If the socialists are coming, they haven’t booked their tickets yet.
President Trump has lampooned incoming President Joe Biden as a business-wrecking radical who will kill jobs and depress stock prices. But Biden’s early choices for Cabinet jobs and other key posts reflect comfort with Wall Street and a friendly attitude toward business. Stocks, so far, are buoyant.
In the Biden administration, it appears investing giant BlackRock (BLK) will be the new Goldman Sachs. “Government Sachs” is famous for seeding Washington with prominent alumni such as Gary Cohn, Gary Gensler and Hank Paulson. Biden, so far, has appointed two BlackRock veterans to top posts, rejecting the demands of some Democrats to bar appointees with corporate work on their resumes.
Biden’s pick to head his National Economic Council, Brian Deese, is a BlackRock managing director who oversees the firm’s “sustainable” investing strategy. Biden’s choice for the No. 2 Treasury Department job, under Janet Yellen, is Adewale “Wally” Adeyemo, who was a senior adviser at BlackRock for three years and also chief of staff to CEO Larry Fink for a short time.
Unlike Goldman, BlackRock isn’t an investment bank, and Deese and Adeyemo aren’t bankers. BlackRock is the world’s largest money-management firm, with less of a connection to the 2008 financial meltdown than trading firms such as Bear Stearns, Lehman Brothers, Merrill Lynch, and Goldman. That makes it a safer place for Democratic policymakers to hang a shingle—and make good money—when their party is out of power in Washington.
Deese has spent more time working in government and think tank jobs than in finance, yet the left-leaning Revolving Door Project still opposes his appointment to the Biden administration. The liberal American Prospect website calls Adeyemo’s appointment “trouble at Treasury,” even though Adeyemo, too, has spent more time in government than in the private sector.
Biden seems to favor business experience in other appointments. His pick to run the Defense Department, retired Army Gen. Lloyd Austin, is a board member at defense contractor Raytheon. Jeff Zients, who will coordinate coronavirus policy for Biden, is a former board member at Facebook with a long career in investing and consulting. Neera Tanden, Biden’s choice for budget chief, runs a center-left think tank, the Center for American Progress—but she helps raise millions of dollars in funding for the group each year from firms in finance, tech and other sectors.
Biden’s Secretary of State nominee, Tony Blinken, helped form a consulting firm in 2017 called WestExec Advisors that seems to offer corporate clients advice on how to get what they want from Uncle Sam. Blinken and Austin, meanwhile, are both partners at a private equity firm called Pine Island Capital Partners, which buys and sells mid-sized companies in the aerospace and defense sectors. One of Pine Island’s founders is John Thain, who was CEO of Merrill Lynch in 2008 when it nearly collapsed, requiring billions of dollars in federal bailout money.
Janet Yellen, Biden’s nominee for Treasury Secretary, is an economist who has spent most of her career in academia and was Federal Reserve chair from 2014 to 2018. Investors cheered her Treasury nomination, since her Fed tenure is widely viewed as a dovish one, with very low interest rates helping fuel stock values. Yellen also dipped a toe into finance after her Fed tenure, becoming an adviser to an Australian investing firm called Magellan.
Liberal Democrats oppose the appointment of business and finance veterans to top government jobs as a way of limiting or preventing corporate influence over federal policymaking. But it’s almost impossible to staff a Cabinet without tapping business veterans, and arguably unwise. Business leaders are often the most capable operators in their fields, with the kind of expertise often needed in sclerotic government agencies. Jeff Zients, for instance, left a private-sector consulting job in 2013 to join the Obama administration and fix the disastrous healthcare.gov website, earning praise for his work.
There are supposed to be safeguards against corporate influencers joining the government to advance their own interests or boost the fortunes of once and future employers. Senior officials are supposed to disclose possible conflicts of interest, for example, and recuse themselves from matters they have a personal stake in. Oversight and enforcement comes from various federal agencies and Congress, plus the press and outside groups. It doesn’t always work, obviously. President Trump himself amassed 3,400 conflicts of interest while president, according to one watchdog group. Biden has pledged to do better.
As for Biden policies that could affect corporate America, there are plenty. The Biden administration could impose new rules on businesses to protect workers and customers from coronavirus. Biden will probably toughen environmental rules and other regulations quickly after taking office. Longer term, he will likely ask Congress for legislation hiking the corporate tax rate and seeking other ways to raise revenue for social programs.
Markets don’t seem to be worried. Since Nov. 4, when Biden’s defeat of Trump began coming into focus, the S&P 500 stock index is up 10%. That’s twice the bump stocks got at the same point in 2016, following Trump’s surprise win.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: email@example.com. Click here to get Rick’s stories by email.