Wall Street's moving to Washington


A few weeks ago I appeared on CNBC's Closing Bell with Maria Bartiromo to discuss executive pay. One interesting point in the interview was when Ms. Bartiromo argued that it would be difficult to get good people to run big banks if their pay was limited because Wall Streeters are motivated primarily by money. I suggested that if that were true, then you would never see a former CEO of Goldman Sachs Group, Inc. (NYSE: GS) take the enormous pay cut required to become Treasury Secretary.

I am not sure what motivates Wall Streeters to take those pay cuts. But today, another prominent one -- Steve Rattner with whom I worked in the 2004 presidential campaign -- announced he is leaving his private equity firm, Quadrangle Group, and shipping off to Washington to work as Counselor to the Secretary (of the Treasury).


What will that mean? According to the New York Times, "In that capacity, he will advise Secretary Timothy Geithner regarding a variety of economic and financial matters and will lead the team advising Secretary Geithner and National Economic Council Director Lawrence Summers on the automobile sector."

Rattner is a very capable individual who is clearly giving up money to get something else. I am not sure what is motivating him -- he had been rumored to be a candidate for Car Czar before that position was eliminated. Maybe he sees that Washington is going to be where the action is for the next several years. And he wants to be in the driver's seat of the automotive industry restructuring process. With all the competing interests involved in that process, he probably won't be driving -- but he'll help navigate.

Let's hope that Rattner's move begins a flow of talent from Wall Street to Washington. Given the enormity of the challenges facing this country, it needs all the help it can get.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.

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