Arguments—Good and Bad—Against Antonio Weiss

by Peter Conti-Brown — Thursday, Dec. 18, 2014

There is a largely intramural dispute within the Democratic Party about the wisdom (or not) of appointing Antonio Weiss to a senior position at the Treasury Department. Weiss’s title would be the Under Secretary of the Treasury for Domestic Finance (UDF), but he would effectively occupy the third chair in the Treasury’s C-suite and thus have a say in virtually everything the Treasury does (subject to the views and decisions of his two bosses, Treasury Secretary Jacob Lew and Deputy Treasury Secretary Sarah Bloom Raskin).

What’s the fight? It’s actually a bit muddled, but it has to do with Weiss’s suitability for the position. I choose the term “suitability” carefully, rather than the more frequently invoked “qualifications.” In fact, the debate is about three related but distinct propositions, the first quite flimsy and the second two much more powerful:

1. Antonio Weiss is not qualified to serve as UDF because his background as an investment banker provided little or no relevant experience for the position.

2. Wall Street influence on this Administration’s formulation of financial regulatory policy is overwhelming, and the UDF oversees nearly every aspect of the Administration’s financial and fiscal policies.

3. In light of #2—but unrelated to #1enough is enough; we need an UDF untainted by these affiliations. There are many different ways a person can become qualified to serve as UDF, and given the risks of policy formulation for the benefit of the few at the expense of the many that may come from someone who spent his career on Wall Street, the President cannot and should not point to an investment banking background as one of his nominee’s strengths. It is, in fact, a debilitating weakness.

Much of the fight, it seems to me, has been on the first point (see Andrew Ross Sorkin’s somewhat snarky response to this point). I think the fight should focus on the second two.

The first proposition—that Weiss is unqualified because he has no relevant experience—is inaccurate except under the most unyielding of standards for presidential appointments. Under this same theory,Republicans blocked Peter Diamond from service on the Fed’s Board of Governors: despite Diamond’s Nobel Prize and extraordinary expertise in labor economics his lack of experience as a banking regulator and monetary theorist.

This was absurd when the Republicans made the argument; I don’t see how the situation is different when the Democrats are making it. There are many different ways to prepare for a career in public service, but the only truly identical experience one needs to be UDF is…to serve as UDF.

That illogical position can’t be the standard. It certainly isn’t the statutory one. By statute, the qualifications for UDF are clear: there are no qualifications, except that the President must appoint and the Senate must consent. Statutory silence is the norm, but that’s not always the case: a solicitor general must be “ learned in the law,” the only non-ex officio member of the Financial Stability Oversight Council must have “ insurance expertise.” But the statute here not only fails to specify any kind of qualification, it actually fails to name the position itself: UDF is just one of two “Under Secretaries” whose titles and duties are defined by regulation, not statute.

I think the broad delegation to the President to name his own team is institutionally sound. Behind a veil of ignorance, I’d favor giving the President enough rope to hang himself in determining the qualifications for these positions: give him the glory when he gets it right, give him the boot (or cast a pall on his legacy) when he gets it wrong.

But this statutory point is a bit of a dodge. The real question is whether Weiss’s experience as an investment banker has prepared him for the position as UDF. I think those who say “no” are pursuing a dangerous strategy. Weiss is plainly sufficiently familiar with the operations of the financial markets to be qualified to oversee the technical aspects of the job. The U.S. Government is the 800-lb gorilla of the financial markets: it can sit wherever it wants. Every other participant in those markets cannot make plans or execute trades or advise companies without an awareness of the Treasury, an Administration’s fiscal policies, and—separately, but also important—changes in the financial legislative and regulatory landscape. Other people sitting in that room with the U.S. Treasury, including Antonio Weiss, will have years of Treasury watching, all of which will be directly relevant for the work of the UDF.

Importantly, though, Senator Warren and her allies are not making only the argument that Weiss is not qualified with sufficient technical expertise. They are also saying that Wall Street experience is not a sine qua non of Treasury service: in fact, they argue, such experience without sufficient ballast from other perspectives within the Administration is in fact a weakness. There are others who are just as familiar with the specific work that the UDF undertakes, but without the debility of representing—legally and ideologically—the interests of bankers, including when those interests conflict with those of the broader society. The point is not that bankers should neverbe public servants. The point is that public servants should not always be bankers.

In that sense, Sen. Warren’s arguments in favor of balance are not only legitimate, but also part of an important discussion that we see in other contexts, related and unrelated. For example, we have debates about the predominance among federal judges of former prosecutors over defense attorneys; economists over lawyers (or others) as central bankers; political donors over career diplomats as ambassadors. And, as we have before, bankers in financial regulatory positions at the exclusion of others.

On this front, Sen. Warren’s arguments seem much stronger (see here for Simon Johnson’s take on how Weiss’s thin public record on financial regulation makes his candidacy deeply flawed). The real question, again, should not be whether Weiss is qualified to understand the technical aspects of his job. Those who advance that argument aren’t doing themselves any favors. Instead, the best point is whether Weiss’s familiarity with the financial markets will lead him to make decisions that the majority of Senators (and their constituencies) should support, or whether they will lead him to make decisions on behalf of a privileged few who have enough representation in the current Administration. If Weiss’s candidacy is derailed, I hope the focus becomes much more on the second line of arguments and that his critics concede the first—that Weiss is unquestionably qualified for the position—entirely.

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About Peter Conti-Brown

Conti-Brown is an assistant professor at The Wharton School of the University of Pennsylvania. A historian and a legal scholar, Conti-Brown focuses on central banking, financial regulation, and public finance.

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