BUSINESS
12/16/2010 11:51 am ET Updated May 25, 2011

Peter Orszag's Move From The White House To Citigroup Should Definitely Trouble You

Ezra Klein has a post up today that responds to James Fallows, who had "gently chided" the Washington Post for failing to publish a single story about Peter Orszag's move from the Obama administration to zombie bank Citigroup. Oh, hey, in case you are a Washington Post reader just joining us today, Peter Orszag is going to Citigroup.

Klein's take is that Orszag probably isn't going to Citigroup for the money (though, lo, he shall have some, I'm sure), leaving the possibility that he is doing it for the love, or because the lifestyle of the think-tank/academic/newspaper columnist/deep-thought haver doesn't offer the same "tempo."

Also, in Klein's view, though the value Citigroup can extract from Orszag is perhaps troubling, there's no record of "unscrupulous behavior" on Orszag's part, so why are we worried, exactly? What if we just all agree to look past the seeming corruptness with glancing curlicues of speculation, leavening what would appear to be the Obvious?

What Citigroup gets in Orszag is a brilliant policy mind and a deep understanding of government, not to mention a thick rolodex that certainly still has some friendly names on it. The reasons those things are valuable to Citigroup make most of us uncomfortable, and that goes double after the government bailed Citigroup out during the financial crisis. I highly doubt that the meetings between Orszag and Citigroup left him with the impression that he was getting hired to help with governmental affairs. His portfolio, in fact, is explicitly international. But I don't know anyone who believes that it will stay that way.

So, in other words, Orszag brings a lot of government connections to the table at Citigroup. It's stuff that Citigroup totally wants. Citigroup has already come to realize some of the value of what Orszag has in his pocket. But maybe ALL OF THIS IS LOST ON ORSZAG! And maybe he wants to do, I don't know, something "international?" Nah ... no one believes that it "will stay that way." But is it outside the realm of possibility? Is it not possible that Citigroup has hired Orszag to recover the Raifuku Maru, or become an international ghost hunter?

At this point, maybe we should remember the salient point that James Fallows was trying to make:

Over the past two-plus years, Obama (and GW Bush) policies played a crucial role in saving Citi -- and in not holding its executives (or other senior financial-world figures) accountable for polices that brought on the world financial crisis or reining in top-end pay as profitability has returned. Now a senior member of the Obama team -- Orszag was budget director -- was going straight to one of those top-end jobs, even as his former colleagues in the administration have their hands full fighting the social, economic, and political effects of the crisis on "ordinary" Americans who can't find jobs or are losing their homes.

My mistake was not in pointing out this problem, nor in identifying it as the kind of thing that is notable precisely because no one even stops to remark on it any more. It was in the sentence that said, "Objectively this is both damaging and shocking." That's the difference between one-draft web postings and many-times-edited print articles. What I meant was, "Politically this is damaging, and it should be shocking." Because the real point is that official Washington should notice this instance of structural corruption -- but won't.

Not that anyone is out there branding those moving through the revolving door, as Orszag is, with the scarlet letters of unscrupulous behavior -- the point is that the revolving door itself bespeaks an unscrupulousness that simply goes unnoticed. And in terms of how the government relates to the financial services sector, the spin of that door is near frictionless. The overall seaminess of that enterprise is so underreported that just last week, one of the Post's own reporters felt like they had to obtain a quote in order to get the dictionary definition of "lobbyist" into their story.

Klein writes: "What's difficult about Orszag's decision to go to Citigroup is that I can see how it was the right decision for him even as it was the wrong thing to do. But pile up enough of those decisions -- this one, for instance -- and it is very hard to explain to anyone why they should trust government, even when the people in question haven't yet worked outside the public sector."

That doesn't really explain all the time taken to embark on a mission of speculative justification for Orszag's choice, but the larger point is that if a "pile" of "these decisions" would make it "hard to explain to anyone why they should trust government," then let's make a pile, already! Here's just one example of such a pile. Let a distrust of government flourish!

One last note here. Klein describes Citigroup as a "really big, really powerful institution." Let's take a minute to remember that Citigroup's institutional strength is, in part, a product of the Financial Accounting Standards Board easing the mark-to-market accounting rule, which allows the bank to assign their worthless assets a value that's rooted in dreamland. Those who lobbied for that rule change were veterans of the revolving door. So, I'm quite sure Peter Orszag knows what the score is, for frack's sake.

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