The Obama campaign has been setting up events with various advisers in order to expand the universe of people who can be bought and sold for the sake of hope-ocracy (which sounds like...). From the Politico via Open Left:

A “Round Table Discussion” in Boston with Robert E. Rubin, who was Treasury secretary under President Bill Clinton and talked on the phone with Obama as the financial crisis broke out, cost $28,500.

To get his delusional take on the economy, the housing market, and so forth? Or maybe this is a measure of just how corrupt Bob Rubin is, and how worthwhile it is to buy your way into his inner circle.

Rumor has it that Charlie Rose was the only taker.

The American Prospect has another story this week on the next Treasury Secretary. This time, rather than laying out the landscape of potential Treasury picks, Robert Kuttner endorses FDIC chair Sheila Bair. I wholeheartedly agree with the crux of his argument: that the next Treasury Secretary, in the event of an Obama administration, should not be Larry Summers or another minion of Bob Rubin (Timothy Geithner).

Kuttner does not come out and say that in so many words, but that's what I took from the piece. The best case for Bair is the abysmal record of the other potential appointees, and the corrosive influence of the Rubin crowd in particular. Otherwise, the argument is a bit flimsy in places.

Larry Summers appears to be in the running for Treasury Secretary. The selection of Summers would be an outrage, given his atrocious record as one of the key government officials who laid the groundwork for this mess (not to mention his boarish and ineffective management style, which led to his resignation/firing as Harvard's president). But he is also hugely ambitious, seems to have a lot of support in Democratic circles, and is apparently traveling with Obama on a regular basis, according to Newsweek, so it seems highly likely that he will get some key post in the event of an Obama administration, if not Treasury Secretary.

I'll be posting embarrassing Summers tidbits over the next few weeks (and months, if Obama is elected). There are a lot of them, but I'm going to stick to ones that are economically relevant.

Here's a personal favorite, from the HarvardWatch archive:

All that money, all that power, and all the market can muster in response to his cheerpleading is this:

The Money Times: Buffet Plea Fails to Move Investors

Andrew Lahde, who made a name for himself by betting heavily on a collapse in the subprime market, recently closed out his hedge fund. His resignation letter is quite something. A teaser:

Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, “What I have learned about the hedge fund business is that I hate it.” I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.

Full letter at FT Alphaville.

A lot can be learned about the housing bubble economy from Arrested Development. For instance, this shot (of the Bluth family's model home) should be in history textbooks ten years from now:

Yesterday, in discussing FDIC chair Sheila Bair's affection for derivatives, I wrote that a quick way to get marginalized during the Clinton administration was to come out hard in favor of increased financial regulation.

Case in point: Brooksley Born, former head of the Commodity Futures Trading Commission. Born - unlike Bair, who had held the same post early in the Clinton administration - pushed for regulation of derivatives and was very outspoken about the problems she perceived. She was met with fierce opposition from other regulators, specifically Fed chair Greenspan, Treasury Secretaries Rubin and Summers, and SEC chair Levitt.

Over the past week Born's story has received coverage in the New York Times and the Washington Post. Both pieces make it clear that Born was up against a Wall Street boys club that was disdainful of her and looked on her as an outsider. Their arguments against regulation were extremely weak, so they defeated her agenda by ganging up on her, and she quit in 1999.

There are several truly awful potential Treasury Secretaries for both McCain and Obama, people whose appointment would be a real travesty, an insult to the intelligence of the voting public. Sheila Bair, FDIC chair, who has been mentioned as a potential nominee, isn't one of them, from what I can tell - she is not of Wall Street, not in the old boys' club, and was sounding warnings about the subprime crisis long before folks like Paulson noticed.

Things seem to be going relatively smoothly at the FDIC, also, even as they see us through a string of unprecedented bank failures. Bob Kuttner had some nice words for her a few weeks ago (too nice, actually).

That said, Bair is going to be the first person featured in my efforts to shed some light on the historical record and increase the google-ability of the embarrassing quotes and wrongheaded policy positions of Treasury Secretary candidates.

A time capsule:

It's depicted in financial journals as a wild three-headed dragon. One Congressman wonders if it may lead to another savings and loan crisis. Few outside the banking world understand it.

The derivatives industry has an image problem.

This worries bank and brokerage firm executives, who've responded with a detailed campaign to educate members of Congress about the fast-growing market of exotic financial contracts.

That was in an AP article in November 1993. The one member of Congress was the legendary Henry Gonzalez, one of the last great progressive leaders in the House.