As readers may recall, Elizabeth Warren blasted the Administration’s nomination of a Lazard executive and senior mergers & acquisitions banker Antonio Weiss to the number three Treasury psot, assistant secretary for domestic finance. Warren’s grounds for objecting to Weiss were straightforward: his experience was no fit for the requirements of his proposed Treasury role. On top of that, he had been involved in and therefore profited from acquisitions called inversions that Treasury opposes because they reduce the taxes paid by the acquirer, which uses the acquired company to move its headquarters to a lower-tax jurisdiction.
Today Weiss withdrew as a candidate for the Treasury position. From Politico:
Antonio Weiss, the Wall Street banker who President Barack Obama had picked to be the third-ranking official at the Treasury Department, has asked that the president not resend his nomination to the Senate following a major backlash from progressive Democrats who questioned his ties to the financial industry, POLITICO has learned.
Obama accepted the decision, which Weiss conveyed in a letter to the president over the weekend. But the Lazard banker will still join the administration in the position of counselor to Treasury Secretary Jack Lew, which does not require Senate confirmation.
This is a defacto admission that Weiss was not going to stand up well under the hot lights and that the Administration had to back down on its efforts to stack senior Treasury positions with more Big Finance loyalists.
Cynics may say that the Administration has gotten its way by making Weiss a counselor, but it could have done that from the outset. This is the Administration trying to salvage the situation. Even though Weiss will still be able to get Wall Street friendly views into the mix at Treasury, that was already the bias. He will not have execution authority and his reputation has taken a dent, which will discourage other Wall Street cronies from taking nominations for positions senior enough to need Congressional approval.
It is also worth pointing out that Treasury has used the “counselor” role to include some individuals with particularly dubious track records on the Treasury team. One example under Geithner was Lee Sachs, a former Bear Stearns partner who later headed CDO manager Tricadia. Tricadia was widely seen as one of the worst in a businesses that was directly responsible for the severity of the financial crisis (see ECONNED for details). A New York Times editorial even took note of this seamy connection, pointing out that any investigation of CDO misconduct would reach into the Treasury department. I met with Lee Sachs along with a small group of bloggers who were invited to meet Geithner and other Treasury officials. Sachs could barely contain his contempt.
Having someone with that background as a well placed insider made it abundantly clear how serious the Administration was about cleaning up crisis-related abuses. Having Antonio Weiss, even in a lesser role at Treasury, will, as it did with Lee Sachs, inhibit any investigation into areas that relate to the work he did at Lazard. That’s a feature, not a bug. Having Antonio Weiss in Treasury in any capacity sends a powerful signal that Obama remains deeply committed to advancing the pet needs of major financial firms.