As President-Elect Joe Biden rolls out his picks for the top Cabinet and White House economic positions, the main question ricocheting among finance types these days is: Where are all the Wall Street guys? For the first time in a generation, Wall Street bankers and traders are in the process of being all but shut out from the top economic jobs in the incoming Biden administration. And that’s despite Wall Street collectively donating nearly $80 million to Biden’s election effort and, by my informal count, voting overwhelmingly for him. But “the politics of hiring Wall Street people is bad,” says Jeff Hauser, the executive director of the Revolving Door Project, a watchdog for political appointees in Washington.
Donald Trump, of course, surrounded himself with Wall Street brass, including from firms that never wanted a thing to do with him in his prepresidential days, when his behavior as a notorious grifter made every Wall Street bank but Deutsche Bank extremely wary of him. Once in the Oval Office, though, boom! It was his way of trying to obtain instant credibility in the financial markets. He had his quintet of former Goldman Sachs executives, Gary Cohn (national economic adviser), Steve Mnuchin (Treasury secretary), Dina Powell (deputy national security adviser), Steve Bannon (chief strategist), and Anthony Scaramucci (director of communications). Trump nominated another longtime Goldman banker, Jim Donovan, to be Mnuchin’s deputy but Donovan withdrew his name from consideration. Trump also had Wilbur Ross, a private-equity mogul and former restructuring banker at Rothschild, as Commerce secretary. Larry Kudlow, his current national economic adviser, was the chief economist at Bear Stearns before heading off to CNBC as a television host. As chairman of the Securities and Exchange Commission, Trump appointed Jay Clayton, a partner at Sullivan & Cromwell, a powerful law firm that for years has counted Goldman Sachs as an important client.
Trump, of course, is hardly unique, at least in this regard. The list of Wall Street executives migrating to Washington as a capstone to their banking careers is long and varied. Bill Clinton named Robert Rubin, a co-senior partner at Goldman Sachs, his national economic adviser, and then named Rubin Treasury secretary after the departure of Lloyd Bentsen, his first Treasury secretary. Felix Rohatyn, the longtime Lazard banker, was hoping Clinton would name him Treasury secretary or that he would become vice-chairman of the Federal Reserve. But he ended up as ambassador to France. George W. Bush named Stephen Friedman, Rubin’s co-senior partner at Goldman, as national economic adviser, and Henry Paulson, Goldman’s first CEO after it became a publicly traded company, as his third Treasury secretary. Joshua Bolten, Bush’s second White House chief of staff, spent five years at Goldman. I could go on.
Obama’s critics like to point to appointments such as Tim Geithner (at Treasury), Larry Summers (as national economic adviser), and Jack Lew (at Treasury, succeeding Geithner) as evidence of him also tapping into the Wall Street vein. But Geithner never worked on Wall Street until he left office (he now helps run Warburg Pincus, a big private-equity firm); Summers, the former president of Harvard and Clinton Treasury secretary, worked one day a week for two years as an adviser to D.E. Shaw, a big hedge fund; and, Lew worked at Citigroup after a long career in public service (he also now works at a private-equity firm). None of these three men are considered Wall Street born and bred. To be sure, Obama hired some Wall Street types: Tom Nides, now a vice-chairman at Morgan Stanley, was the deputy Secretary of State for management and resources under Hillary Clinton (he also has years of government experience); Obama-nominated Antonio Weiss, a former head of investment banking at Lazard, to be a Treasury undersecretary and he ended up as a counselor to Lew; and Obama’s first chief of staff, Rahm Emanuel, spent a few years at Wasserstein Perella, a long-gone boutique investment bank.
Biden seems to be taking a page from the Obama book. His first round of economic appointees is sublime, in the sense that many of them seem to be Wall Street types—and certainly Wall Street isn’t complaining about them—but they aren’t actually Wall Street bankers, traders, or executives. Janet Yellen, Biden’s choice for Treasury, is a former Fed chairman and a longtime labor economist. If confirmed, Yellen would be the first woman to serve as Treasury secretary. She has never worked on Wall Street. Biden’s choice for Yellen’s deputy, Adewale “Wally” Adeyemo, held a slew of positions in the Obama administration and most recently was named the first president of the Obama Foundation. The closest he got to Wall Street was serving as interim chief of staff to Larry Fink, the powerful chairman and CEO of BlackRock, the behemoth money manager. Brian Deese, Biden’s pick for national economic adviser, also spent the last four years at BlackRock as the global head of sustainable investing. But for the eight years before joining BlackRock, Deese served in a variety of positions in the Obama administration, including a senior adviser to the president, as well as in senior roles at the Office of Management and Budget and on the National Economic Council. Biden’s choice for Office of Management and Budget, Neera Tanden, is the longtime president and CEO of the Center for American Progress, a progressive think tank. She’s never worked on Wall Street.