U.S. Markets closed

Obama’s War Cabinet: Let the Fighting Begin


Sir Winston Churchill's wartime cabinet and underground strategy sessions hold such a renowned place in modern history that the British have turned his basement bunker into a museum. While our current military commitments (fortunately) have not escalated to the level of World War II, our current President also appears to be one who relishes a good fight — especially when it's on our own soil and in the halls of Congress.

"Everyone discusses that the first term of Obama was a team of rivals. Now it looks like they're putting together a band of brothers of [cabinet picks] who have a close relationship with President Obama," says Ed Mills, Washington policy analyst at FBR Capital Markets.

Among the appointments that are set to impact financial markets, none looks more contentious than the nomination of Jack Lew as the new Treasury Secretary. A career political and budget advisor, Lew's brief private sector experience includes a stint at Citigroup — an institution The Wall Street Journal calls the "most political of banks" — and a resume-line that Mills characterizes as "damned if you do, damned if you don't."

At the same time, the nomination of prosecutor turned high-powered defense attorney Mary Jo White to head the Securities and Exchange Commission (SEC) is being called ''a bad choice" by the left-leaning New Yorker magazine and a ''tie-breaker" pick by Mills, who says if nothing else, White's arrival will bust the two Democrat, two Republican stand-off that has held up the SEC from taking action on the Volcker rule, capital standards and derivatives.

Lastly is the selection of Richard Cordray to head the newly formed Consumer Financial Protection Bureau (CFPB). As Mills explains it, not only has the viability and need of the agency itself been in question since its creation two years ago, but an appeals court has just challenged the constitutionality of so-called ''recess appointments," which he says sets the stage for a mid-summer drama.

"If that is held up by the Supreme Court later this year, Cordray [would have] to be out; the things he's done there are ruled invalid," he says. And yet, it's a gamble the Obama administration is willing to take, as Mills says Republicans remain committed to gutting an agency they don't think is needed.

To be fair, whether they're considered controversial or not, Mills says all of Obama's second term cabinet picks (so far) are expected to be confirmed.