At the very moment the nation is celebrating its new youthful and energetic president-elect, who won a smashing mandate predicated on implementing much-needed “change,” we are also witnessing the resurrection of two octogenarians and the acceptance of them—and their ideas—into Barack Obama’s inner circle. Call it the Triumph of the Democratic Octos.
First to find his way back into the fold is Paul Volcker, the 81-year-old former chairman of the Federal Reserve (for eight years during the Carter and Reagan administrations), who is under serious consideration as Obama’s Secretary of the Treasury, along with the much younger Tim Geithner, president of the Federal Reserve Bank of New York and an architect of the panoply of financial rescues this year, beginning with Bear Stearns in March; and, Larry Summers, a former Treasury Secretary in the second Clinton Administration and a former president of Harvard University.
Last week, a standing-room only crowd watched Charlie Rose interview Rohatyn at the New York Public Library.
Whether Volcker’s age limits the likelihood of his being selected, he deserves praise for speaking forcefully and publicly as early as February 2005 about the rapidly inflating housing bubble. “The capital markets, which have been so seemingly benign in providing flexibility and maneuvering room, can, once overstretched, become a point of great vulnerability as well,” he said in a speech at Stanford University. “I will suggest to you big adjustments will inevitably come, and they will come long before the Social Security surpluses disappear or even before we cut the Federal Budget in half. And as things stand, it is more likely than not, that it will be financial crises rather than policy foresight that will force the change.” During the campaign, Obama cleverly sought Volcker’s advice about the economy and the $700 billion bailout bill and used the octogenarian’s wisdom and insights as a shield against Sen. McCain’s charges that he lacked experience in matters economic.
The other 80-year-old making a surprising return to power circles is none other than that crafty, media-savvy investment banker himself, Felix Rohatyn. Even though he was one of the stars of my book, The Last Tycoons: The Secret History of Lazard Frères, the truth is that Rohatyn has been a little bit at sea ever since he failed to achieve his dream of becoming Secretary of the Treasury and instead went to Paris, in 1997, as Clinton’s second Ambassador to France. When Rohatyn came back to New York, in late 2000, he futzed around with his own firm and then, when his Lazard non-compete expired in 2006, Dick Fuld, the CEO of Lehman Brothers, asked him to be his trusted “senior advisor”. But Fuld never listened to Rohatyn and barely gave him the time of day (maybe he should have listened to him more). When Lehman imploded on September 15 and then, four days later, Barclays scooped up Lehman’s U.S. securities business, Rohatyn was not invited to join the party. Like many others, he packed up his boxes and left 745 Seventh Avenue, a man once again without portfolio.
Not for long, though. Now, he seems everywhere again. Since, New York City’s finances are headed down the tubes, he has been sought after as an oracle for being the public face of saving New York City in the 1970s. Last week, a standing-room only crowd watched Charlie Rose interview him at the New York Public Library. He penned an op-ed in the New York Daily News about why Mayor Mike Bloomberg should be able to bend the rules and get a third term. And he was given a ton of ink by Forbes about how Obama and the newly Democratic-controlled Congress should push through a new stimulus plan to help rebuild our schools, our roads, our bridges and our spirits. In truth, Rohatyn has been advocating the infrastructure idea for decades in one form and forum after another, both with and without former Vermont Sen. Warren Rudman. (He wrote his Forbes piece with Everett Ehrlich, a former undersecretary of commerce in the Clinton Administration.) But there is no question that the powerful new winds in Washington are blowing his way.
Which goes to show that even if old dogs can’t be taught new tricks, they can still be appreciated for their old ones.
William D. Cohan, a former senior-level M&A banker on Wall Street, is the author of The Last Tycoons: The Secret History of Lazard Freres & Co. Cohan's House of Cards: The Fall of Bear Stearns and the End of the Second Gilded Age, will be published by Doubleday in 2009. He also writes for Fortune, ArtNews, The Financial Times and the Washington Post.