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Is Larry Summers' Potential Successor Really a Wall Street Ally?

Some progressives are griping about Gene Sperling's Big Finance ties, but this policy wonk is no Gordon Gekko.

| Thu Jan. 6, 2011 5:00 AM EST

Lawrence Summers, the imperious Democratic economic poohbah, has departed the Obama White House, leaving the job of National Economic Council (NEC) director open. Which means it's time to rev up the inside-the-family debate about the Democratic party's economic stance: do Democrats want to work with corporatists to better manage the globalizing economy, or do they want to confront the corporatists to even out the distribution of economic power? With the White House apparently favoring Gene Sperling, currently a counselor to Treasury Secretary Tim Geithner and an NEC director during the Clinton years, for the post, some progressives and Wall Street critics have expressed dismay or discouragement, as they point to Sperling's supposed Wall Street ties. But how upset should they be? Sperling is hardly a Wall Street insider. In fact, he's the rare economic power-player in Washington who didn't fully cash in after leaving government service. He might be the wrong guy for this game of political/policy football.

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Still, he's come under criticism as a Wall Street pal. Referring to Sperling and another contender for the job, investment banker Roger Altman, Robert Borosage, co-director of the liberal Campaign for America's Future, told the Washington Post, "It's a big concern when there are these high-level advisers who have been marinated in the industry." The Huffington Post observes, "By appointing Sperling, the president would be sending a message that his administration would continue to be sympathetic to big bank interests." (The White House has indicated it will announce the new NEC director on Friday.)

Sperling, 52, draws the most criticism for having worked for Goldman Sachs in 2008, pulling in a whopping $887,727 in a single year, 2008. Yet he was not helping the investment firm earn money, but spend it—on a $100 million charitable project aimed at elevating the skill levels of poor women in developing nations. Sperling's path toward this project is a decidedly non-Washington tale.

"He could have immediately gone to Wall Street and made a lot of money. That's what most people in his situation do. But he didn't. A lot of us who know him scratched our heads about that."

After the Clinton administration ended in 2001, Sperling, according to a former Clinton administration aide, spoke to several "wise men" about what he should do next. As a former NEC director, he was in great spot to cash in. And he received the same career advice from all of these counselors: go to Wall Street for the next eight years, make millions, and then return to public service (when there might be a Democratic president). He didn't follow this guidance. Instead, Sperling devoted most of his time to addressing the challenge of global poverty, particularly promoting the need for basic education in developing nations (with an emphasis on educating young girls). He created and led the Center for Universal Education at the Council on Foreign Relations. (The center is now based at the Brookings Institution.) He wrote papers and articles and convened seminars on how the world's wealthy had to do more (and spend more) to redress poverty in developing nations, especially Africa, where he traveled frequently. He developed a program with Hollywood star Angelina Jolie to push for educating children in regions of conflict.

In 2000, the United Nations had devised the Millennium Development Goals, which included ensuring that every child on the planet could complete primary education by 2015. Sperling was doing what he could to hold wealthy nations to this target. "He fully embraced the idea that basic education was core to positive development overseas and tried to make that issue central to US deveopment thinking and strategy," says Ray Offenheiser, president of Oxfam America. Tom Hart, senior director of government relations at ONE, a nonprofit focused on African development, notes that Sperling "was a leading outside-the-government advocate for basic education, and he used his considerable network built during the Clinton administration to work on this. He didn't have to focus on this. He chose to." A friend of Sperling adds, "After having been head of the NEC for Clinton, he could have immediately gone to Wall Street and made a lot of money. That's what most people in his situation do. But he didn't. A lot of us who know him scratched our heads about that."

Sperling didn't don a sack cloth and follow the example of Mother Teresa. Reuters financial blogger Felix Salmon complains that Sperling "signed up with the Harry Walker Agency and started giving speeches to anybody with cash, including not only Citigroup but even Allen Stanford. He also wrote a monthly 900-word column for Bloomberg for $137,500 a year." But the Bloomberg fee also covered appearances on Bloomberg television and drafting strategy memos for the media company—which doesn't make the compensation outlandish in political-media circles. Sperling also was a consultant to the television show The West Wing.

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