It is a small subset of the larger problems we are facing. But when historians look back to write the history of this crisis, it will be difficult to explain why everyone conspired together to face the crisis with an unstaffed Treasury Department. It’s truly astounding. There were hints of this back in January. But it’s really only bleeding into the press now. Just yesterday, likely nominees for two critical positions pulled their names out of consideration.
The reasons for the delays seem clear at least in broad outlines. The Obama administration has set pretty stringent ethics requirements, relating to lobbying and conflicts of interests. That’s taken lots of people out of contention. And that’s been aggravated by the vetting snafus on Geithner and Daschle, which have probably made them still more gun-shy.
Then there’s a whole separate obstacle. Lots of the people who would staff a Treasury at the moment are compromised by their own roles in the debacle we’re facing. Whether that’s because so many of the people with the requisite experience are tainted or whether it’s just that so many of the people the principals — Geithner, Summers, et al. — know and trust are compromised is unclear to me.
Nor is it only people who caused the mess in the private sector but people in the regulatory agencies who enabled it or failed to prevent it.
To some degree, you can knock the Republicans for not helping to fast-track the confirmations of anyone who is immediately needed at Treasury. As I mentioned last night, Republicans are holding up two critical appointments on the National Economic Council for what they readily admit is payback. But fundamentally it’s a Democratic administration and a Democratic Congress. We’re in the midst of the worst economic crisis in almost anyone’s living memory. And we have a Treasury Department where a lot of the key offices are empty.