With the expected appointment of Jason Furman to become the new head of the Council of Economic Advisers, former Treasury Secretary Robert Rubin has completed the remarkable feat of placing five of his acolytes in key positions of power in the Obama administration.
Furman, a Harvard-trained economist who helped Rubin set up the Hamilton Project at the Brookings Institution, is just the latest Rubin mentee to get an important economic role with Obama. Others include: Treasury Secretary Jack Lew; Sylvia Mathews Burwell, the director of the Office of Management and Budget; Gene Sperling, the director of the National Economic Council; and Michael Froman, the nominee for U.S. Trade Representative.
Unfortunately for those hoping for real reform on Wall Street in the wake of the 2007-08 financial crisis, the track record of the Rubin acolytes is not good: Despite the passage of the Dodd-Frank law, genuine financial reform is moribund. The Volcker Rule, which theoretically would prevent forms of proprietary risk-taking on Wall Street, is missing in action amid the bureaucracy of the Federal Reserve. The idea of having transparency in the derivatives markets -- one of the key reforms promised by Dodd-Frank -- was dealt a near-fatal blow this month by the Commodity Futures Trading Commission, which caved to Wall Street and hollowed out a provision requiring multiple bids for a derivatives transaction.
As for the idea of allowing the free markets to work with the big Wall Street banks when they get into trouble, let's just say that nobody in Washington or Wall Street thinks allowing Goldman Sachs Group Inc. or JPMorganChase & Co. to fail is remotely possible. Rubin and his people have been very good at one thing: maintaining the status quo on Wall Street for the people who run those firms, as Rubin once did at Goldman Sachs.
Rubin's extraordinary record as a power broker in Washington may finally have exceeded that of his own mentor, Bob Strauss, the Akin Gump partner who gave Rubin his start in national politics with the cogent advice: "Follow through." And that Rubin has done.
(William D. Cohan is a Bloomberg View columnist. Follow him on Twitter.)