The cooling-off period is over for former Treasury Secretary Tim Geithner, who is joining the private equity firm Warburg Pincus as president and managing director. Geithner had initially joined the Council on Foreign Relations as a senior fellow after leaving the Treasury Department early this year. He had taken several plum speaking engagements at Wall Street firms (including a $100,000 gig at the Warburg Pincus annual meeting), but had not yet fully cashed in. Warburg Pincus, one of the largest private equity firms in the country, provides the perks of Wall Street without the baggage associated with bailout symbols like Citigroup and Goldman Sachs.
Geithner’s trajectory, from administration post to temporary think tank fellowship to Wall Street roost, is not uncommon for high-level officials. The waiting period blunts the negative media attention associated with moving directly to Wall Street while allowing some time to negotiate the best deal possible. Most reporters do not seem to understand this playbook, and so it works well for Geithner & co. CJR’s Ryan Chittum has taken the New York Times to task for treating the Geithner move like it was unexpected, and not preordained, and quotes an earlier piece he wrote describing the playbook:
As the exit profiles stop, the real fun begins: Watching where these guys end up next. Presumably, the days of waltzing right into Citigroup, say, from high public office, for $15 million-a-year gigs with no responsibility, are over for now. More likely: A six-month break to disinterest the press followed by a sinecure at Cadwalader or a return to Covington or some such.
Chittum is referring to Rubin’s move to Citigroup in 1999 following his stint at the Clinton Treasury, during which he oversaw the repeal of Glass Steagall (thereby ensuring that Citi’s too-big-to-fail business model had the seal of government approval).
But while the Rubin example is extreme, it is worth noting that Rubin, like Geithner, did not move directly to Citigroup. From the Washington Post in June 1999:
Rubin Off to Council on Foreign Relations
Outgoing Treasury Secretary Robert E. Rubin is setting up shop temporarily at the Council on Foreign Relations offices in New York while he looks for permanent work. His chief of staff, Michael Froman, is going to work at the Council on Foreign Relations, thinking deep thoughts as a senior fellow at the council’s office here.
Rubin was at CFR for four months before Citigroup announced that he was joining the bank as a senior executive and director. Froman followed Rubin to Citigroup (he later helped pick Obama’s economic team and is now the US Trade Representative, with oversight of Trans-Pacific Partnership negotiations).
There are other, more recent examples of the “Rubin shuffle.” Former OMB director Peter Orszag joined CFR as a distinguished visiting fellow in July 2010, then joined Citigroup in December 2010. Former Geithner friend and Treasury aide Lee Sachs joined Brookings before eventually founding his own quasi-bank, Alliance Partners, which is owned in part by BlackRock and advised by the likes of Larry Summers. Summers himself re-joined Harvard after leaving the Obama administration, but later took on paid stints at the hedge fund DE Shaw, Citigroup, and elsewhere.
The waiting game continues for some officials. Former Treasury official Neal Wolin left the Obama administration earlier this year and has since joined the Mossavar-Rahmani Center for Business and Government, where Summers is co-director. When he decided to step down, the Washington Post reported that he would take a think tank post “as he mulls other options outside government.”
Economic officials are not the only ones who take refuge in think tanks before moving on to more lucrative employment. Nancy-Ann DeParle, Obama’s point person on health care reform, joined Brookings as a fellow in January 2013. In August, she joined the private equity firm Consonance Capital Partners, where she will advise the firm on its health care market investment decisions. She also joined the board of CVS Caremark in September. In her case, the cooling-off period really seems to have minimized negative press attention – her swing through the revolving door has gotten little to no attention.
This is not an exhaustive list of Obama officials who have done the Rubin shuffle — I imagine there are more. How many other Obama officials have headed to a think tank for a cooling-off period before cashing in? Let’s make a list.