The Three Most Powerful Men in the World Today

Posted on September 19, 2008

So who exactly is in charge of fixing the current credit crisis? Three men hold the reins of power right now: Treasury Secretary Henry M. Paulson Jr., Federal Reserve Chairman Ben S. Bernanke and Timothy F. Geithner, the president of the Federal Reserve Bank of New York. The Washington Post has an excellent piece about the three men and how they have learned to work together to try to avert a financial catastrophe.

It is this unusual collaboration among a consummate dealmaker, a professor and a seasoned public servant that could determine how the nation weathers the most profound threat to its economy in modern times. Despite their disparate backgrounds, the three men have formed a close, informal partnership built on rapid-fire phone calls and open debate that breaks the mold of Washington policymaking.
As they chart a government response to the crisis, the stakes could hardly be higher. If they succeed, they could tame the economic downturn and orchestrate a restructuring of Wall Street with minimal collateral damage. If they fail, the toll could be millions of jobs, trillions of dollars in lost wealth and a crisis of confidence in global capitalism.
Paulson, Bernanke and Geithner spent most of their careers in different worlds. They barely knew one another before beginning their current jobs and still rarely socialize -- though they have spent more time working together in recent months than with their wives.
Paulson, 62, is an investment banker who rose through the ranks of Goldman Sachs to lead the firm. A lanky former Dartmouth College offensive tackle and an intense workaholic, he said he agreed in 2006 to become the Bush administration's third Treasury secretary to prepare the government for a possible market crisis.
Bernanke, 54 and calm of demeanor, is one of the foremost scholars of financial crises, especially the Great Depression. Before being named Fed chairman in 2006, the largest organization he had run was Princeton University's economics department.
Geithner, 47, was a career staff member at the Treasury Department when Lawrence Summers, then a Treasury undersecretary, plucked him from obscurity in the early 1990s. He became a key member of the group that guided the Clinton administration's response to the international financial crises in the 1990s and has been honing his knowledge of Wall Street since taking over the New York Fed in 2003.

It's a lengthy article that's well worth reading. Because most of Congress wouldn't know the difference between a CDS (Credit Default Swap) and the RTC (The Resolution Trust Corporation), it will have to rely on the advice from these three men when it drafts bailout legislation. In fact, the current crisis is actually so complicated to explain that not one politician I've heard has tried to discuss it in any more than the most general of statements, such as "Wall Street is Greedy" or "Don't Worry, We'll Fix It."

In fact, I heard a noted economist this morning refer to the RTC as the Resolution Thrift Corp. If even he doesn't remember the correct name of that agency helped resolve the savings and loan crisis in the 1980s, then we really are in big trouble. Unless, of course, the Council of Three gets it right.