Meet Jeremiah Norton: Wall Street banker, bailout architect, and Obama’s latest nominee
President Obama has nominated Jeremiah Norton — a former Treasury official under Bush and current JP Morgan executive — to the Federal Deposit Insurance Corporation. The nomination could smooth over tensions with Senate Republicans who are still incensed over Obama’s recess appointment of Richard Cordray to the Consumer Financial Protection Board and could potentially filibuster a handful of other key nominees to the FDIC and the Federal Reserve. In fact, Reuters writes that the Senate GOP leadership reportedly recommended Norton to the White House for the position.
That said, Norton is hardly an ideological, anti-government conservative. As a deputy assistant secretary to then Treasury secretary Hank Paulson, Norton not only helped craft the TARP bank bailout and the takeover of Fannie and Freddie, but also helped convince a reluctant Paulson that this was the right course to take. In “Too Big to Fail,” Andrew Ross Sorkin describes how Norton, together with his colleague Dan Jester, prepared the controversial proposal to shore up banks by injecting government funds.
Norton himself had initial doubts about the plan. “This is crazy,” he reportedly said at the time. But ultimately he and Jester sold Paulson on TARP, Sorkin explains. “Based on the work of Jester, Norton, and [assistant secretary for financial institutions David] Nason, [Paulson] wanted to forge ahead and invest $250 billion of the TARP funds into the banking system,” Sorkin wrote. Norton contributed similarly to the government takeover of Fannie and Freddie. “It was a difficult decision, the secretary didn’t want to be here, to go into the firms,” Norton told C-SPAN in 2008. But, he concluded, “this action was necessary to prevent systemic risk that would harm the broader economy.”
Norton still might encounter some objections from the right, as both TARP and the government conservatorship of Fannie and Freddie have come under growing fire from the tea party wing of the GOP. What’s more, the Congressional Budget Office recently raised the cost of TARP in 2012, and the government control of Fannie and Freddie has extended well beyond the 15-month “timeout” that Norton, Paulson and others had originally envisioned.
That said, having apparently received the GOP leadership’s blessing, Norton should have an easier time in the Senate, where 33 Republicans voted to support TARP in 2008 (though not all of them are still in office). And it’s the second time that the White House has taken the Senate GOP leadership’s advice on FDIC leadership, having already followed Mitch McConnell’s recommendation to pick Thomas Hoenig for another key FDIC post.