During the financial crisis, an angry Congress demanded that the Treasury Department limit executive pay at firms that received bailouts — an effort that would be sure to elicit white-hot criticism from all corners.
So Deputy Treasury Secretary Neal S. Wolin had an idea: Get someone else to make the unpopular decisions about how much those executives should be paid. “He called and said too many people will say it’s none of the government’s business to regulate private pay. And too many people will say you’re not cutting their pay enough,” recalled Kenneth R. Feinberg, who was Wolin’s choice to serve as the quasi-independent official overseeing executive pay. “And we think it shouldn’t be Treasury in the middle of this battle royale.”
The suggestion to largely remove Treasury from individual decisions about executive compensation helped insulate President Obama and then-Treasury Secretary Timothy F. Geithner from one of the most polarizing facets of the crisis response. In the four years since, Wolin has played a similar role in confronting some of the thorniest economic issues facing the Obama administration.
Wolin, 51, has decided to step down next month and is planning to take a post with a not-yet-
determined think tank as he mulls other options outside government. He served briefly as acting Treasury secretary earlier this year while Jack Lew awaited confirmation to succeed Geithner, but he has been mostly a behind-the-scenes figure, helping shape a range of policies, from the passage and implementation of new financial regulations to sensitive discussions with leaders of some of the most troubled countries.
In a statement to The Washington Post, President Obama said he was grateful for the role Wolin has played on his economic team. “His deep knowledge and excellent judgment helped us . . . pass tough new Wall Street reform, strengthen our financial system, foster growth here at home, and promote economic development around the world,” Obama said.
Many of those policies have been the subject of intense criticism. Wolin, a former senior executive at the Hartford Financial Services Group, which received a taxpayer bailout, helped feed the perception that top Obama officials were too close to the financial industry. One of the signature achievements he worked on, the Dodd-Frank rewrite of financial rules, has been the subject of enormous controversy, with conservatives saying it is holding back economic growth and liberals complaining it falls short of what’s needed to rein in Wall Street.
Wolin has played an outsize role overseeing Dodd-Frank and has expressed enormous satisfaction with it. Such legislation, he said, is “hard to do with that much complexity, and it’s hard to do in a way that’s basically got fidelity to what you wanted to achieve,” Wolin said in a recent interview. He said there are “issues in Dodd-Frank, but it does have basic fidelity.”
In particular, Wolin acknowledged that it has taken a long time to put all the elements of the law in place, calling it a “tough slog” to coordinate the agencies working on it. Some of the most prominent regulations — such as the Volcker Rule banning speculative trading by banks — have blown through deadlines.
Critics have charged that Congress and the administration erred in leaving so many details to be worked out later by government agencies.
Still, Wolin said, Dodd-Frank as a whole is working. “The financial sector is in a much better place, and banks are much better capitalized,” he said.
Wolin had planned to leave Treasury earlier this year, when Geithner departed, but he was asked to stay by Obama and then repeatedly by Lew.
As acting Treasury secretary, Wolin was constantly asked by acquaintenances whether he could sign his name on U.S. currency. He did not have to look up the answer: When he was Treasury’s top lawyer in the late 1990s, he researched the issue on behalf of then-acting Treasury Secretary Lawrence H. Summers, who was awaiting Senate confirmation.
The answer was no.
The past 4 1 / 2 years have been the culmination of a career in Washington that began during the George H.W. Bush administration, when Wolin served as an assistant to three CIA directors. He joined the Clinton administration, on the National Security Council, before decamping for Treasury.
During the George W. Bush administration, Wolin worked at the Hartford, where he became president of the property and casualty insurance business. When Obama was elected, he joined the new administration as a lawyer in the White House before once again gravitating toward Treasury.
Wolin said he was most worried early in his tenure, when it wasn’t clear whether the adminstration’s plan to stabilize the financial system would work.
“In early ’09, when the fires were raging, and they were raging in the markets, and they were raging in the politics of the city and in the politics of the country, I think it felt that we had a plan that was sound, but there was no ex-ante playbook from which we were operating,” Wolin said. “Until you knew the pendulum was going to start swinging in the right direction, there was a lot of anxiety.”
As the economy stabilized, Wolin became the point man for helping develop a plan to tighten regulation of Wall Street. Along with his other responsibilities, “he really was the main guy running broader policy with the White House in developing financial reform and negotiating the legislation and much of the follow-on work,” Geithner said in an interview.
His stewardship of that process won him plaudits from Obama, who invited Wolin and his family into the Oval Office after Dodd-Frank was passed. His then-2-year-old daughter, Zoe, walked in and raised her right fist and said to the president, “Bump!”
“That’s what I’m talking about!” Obama replied.
A few days later, at the start of a meeting on Dodd-Frank, Obama walked in and said to his economic team, “Man, Wolin’s kids are adorable.” To which Geithner, teasing his deputy, retorted, “Isn’t that shocking, Mr. President?”
Because of his background at the CIA and the National Security Council, Wolin handled many of the dicey diplomatic issues facing Treasury, incuding overseeing the unit that tries to stop terrorist financing. That brought him to some of the most violent corners of the world, from visits to Pakistan and Afghanistan to a raft trip in the Congo region of sub-Saharan Africa.
Wolin waged a campaign within the U.S. government to apply pressure to the government of Hamid Karzai to fix the problems plaguing Kabul Bank, Afghanistan’s largest, which had been the victim of gross mismanagement.
“It was about whether Afghanistan was going to be successful,” Wolin said.
The State Department was resistant to the idea, given the bank’s close ties to Karzai, and the Pentagon regarded it as a distraction from the core focus on security. But Wolin won the argument and was dispatched by Obama to meet with Karzai in Afghanistan as part of a process that slowly led to reforms of the bank.
“A lot of people didn’t want to touch it because it was complicated and controversial, but Neal jumped in and figured out what was going on,” said Lew, previously Obama’s chief of staff.
Despite his less-than-luxurious destinations, the deputy Treasury secretary found time for humor. Having learned from a CIA briefer that President Jakaya Kikwete of Tanzania was a hoops fan, Wolin asked the leader about the NBA when he visited the African country.
Kikwete said he was a big Chicago Bulls fan because of whom he called the "Air Man” — Michael Jordan. Later, Wolin, a huge Chicago sports fan, wouldn’t let the State Department file its cable on the meeting without mentioning that Kikwete was a Bulls fan.