The New York Times reports that several former government officials who helped organize the savings and loan bailout of the early 1990s are now putting that expertise to use by working as lawyers or lobbyists helping banks get a piece of the financial bailout — or even by investing in some of the bad assets to be offered for sale.
Much of this, it appears, amounts to little more than an example of the decades-old revolving door between government and private business. But the paper reports that at least one former top government official is advising both the Bush and Obama teams on how to respond to the crisis, while at the same time being involved in efforts to profit from it.
Some of these former federal officials, like L. William Seidman, the first chairman of the R.T.C., are serving as advisers — sharing ideas with Treasury Secretary Henry M. Paulson Jr. and the transition team for President-elect Barack Obama — even while they are separately directing investors or banks on how to best profit from this advice.“It is an enormous market,” said Mr. Seidman, who has already joined two such potential money-making efforts and is evaluating proposals to participate in a third. “I am enjoying this.”
As the chair of the Resolution Trust Corporation and the FDIC in the early 1990s, Seidman directed the government’s disposal of the assets of failed savings and loans. So no one’s suggesting that Paulson, and advisers to Obama, shouldn’t be able to call on him for advice this time around.
But it would be nice to know more about what kind of ideas Seidman, and others like him, are sharing with current and future policymakers, and how those ideas line up with their own flourishing financial interests. And that’s only more true given what we’ve learned about the inadequate efforts to monitor what the federal government has done with the bailout money and to protect against conflicts of interest.