Gene Sperling, a leading contender for a top economic post in the White House, made millions on Wall Street even as the economy faltered.
The adviser to Treasury Secretary Tim Geithner is near the top of President Barack Obama's list of candidates to replace Larry Summers as director of the National Economic Council, HuffPost reports. By appointing Sperling, the president would fuel perceptions that his administration is overly close to Wall Street, installing a policymaker who has not only overseen monumental deregulation of the financial sector, but has also collected hefty paychecks from its leading firms.
The next NEC director will help determine the administration's economic policy over the next two years. Summers, who last week left his White House post for a Harvard professorship, met with the president almost daily to discuss economic decisions. Long sympathetic to Wall Street interests, Summers pushed for deregulation of financial instruments under President Clinton, a policy that experts -- and Clinton himself -- now say was misguided, contributing to the worst financial crisis since the Great Depression.
Sperling, if appointed, would be expected to take a stance similar to that of Summers and former Treasury Secretary Robert Rubin, said those familiar with his history. (Rubin became chairman of Citigroup after leaving the Clinton administration and later resigned from that post in disgrace.) Sperling worked under Rubin in the early Clinton years, when Rubin was NEC director. In Clinton's second term, during Sperling's own tenure as NEC director, Congress repealed the Glass-Steagall Act, prompting a rule-easing that allowed Citigroup to become the world's largest financial services company.
Citigroup later required a $45 billion taxpayer bailout.
"He saw nothing at all wrong with the pattern of growth we had in place in the '90s," Dean Baker, co-director of the Center for Economic and Policy Research in Washington, said of Sperling. "He was not thinking at all critically, seeing that there were even any issues here."
Sperling's appointment would likely draw criticism from consumer advocates, who have clashed with Wall Street supporters in the debate over how the government should promote the economic recovery. By appointing Sperling, the president would be sending a message that his administration would continue to be sympathetic to big bank interests.
"It's striking that he's not concerned about the image," Baker said, referring to the president. "It might be better to keep them at a little distance -- not to have everyone on this staff be a former Rubin person."
Sperling has never worked full-time in the financial sector. But that hasn't prevented him from earning paychecks on Wall Street.
Goldman Sachs paid Sperling $887,727 for his advice in 2008, according to Bloomberg News's analysis of financial disclosure forms. Sperling advised Goldman on one of its charitable projects, known as "10,000 Women," which provides business education to women in poor countries.
It was a lucrative year for Sperling. During that time he also earned $250,000 for giving briefings to two hedge funds, Brevan Howard Asset Management and Sterling Stamos Capital Management. He also earned $480,051 as director of the Philadelphia Stock Exchange. During October 2007, he was paid to speak at an event sponsored by Citigroup, but the financial disclosure forms, according to Bloomberg, do not say how much that speech was worth.
"Once again, you would have someone who owes Goldman in a top economic position," said Robert Kuttner, co-editor of the American Prospect and co-founder of the Economic Policy Institute. "It's such an emblematic example of how these guys work."
All told, Sperling took home more than $2.2 million during 2008 and the first month of 2009.
It would take a typical U.S. worker with an income of about $49,777, more than 40 years to earn the sum that Sperling made in one. As NEC director, Sperling would help determine the policies that directly affect American middle class families.
Jenni LeCompte, a Treasury spokesperson, wouldn't comment on the record. Amy Brundage, a White House spokesperson, emphasized that the president has not yet made a decision as to the next NEC director.
Sperling's ties to the financial sector don't mean he would be unsympathetic to consumer interests, or to the interests of small banks and small businesses.
An advocate for community banks said Sperling has unique insight into the small business lending process. Sperling was a key adviser in the creation of a $30 billion account that small banks can access for funds, said Steve Verdier, executive vice president of Congressional relations for the Independent Community Bankers of America, a leading lobbyist group. The president signed the Small Business Jobs Act in September, creating the Small Business Lending Fund.
"He's had an opportunity to understand where small banks are coming from, and what our concerns are," Verdier said of Sperling.
According to the Obama administration's estimate, small businesses, which rely on small banks for loans, create about 70 percent of the nation's jobs.