Summer’s Time (at D.E. Shaw), and the Living was Easy

Larry Summers made $100,000 a day working for D.E. Shaw & Co.

As President Obama fashions himself as the second coming of FDR, it looks like he’s taking a page straight out of Roosevelt’s playbook by surrounding himself with Wall Streeters to help him solve the economic crisis. Roosevelt, you may recall, appointed Joe Kennedy to head up the Securities and Exchange Commission after the former bootlegger had made millions running stock scams in the Twenties. Roosevelt explained the appointment with, “It takes [a crook] to catch a crook.”

This is not to say that Lawrence Summers, Rahm Emanuel, or campaign economic advisor Richard Rubin are crooks, or even the proverbial  - and cliched - foxes guarding the henhouse. Kennedy actually did a reasonable job cleaning up Wall Street, and so might the three we mention here, who all spun through the revolving door from the Clinton White House to make millions in the banking industry.  It just shows who Obama thinks can get us out of this mess, which is a little scary, considering these guys all cashed in on it.

Sounds like Lawrence Summers had a pretty sweet gig at D.E. Shaw & Co,, a huge hedge fund, for example, before becoming Obama’s chief economic advisor, as The New York Times reports today.

Summers pulled in a cool $5.2 million just last year, and that working only one day a week. And, of course, as we’ve mentioned previously, hedge fund workers like Summers pay a much lower tax rate than most workers in America. The government takes only 15 percent of their profits as opposed to the usual 30 percent or so for the rest of us, which once led Warren Buffett to quip that he paid a lower rate in taxes than his cleaning lady.

Obama’s chief of staff, Rahm Emanuel, probably had to work all five days a week to collect the $16 million he earned as an investment banker in his two years between the Clinton administration and getting elected to Congress.

Kinda makes you wonder what Robert Rubin earned during his time at Citigroup. Rubin would have to open his books, like Summers has, if he had been appointed to an official role in the White House.  Interesting, considering he was so active in Obama’s campaign…

No wonder economist Paul Krugman was so filled with “despair” at Timothy Geithner’s latest bank bailout redux, which Krugman describes as the same trick Geithner tried when he was working for Hank Paulson, just with different bells and whistles. The man in the White House may have changed, but the reverence for Wall Street remains.

Krugman told Newsweek that “these men and women have ‘no venality’…but they are suffering from ‘osmosis,’ from simply spending too much time around investment bankers and the like.”

As a result,  Krugman writes in his column, Obama “has apparently settled on a financial plan, that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing. It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street.”