NEW YORK (Reuters Breakingviews) - The revolving door from Wall Street to Washington might soon slam shut. If Joe Biden wins November’s U.S. presidential election, some Democrats want him to eschew finance folks when staffing key roles. Some people who could add value, like BlackRock boss Larry Fink, would fail such a tough purity test.
Filings for Chapter 11 bankruptcy protection rose 33% in the first three quarters of this year compared to the same period in 2019, according to data from Epiq. That’s just one facet of the post-pandemic slump from which the United States is recovering only slowly. The Treasury has an important role in what happens next.
Some centrist Democrats think Fink, whose company manages $7.3 trillion of investors’ money, could be a good person to lead the department, according to news reports. Tony James, a top executive at private equity firm Blackstone, is another name mentioned from the ranks of finance.
Some left-leaning Biden backers have other ideas. Groups including the Revolving Door Project and Justice Democrats say they want jobs at the Treasury, the Federal Reserve and other agencies filled from outside finance. Progressive opposition ruled Lazard banker Antonio Weiss out of a job at Treasury in 2015, for which he would have required Senate approval.
Biases are a risk for officials recruited from any industry. But some Wall Street alumni have proved zealous overseers of their former colleagues. One example is former Commodity Futures Trading Commission Chair Gary Gensler, who spent 20 years at Goldman Sachs and then took few prisoners implementing post-financial crisis reforms.
Ideological litmus tests could also eliminate people progressives might want on the list. Organizations including the National Association of Securities Professionals, which promotes people of color and women in the financial industry, last week asked Biden to reject a blanket exclusion of finance executives. One candidate being pitched by Black organizations is TIAA Chief Executive Roger Ferguson, a former Fed vice chair.
Biden could compromise. Maybe BlackRock’s massive financial-market sprawl makes Fink too controversial, and anyway he told his board he doesn’t want a job in D.C., according to Bloomberg. But if he picked Wall Streeters for Treasury and key economic jobs, he could nominate people from other backgrounds to lead regulatory agencies like the Securities and Exchange Commission. Limiting the talent pool too much would make any new president’s job harder.
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