflict, and its make up, we should all watch closely to make sure it is a positive influence.
FYI -- sometimes you need to get all the facts
ReplyDeleteRegarding the Trib's editorial that criticized President Obama's choice of Penny Pritzker to serve on his Economic Recovery Advisory Board ("Obama's judgment: Poor & deteriorating," Feb. 8 and PghTrib.com), I have known Ms. Pritzker for many years.
Obama's selection of her is an excellent choice. Pritzker knows how to build businesses and create jobs and she is an experienced executive who understands many industries.
As for the Trib's statement that Pritzker was "intimately involved in the failure of Superior Bank of Chicago," which The Wall Street Journal said " 'engaged in unsound financial activities and predatory lending practices,' " Superior Bank closed eight years ago.
As CEO of Promontory Financial Group, which was engaged to advise on the Superior Bank matter, I know firsthand that Pritzker was not an owner or officer of the bank. She served as a director of the holding company of the enterprise, and business interests of her extended family owned 50 percent of the bank.
When the bank encountered difficulties, she stepped in to assist it. She and other family members agreed to have their business interests pay $460 million to the government to reduce losses.
In doing so, Pritzker went well beyond the norm and acted in an ethical and responsible manner.
Eugene A. Ludwig
Washington, D.C.
FYI, I am not impressed and I don't care. I often get folks defending those I speak of here and I will give you credit as you are the first to identify yourself.
ReplyDeleteI am a bottom line person. Superior Bank was family owned. It engaged in very risky behavior and she was on the board. That risky behavior cost billions and so the facts speak for themselves. That her family gave money to help with the downfall is admirable but it doesn't change what the bank did.