President Obama made official what everybody has suspected for days now: Jack Lew will be the next Secretary of the Treasury. Leaving 1500 Pennsylvania Avenue is Timothy Geithner, a lifelong public servant who was absurdly perceived by many to be a puppet of Wall Street. His replacement, who has spent the majority of his professional life in public service and academia, is already being opposed by one U.S. Senator partly for his three short, yet lucrative years on Wall Street. So, what does Wall Street think of a Secretary Lew?
Well, the reviews are in, and they appear to be positive. Take for instance, this press release from the Financial Services Forum, a financial and economic policy organization made up of the CEOs of 19 of the largest financial institutions in the world (and chaired by Goldman Sachs’ Lloyd Blankfein). So, why does Wall Street support Lew’s nomination? Is it because he is one of them? Of course not, but it is because they see how he can help them.
The one thing that upsets the apple cart more than anything on Wall Street is uncertainty. The debt ceiling and budget fights that will define the coming months in Washington can create the ultimate form of uncertainty on Wall Street. As noted in the Financial Services Forum press release, Wall Street sees Lew as well suited to handle this task. President Obama labeled the veteran of many budget fights a “Master of Policy.” Finally, Lew appears to be in lock step with Obama in terms of keeping the debt ceiling out of budget negotiations. If successful at that one task, Lew will remove much of the uncertainty on Wall Street.
Second, while Lew may not have been “one of them” on Wall Street for long, he appears to sympathize with the bankers in Manhattan. As noted by many, including Senator Sanders, Lew did participate in the deregulation of Wall Street during the Clinton Administration and refused to blame deregulation for the financial crisis while going through the OMB nomination process. As discussed on this site, Washington and Wall Street will be seeing a lot of each other in 2013. History suggests that Lew could be a willing dance partner for the banking lobby.
Finally, on this point of lobbying and deals, the praise from Wall Street could just be a wise move from people who make deals for a living. Instead of poisoning negotiations with nasty and personal rhetoric before they even start, Wall Street has decided to play nice with a man they need on their side.
For the most part, Wall Street did everything they could to help out the Republicans during the election season. But that’s over and now its back to business. Maybe Republicans can help themselves in the upcoming budget negotiations by taking a page out of Wall Street’s book.