Yesterday President Obama heralded his newly appointed Chief of Staff, to great fanfare from the Republicans, US Chamber of Commerce, Wall Street Journal and others. According to the Wall Street Journal,
The selection of Mr. Daley shows that the president is more concerned with reaching out to the independent voters and to the Republicans who now control the House and have greater numbers in the Senate.
Daley is the son of legendary Chicago Mayor Richard J. Daley and brother of the city’s current mayor, Richard M. Daley. He runs Midwest operations for the investment bank JP Morgan Chase, and his appointment is expected to help patch up Obama’s frosty relations with the business community after nasty battles over health care reform, taxes and government regulations.
So I am open-minded about this. Clearly Obama needs a change in program and needs someone who can reach across the aisle. But reaching across the aisle is not the same as capitulating.
Even the Huffington Post reporting is fairly sanguine on this.
Daley, the son and brother of Chicago mayors, has always been the Inside Daley, the one who deals quietly with the powers that be in the city and country — the brokers of money, commerce, family and tribal politics.
Daley is an ancestral Democrat, which means that he believes in the government’s role in helping people survive and live a decent life. He is an Irishman through and through, with a fierce faith in friends and loyalty. He is a big-city guy, at home in big-city haunts.
But he is not an ideologue of the left or right. He helped Bill Clinton pass free-trade agreements, even though Democratic union bosses hated them. Now a banker, he opposed some provisions of the bank-reform bill. He also expressed skepticism about the political and substantive wisdom of Obama’s spending a year on health care reform. He’s not for government for government’s sake.
The question for Daley is “who’s your daddy?” The revolving door between Wall Street and Washington power elites is still revolving. His predecessors have proven to be lap-dogs. As a big bank insider, Daley knows. He knows the games being played. He knows the scare tactics used to manipulate Washington for what they are, scare tactics designed to keep the status quo. He knows the business tactics and the business ethics. He knows the compensation structure and what it incents. He knows what management really cares about. He knows why executives shun shareholder empowerment. He knows why they offshore so many jobs. He knows why trading operations are housed where they are and how trans-national banks play the regulatory arbitrage game globally. He knows if the books are cooked. He knows if Primary Dealers get a heads up on Fed market actions and why they win in trading virtually every day, whichever way the markets move. He knows if they trade against their customers. He knows why they fight transparency. He knows why they fear Elizabeth Warren and may attempt to castrate her budget.
With this knowledge comes a greater responsibility.
Our financial system is past its prime. It is not longer suitable for the evolving society. So will Daley stand for the entrenched interests, or muster the courage to help the President usher in a new age by rigorous enforcement and funding of Dodd-Frank, such as it is, and by pressing for additional measures to close gaps in the legislation? Should a new crisis emerge, will he allow the process of creative destruction to take place with adequate systemic safeguards as proposed by Bill Black and Randall Wray? Will he permit bondholders to take the haircuts their risks and rewards warrant or will he support the big bank subsidy of implicit TBTF status?
Bill Daley, who’s your daddy?