As the sovereign debt crisis continues to roil Europe, the eurozone is currently in the process of trying to save the euro single currency by deposing elected political leaders — Papandreou in Greece, Berlusconi in Italy, the socialists in Spain — and replacing them with "technocrats," or economic experts who, in theory, will be able to make the dispassionate, non-political, utterly essential decisions that need to be made.
Can't happen here, right? Well, maybe it's happened already. Take as Exhibit A one Tim Geithner, U.S. Treasury secretary and according to the Atlantic's Dan Indiviglio, a man disliked by all but his boss, one Barack Obama.
Geithner is probably the closest creature to a technocrat we have in American government. And he runs practically the entire economy (the Federal Reserve runs the rest, and its part is extremely not insignificant). So who needs to hire technocrats when we already have one in the top job?
Technocrats always think they know better, based on their expertise. Geithner hasn't often tipped his hand that this is how he thinks. But it's how he thinks. This is from a lengthy Bloomberg report on how the nation's biggest banks accessed a Fed lending facility, to the tune of a staggering $7.8 trillion (more than half of the entire annual U.S. GDP), to remain solvent in the throes of the financial crisis:
On May 4, 2010, Geithner visited [former Delaware Senator Ted] Kaufman in his Capitol Hill office. As president of the New York Fed in 2007 and 2008, Geithner helped design and run the central bank’s lending programs. The New York Fed supervised four of the six biggest U.S. banks and, during the credit crunch, put together a daily confidential report on Wall Street’s financial condition. Geithner was copied on these reports, based on a sampling of e- mails released by the Financial Crisis Inquiry Commission.
At the meeting with Kaufman, Geithner argued that the issue of limiting bank size was too complex for Congress and that people who know the markets should handle these decisions, Kaufman says. According to Kaufman, Geithner said he preferred that bank supervisors from around the world, meeting in Basel, Switzerland, make rules increasing the amount of money banks need to hold in reserve. Passing laws in the U.S. would undercut his efforts in Basel, Geithner said, according to Kaufman.
Geithner argued that the issue of limiting bank size was too complex for Congress. Or, stated another way, there's a decent chance that Congress would limit bank size, given a chance. So let's not let Congress get that chance. Better to leave it up to...the technocrats in Switzerland.
Water under the bridge now. But it's worth noting that the same six megabanks that were kept alive by the Fed — JP Morgan, Bank of America, Citigroup, Wells Fargo, and the two former investment banks that were converted to traditional banks so that they could get the Fed's money, Goldman Sachs and Morgan Stanley — remain huge. They're still too big to fail.
And, one assumes, still too "complex" for Congress to do anything about reforming.
The tough thing here is that, even if you're a Geitner hater (aka, everyone, per Indiviglio), you have to say that he could be right. The big banks may be too complex to break up. Geithner the technocrat is simply making an observation of fact.
In which case we might want to think about electing a financially smarter Congress. Otherwise, as in Europe, our future may lie with the technocrats.