Confidence Men | Ron Suskind

Summary of: Confidence Men: Wall Street, Washington, and the Education of a President
By: Ron Suskind

Introduction

In ‘Confidence Men: Wall Street, Washington, and the Education of a President’, Ron Suskind takes us on a journey through economic policymaking in Barack Obama’s presidential election campaign and the early years of his administration. The major themes of the book revolve around Obama’s efforts to tackle growing income inequality, the financial crisis of 2008, and the subsequent bailout and stimulus policies. The book provides insights into the power struggles and differing opinions of Obama’s economic team and their impacts on shaping the nation’s financial system.

Obama’s Vision for the US Economy

During his presidential campaign, Barack Obama focused on tackling the growing income disparity in America. With the help of his advisors, he considered various strategies such as investing in alternative energy, healthcare, and infrastructure to reignite the economy and create jobs. Obama listened closely while integrating the best ideas with his vision and insight. Meanwhile, Robert Wolf, then chairman and chief operations officer of UBS Americas, noticed signs of potential trouble in the financial market. His bank was heavily leveraged and played a significant role in the mortgage derivatives market. Wolf had met Obama and called him to express his fears of a potential “market-driven disaster that could crush Wall Street and with it, the whole US economy.” Obama’s calm and analytical way of handling the economy helped him become one of the few presidents who restored the economy after a disastrous financial crisis in 2008.

Obama’s Insider Advantage

This summary explores how Obama’s engagement with top Wall Street honchos and luminaries gave him an edge in addressing the 2008 financial crisis. He proved his mastery of economic issues early on in his campaign, outshining his rivals and earning him the nomination. Amid internal dissent among his economic team, Obama displayed strong leadership during the crisis, while John McCain’s campaign struggled to keep up. Obama’s insider advantage, combined with his capability, enthusiasm, and mastery of the issues, likely secured his presidency by September 2008.

Obama’s Economic Team: The Divide

In “Too Big to Fail,” the authors explore the dichotomy between the economic teams appointed by Obama in the run-up to his inauguration. The “Team A” and “Team B” approach was evident in the contest for the Treasury secretary role, with Volcker, Summers, and Geithner being the top contenders. Obama favored the more experienced Geithner and Summers from Team B, who had a continuity in dealing with the crisis and had links to big banks, while Team A wanted a wholesale reorganization of the nation’s troubled banks. Ultimately, Geithner became the Treasury secretary, and Summers headed the National Economic Council, while Christina Romer was appointed as head of the Council of Economic Advisers. With many people criticizing Obama for giving the authority to clean up the mess to those who’d helped create it, the authors examine the challenges Obama’s team faced and the choices they made during the economic crisis.

The American Recovery and Reinvestment Act of 2009

In 2009, President Barack Obama approved The American Recovery and Reinvestment Act (TARP), which aimed to revive the economy. The bill intended to achieve bipartisanship by extending tax cuts to all income groups. However, the Republicans voted against the bill. Timothy Geithner, as a member of Team B, promoted “stress tests” to help banks normalize and tackle industry-wide issues incrementally. Obama, breaking news of executive bonuses for taxpayer-rescued AIG, overruled advisers and prioritized healthcare reform. He urged financial firms to self-police their compensation, leading to nothing much changing.

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