What Geithner's new book means for Hillary in 2016


It's a running joke these days to ask what random things mean for Hillary Clinton's 2016 presidential campaign. As in: "The Cleveland Browns drafted Johnny Manziel … what does it mean for Hillary in 2016?"

It's a good joke because chatter around 2016—especially as it regards the former first lady, New York senator and secretary of state—can seem ridiculously premature and often totally absurd.

But that's not always the case.

Timothy Geithner
Adam Jeffery | CNBC

Sometimes "What does it mean for Hillary?" is a perfectly legitimate question to ask. It's especially so in the case of former Treasury Secretary Tim Geithner's new book "Stress Test: Reflections on Financial Crises."

In the book, as described by CNBC "Squawk Box" co-anchor Andrew Ross Sorkin in The New York Times Magazine, Geithner searches for a way to convince people that he is not secretly in league with Wall Street and that his rescue efforts were intended only to prevent the global financial system from total collapse.

As part of this effort he seeks counsel from former President Bill Clinton.

"You could take Lloyd Blankfein into a dark alley," Clinton responded, according to Sorkin, "and slit his throat, and it would satisfy them for about two days. Then the blood lust would rise again."

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The Bill Clinton quote is perhaps the juiciest bit in Sorkin's piece and captures a major problem for the former president's wife assuming she runs for president. Hillary Clinton will almost certainly face at least some pressure (though maybe not much depending on the field) to further distance herself from Wall Street.

But nothing she does short of demanding mass banker imprisonment is likely to satisfy the "blood lust" of which her husband spoke. That blood lust is real in the progressive movement (and to an extent in the GOP populist movement) and it's not going away so long as the economy remains weak.

And if Hillary Clinton goes just part way toward slamming the financial industry she could both fail to satisfy the left and scare off a huge pool of money and drive it to her eventual GOP opponent, assuming that person is not even more terrifying to Wall Street. There are certainly ways for Hillary Clinton to thread this needle. But it will take some deft politics.

And Clinton will have to deal for the next two years with the threat of a candidate such as Sen. Elizabeth Warren, D-Mass., emerging to challenge her from the left. Warren has urged Clinton to run and consistently said she herself is not running for president.

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But the Massachusetts senator has deliberately left some daylight in her answer to the presidential question.

Warren and I were on "The Diane Rehm Show" on NPR earlier this week and she once again chose to use the phrasing "I am not running" for president rather than the more definitive "I will not run" construction.

This is no accident.

It does not mean Warren will ultimately choose to get in the race—in fact she almost certainly won't. But it keeps the specter out there and keeps pressure on Clinton to move away from the centrist ground occupied by Geithner, Bob Rubin and others, and onto a more progressive footing.

That's somewhat hard for Clinton to do right now given that she has been earning top dollar on the Wall Street speaking circuit, including highly lucrative addresses to Goldman Sachs among several others. Clinton will have to give up making those speeches at some point soon if she plans on running for president and begin addressing the grievances on the left that no top-level Wall Street executives went to prison following the financial crisis while the biggest banks got even bigger.

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And she will have to do this without alienating her benefactors in the financial industry the way President Barack Obama did with his "fat cat" rhetoric in 2009.

Most bankers are savvy enough to know that moves Clinton makes over the next couple of years to distance herself from the industry on regulation or prosecutions will be tactical and aimed at avoiding primary trouble. But many are also thin-skinned enough to revolt if the former first lady goes too far.

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And ideologues on the left will pounce the moment Clinton makes an anti-Wall Street speech and later shows up at a Wall Street fundraiser. It will be an enormously complicated dance fraught with potential embarrassment. Clinton's advantage in all of this—and it's a huge one—is that beyond Warren there is no obvious hero or heroine on the left who could inflict serious damage in the primaries.

That's not to say someone could not emerge or that Warren could not have a major change of heart. But right now Hillary Clinton's best weapon against the Democrats' Occupy Wall Street wing is the party's woefully thin bench of potential presidential hopefuls.

—By Ben White. White is POLITICO's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet POLITICO Morning Money [politico.com/morningmoney]. Follow him on Twitter @morningmoneyben.