Neal Wolin, a deputy White House counsel who has been nominated for the No. 2 position at the Treasury Department, faced persistent questions from senators today about the position of the Obama administration on regulating derivatives, including credit-default swaps.
Two Democrats on the Senate Finance Committee expressed frustration that Wolin, testifying at his confirmation hearing, could not give answers that were more specific. Chairman Max Baucus, D-Mont., even criticized Wolin for his opening statement, which Baucus called a “Sandra Day O’Connor statement” because he considered it to be too vague.
Credit-default swaps are a type of security that acts like insurance, allowing a lender to recover money when a borrower defaults on a loan. They are largely unregulated, and their proliferation over the last decade has been blamed for contributing to the financial crisis.
Senator Maria Cantwell, D-Wash., noted that legislation approved last year required the White House to submit regulatory recommendations by April 30. The White House has not done so. “I can assure you we’re not going to forget what is needed,” Cantwell told Wolin. “My patience is running out with the administration taking five months to say whether these things ought to be regulated and how they ought to be regulated.”
In reply, Wolin referred to the confirmation testimony of Treasury Secretary Timothy Geithner, but Cantwell wasn’t satisfied. She said that Geithner has since given contradictory statements about what the administration wants to do. When pressed, Wolin said he supports “position limits” and increased price transparency as “elements of a proper approach.”
Cantwell pushed Wolin to name a date by when the administration would submit regulatory recommendations. After Wolin replied “as soon as possible,” Baucus said he and Cantwell would be requesting an answer in writing.
President Barack Obama had trouble finding a deputy for Geithner before settling on Wolin. Since January, Wolin has been deputy counsel to the president for economic policy and deputy assistant to the president. Previously, he was president and chief operating officer for property and casualty operations at Hartford Financial Services Group. During the Clinton administration, he was Treasury’s general counsel.
Before ending the hearing, which lasted less than an hour, Baucus said he had expected more details than Wolin provided in his two-and-a-half-page opening statement. Baucus recalled his time on the Senate Judiciary Committee during the early 1980s, when O’Connor went before the committee for her confirmation hearing for the Supreme Court.
“When she testified, she said nothing,” Baucus said. “Absolutely nothing. Basically, ‘Thank you.’ … I think it was a cop-out. I think it was just a dodge.” He added, “With all due respect, your statement was pretty short, too.”
I found Mr, Wolin's testimony to be appropriate and someone who is cautious and not one to over promise.
I found the Senators to be genuine in their concern but they know this is uncharted territory for the US economy. Mr. Wolin's statement and tesimony demonstrated a thoughtful man who is exactly what the Secretary needs to assist him in turning the current econmic conditions around.
It took us years to reach this point and we need thoughtful and cautious policy gurus such as Mr. Wolin to right the sinking ship.
The financial markets are watching.
Posted by: Yitz | May 11, 2009 at 09:42 PM