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Thursday, July 12, 2012

Goldman’s PR Men: From Treasury

A former spokesman for U.S. Treasury Secretary Timothy Geithner announced in July 2012 that he would head to Goldman Sachs at the end of that month. Andrew Williams is the second of the Secretary’s spokesmen to head to the bank. These moves, and the related speculation that Geithner himself would decamp to Goldman, only reaffirm the sense that part of Goldman’s strategy is to have a revolving door between the bank and the federal government. The previous boss at Teasury, Henry Paulson, had been a CEO at the bank.

At the very least, the prospect alone of becoming wealthy at Goldman can be expected to weigh on a government official as he or she considers policies in which the bank has a financial stake. Additionally, the presence of ex-government folks inside Goldman can be expected to put the bank in a good position from which to lobby current government officials, using the “connections.” Mired in scandal following the financial crisis of 2008, Goldman’s leadership no doubt understood the value in hiring good PR men. Such hires could even put a good face on the cozy relationship between the bank and people still in government.

This “revolving door” dynamic contributes toward the capture of regulators by the regulated. Hence SEC, for example, can be soft on Wall Street by citing insufficient staffing while the reality is far more sordid in terms of the relationship between business and government. Lest it be thought that this problem is easily solved, I would simply point out that businesses have sought to influence governments that would regulate them since “way back.”

Legislated restrictions on former government officials can be circumvented (and can reduce the quality of people interested in public service), though prohibiting employment (or financial enrichment) by the industries related to the officials’ respective purviews for many years seems reasonable. At the very least, without such a restriction the specter of a conflict of interest hurts the legitimacy of democratic institutions and offices. Additionally, elected officials can demand that their appointees have a strong public-service ethic, even if it does not keep the government policy-makers and regulators from thinking of their own post-government-service enrichment. In other words, it was much too easy for the officials at Treasury (even in a Democratic administration!) to find their way to the regulated. It is as if the American public were blind to the conflict of interest in such an easy revolving door. Perhaps sustaining this blind spot would be part of Williams’ job at Goldman.


Bonnie Kavoussi, “Andrew Williams, Ex-Treasury Spokesman, Headed to Goldman Sachs,” The Huffington Post, July 12, 2012. http://www.huffingtonpost.com/2012/07/12/andrew-williams-goldman-sachs_n_1669021.html?utm_hp_ref=business