WASHINGTON Gary Gensler, like the rest of the Clinton administration, left his job last month. But before he did, the former Treasury Department under secretary for domestic finance drafted a 16-page cheat sheet for his yet-unnamed successor.
The job has a core set of challenges and policy issues that are there regardless of party affiliation, so what I tried to do in the memo was capture the areas we knew about then, Mr. Gensler said Thursday in a telephone interview from his home in Chevy Chase, Md., where he is taking a few months off to plan his next venture and spend time with his wife and three daughters.
I wasnt asked to do it. The reason I wrote this memo is because no one wrote one for me, said the former partner at Goldman Sachs Group LP, who joined the agency in 1997 as assistant secretary for financial markets.
What does he foresee on the next under secretarys agenda? Building compromise on privacy legislation, finalizing merchant banking and other new powers for financial holding companies, reforming deposit insurance, and, further down the road, creating a federal insurance charter.
Besides serving as the top banking policymaker at Treasury, the under secretarys broad areas of responsibility include debt management, fiscal services such as government benefits payments, and even Social Security reform.
On the need for new privacy laws, Mr. Gensler said his successor will probably be involved in developing a consensus among industry and consumer groups.
Financial services lobbyists fought a bill introduced last year by President Clinton that would have toughened the privacy protections in the Gramm-Leach-Bliley Act of 1999, but Mr. Gensler predicted they will have to support some kind of legislation, because lawmakers on the right and left believe more is necessary.
Something needs to happen and will happen, Mr. Gensler said, noting that President Bush, during his campaign, endorsed stronger privacy laws.
Though the Federal Reserve Board will implement many of the new merchant banking powers granted under Gramm-Leach-Bliley, Mr. Gensler said his successor has an important role in defining other new powers, such as real estate brokerage and management.
This was an important feature of financial modernization, and what it really meant was government should step back and allow banks and financial firms to be organized in whatever way best suits their customers and market, he said.
On the federal deposit insurance system, Mr. Gensler cautioned that the fiscally prudent thing for taxpayers would be not to raise the level of deposits covered from $100,000.
But Mr. Gensler said his successor will have to balance a variety of opinions from various constituencies within the banking industry to find where the consensus is.
The job perhaps closest to Mr. Genslers heart, and now his successors to carry out, is implementing the so-called new markets tax credit to those investing in poor communities. A bipartisan initiative enacted in the waning days of the Clinton administration, it is designed to bring $15 billion of equity investments to poor urban and rural communities over seven years.
Community development is really an essential area for my successor to help promote, Mr. Gensler said.
Mr. Gensler said that how we bring the benefits of the economy to all Americans is an issue to both parties, and that he trusted the Bush administration would follow through. But, the staunch Democrat added, We may have been better at it and more sympathetic. Time will tell what the new administration does there.
Now a seasoned Washington hand, Mr. Gensler, 43, declined to tackle the sensitive question of whether the new Treasury Department under Secretary Paul ONeill needs more market-savvy staff members.
All he would say on the subject was that a significant part of my successors job is Treasurys involvement in the markets, such as debt management.
It was beneficial in addressing the issues we address to have that market experience, he added.
But political savvy is also a necessity at Treasury, Mr. Gensler said. When the 18-year Wall Street veteran came to Washington, he quickly learned that little can be accomplished without consensus.
Lone rangers dont work well in Washington, he said. The most challenging thing coming to Washington is learning how to get things done, how to reach out and find consensus. You dont necessary learn that on Wall Street, in industry, or in academia.
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