Dodd is renowned as a fierce interrogator of hard-line Bush foreign policy officials, but no John Bolton faced him last Thursday. Bernanke, without Republican credentials, was mostly a potted palm at the hearing. He deferred to the 46-year-old Geithner, another non-Republican advocated for the New York Fed post by his mentor, Clinton Treasury Secretary and Wall Street lion Robert Rubin. Just before the 2004 election, the National Journal listed Geithner (heading the New York Fed for less than a year) as an adviser to Democratic presidential candidate John Kerry.
The Treasury's Steel, a Dodd constituent as a Greenwich, Conn., resident, is a political switch-hitter contributing to both parties. His Democratic recipients include John Edwards, Jon Corzine, Evan Bayh, Tom Strickland and Erskine Bowles. He was brought to Washington by his boss at Goldman Sachs, Henry Paulson, who was Rubin's colleague and successor as CEO there. The only undiluted Republican at the witness table was Christopher Cox, Securities and Exchange Commission (SEC) chairman.
Sen. Charles Schumer is a fiercely partisan Democrat but regards Wall Street as part of his New York constituency. He raises campaign money from the securities industry, and his friends include Tim Geithner. Schumer treated Geithner gently last week, and the only witness he interrupted was Cox. "Something is wrong with our regulatory structure," said Schumer. Since the SEC was the regulator, he implied the Republican witness was the guilty party.
The senators could have criticized the Federal Reserve for approving the bailout with just four votes on the Board of Governors, instead of the five formerly required by law. The vote was legal because of legislation after 9-11 to cope with a national security emergency. This was no such emergency. Frederic Mishkin, a former business school professor in his second year as a governor, merely missed the vote. But Democratic senators could not complain. The Fed is down to five members because the Senate refuses to confirm Bush's nominees for three vacancies, waiting for a Democratic president to name governors who are even friendlier than the present board.