Former Top Treasury Advisor Takes the Gloves Off

Former Assistant Treasury Secretary for Economic Policy Phil Swagel has come out swinging against some of the highly interventionist types hanging around the White House. I have personally crossed paths with Swagel a couple of times.

Swagel publicly told me that even though he was at the time the senior economic advisor to Treasury Secretary Hank Paulson, he had no idea that Fed Chairman Bernanke had stopped printing money during the Summer of 2008, and on another occasion  he told me he didn't know what a gold swap was. One wonders what he had been paying attention to.

But he did pay attention at the recent Treasury-HUD GSE Conference. He sent notes about the conference to his buddy, Greg Mankiw. Mankiw has published the notes. Here are  the hot snippets.

Swagel on Bill Gross:

Bill Gross made some news in calling for full nationalization of housing finance and complete guarantees on mortgage capital. He prefaced this by saying that he was speaking on behalf of public policy and not his firm. Mr. Gross is smart and was exceedingly public-minded during the financial crisis (even, yes, while profiting from some astute investment calls). There is no doubt that he means well. But it’s scary to think about what he might suggest when he speaks for his book of business instead of the public interest.

Swagel on the Obama Administration:

The administration is scared of its own shadow with respect to flak from the left—the White House staffer’s introductory remarks were an awkward ode to inclusion and conference guidelines such as time limits went out the window when advocates of affordable housing subsidies were speaking (As a note, I very much support these subsidies and think that an important element of GSE reform is to make the subsidies more effective. But this still does not mean that the people making that point should have had carte blanche to long-talk while avoiding answering direct questions.) Amidst the long-talking, it turns out that there is good reason for the administration’s trembling. To the limited extent that advocates of affordable/low-income housing participated in the conference, they vehemently opposed scaling back any form of government support, including reducing the activities of the portfolios. It was impossible to tell what the affordable advocates were for other than “more.” The administration’s GSE reform plan could come down on stone tablets from Mt. Sinai – and still be attacked by the advocate community as "not enough." GSE reform thus represents yet another conflict brewing between the administration and its frenemies in the “professional” left.

And a bit of biting Swagel sarcasm:

Yesterday's conference was a show of attention to the issue but not more. And next on the agenda are several regional conferences—perhaps the hotel and travel spending is a form of stimulus.

Sweet. I didn't know Swagel had it in him. I know, I know he did curtsy in favor of housing subsidies, and in general he is a big government interventionist, but it is nice to know that when his team is out of power, he knows how to throw a sucker punch. Overall, I give him a passing grade for style, substance and attack, on this one.