Three years ago, a very unhappy Larry Summers conceded that he would not become Fed Chair when he withdrew from the running to become Ben Bernanke's replacement on September 15, 2013, following some dramatic pressure by the press and numerous liberal economists. However, we now know that that was only the most recent of Larry's disappointments. According to one of the Podesta emails released today, it appears that America was this close to having Larry Summers as the appointed replacement to Hank Paulson as Treasury Secretary by the Obama administration in 2009. However, that did not happen as a result of what may have been a letter from the late powerful corporate lawyer Bob Pirie, founder of Skadden Arps, who on November 7, 2008 wrote an email to John Podesta by way of Harold Ickes, explaining why Obama should pick Tim Geithner or Paul Volcker, and not Larry Summers.
From the leaked Podesta email:
Harold would you be kind enough to forward this to John Podesta? He must be very busy and perhaps this is a better way of communicating than via the phone. give a yell when you are coming this way. Bob Dear John, Although still in a state of euphoria over the results on Tuesday, I am concerned that the appointment for Treasury Secretary offers either a great opportunity or a lost one or in one case would create a future problem.
The latter, obviously, is Larry Summers who is an extra bright version of Donald Rumsfeld, arrogantly unpleasant to his subordinates, dismissive to his equals and pandering to his superiors. I spent some time with Neil Rudenstine on Wednesday, and he would use even stronger terms and would be happy to talk to anyone on the subject.
On a positive note, I think the one person with global credibility is Paul Volcker and credibility is as useful a currency as cash for addressing our problems and perhaps even rarer. He was at my house for election eve and did not object to my forwarding his name, but, properly, will not seek it directly.
The answer to the age issue, putting aside that he is demonstrably very active, would be to appoint Tim Geithner as deputy with the clear understanding, but not commitment, that he would succeed in a year or two. Geithner was at my house for dinner last spring with Paul, Felix, Henry Kissinger and a few others to discuss the situation as it then existed, and I was impressed with him, but he seemed a little young (that may be a reflection on me not him) so a few years of seasoning would not be a bad thing. I have talked to John Whitehead, Felix Rohatyn and Joe Flom about this, and they have authorized me to say that they fully support it.
Three months later, on January 26, Tim Geithner was was appointed US Treasury Secretary.
Who was Bob Pirie and why did his opinion matter? "During the 1960s and early 1970s Pirie was associated with law firms in Boston. His work for the Harold Hughes election campaign during this time landed him on the master list of Nixon political opponents." And some more from his NYT obituary:
He had been involved in mergers and acquisitions while practicing at Gaston, Snow, Motley & Holt in Boston in the early 1970s when he joined forces in a hostile takeover with Joseph Flom, a founder of the powerful New York firm Skadden, Arps, Slate, Meagher & Flom. Mr. Pirie developed into an aggressive mergers-and-acquisitions lawyer, spending much of his time in New York. In his book “Skadden: Power, Money, and the Rise of a Legal Empire” (1993), Lincoln Caplan described Mr. Pirie as “an iconoclast.”Mr. Caplan wrote:
“A lawyer who worked with him said, ‘He bulls his way through everything in a larger-than-life way, and he knows he’s doing it. He affects a kind of entitlement, with a confidence and a flair that enable him to pull it off.’ ”
Mr. Pirie was a partner at the firm from 1973 until 1982, when he was named president and chief executive of Rothschild Inc., the New York investment banking arm of the Rothschild family. Among the deals he was involved in at Rothschild were the media mogul Robert Maxwell’s takeover of the publishing company Macmillan and James Goldsmith’s of the paper giant Crown Zellerbach.
“Bob Pirie is a man with green fingers who knows how to make money,” David de Rothschild, head of the Rothschild bank in Paris, said at the time.
Mr. Pirie later became senior managing director of Bear Stearns & Company and vice chairman of investment banking at SG Cowen Securities.
We find it amusing, and ironic, that the American people may owe a career lawyer/banker and ex-Rothschildian a favor for preventing Larry Summers from becoming Obama's Treasury Secretary.