The most interesting part of Treasury Secretary Tim Geithner’s op-ed in the Wall Street Journal today is not what the Treasury Secretary wrote—but that he wrote it at all.
Its appearance in today’s has some in Washington wondering whether the Obama administration may be preparing to sacrifice parts of the Dodd-Frank financial reform law in order to strike a deal on the debt ceiling.
When top administration officials pen op-ed articles in the New York Times or the Wall Street Journal, it is usually the result of a calculated decision to go public. More often than not, the person writing the op-ed is on the losing side of an internal administration debate.
When FDIC chair Sheila Bair took to the op-ed page of the New York Times in October 2007 to call for mortgage services to reset adjustable-rate mortgages en masse to avoid foreclosures, her motive was to take public a fight she had lost behind closed doors at the Treasury Department.
“Although she made no mention of the Treasury Department, everyone in the bureaucracy knew that it was her real target,” New York Times columnist Joe Nocera explained.
There are signs that something similar is going on with Geithner’s op-ed. His closing line, for instance, doesn’t directly threaten a presidential veto of Republican attempts to change Dodd-Frank—which he would do if he was certain the president was on his side.
Instead, Geithner says only that he’ll recommend a presidential veto.
This raises a number of questions. Has Geithner lost a fight inside the administration about Dodd-Frank? Who is on the other side? Is the administration preparing to give in to Republican demands to reform Dodd-Frank?
The key to answering these questions may lie in the surprise revival yesterday of the bipartisan “Gang of Six” debt ceiling coalition.
The group of six senators—three Republicans and three Democrats—had been influential early on in the debt ceiling debate. But it fell apart when Republican Tom Coburn of Oklahoma publicly split with the Gang, saying he could not support the tax increases they were considering.
Yesterday, Coburn returned to the Gang. What prompted his return? Perhaps the looming deadline for the debt ceiling just worried him enough to bring him back to the table. Perhaps the administration and Senate Democrats signaled they would be willing to retreat on demands for tax hikes.
Or perhaps the administration has indicated a willingness to compromise on some aspects of Dodd-Frank.
Coburn is one of 18 senators who co-sponsored a bill to completely repeal Dodd-Frank.
A longtime veteran of Washington politics who said he did not have direct knowledge of the matter told me he expects the administration has been reaching out to Republicans with offers to make compromise on other GOP agenda items in exchange for a deal on the debt ceiling.
“Dodd-Frank is probably high on that list,” he said.
Maybe the timing of the revival of the Gang of Six and Geithner’s op-ed defending Dodd-Frank is just a coincidence. But the theory that the administration is mulling a deal with Republicans on financial reform sure would answer a lot of questions.
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