Life on the Hill

Jim Himes on his journey from Goldman Sachs to Capitol Hill
Rep. Jim Himes (D-Conn.) was born and lived for 10 years in Lima, Peru. He has worked at Goldman Sachs and at the New York non-profit Enterprise Community Partners. In Congress, he has worked to improve veteran benefits and increase middle-class tax cuts.
Harvard Political Review: From your experience working at Goldman Sachs, do you think that a culture developed in the financial services industry that was perhaps not exactly corrupt but reckless?
Jim Himes: I do think that structurally the financial services industry was set up to go adrift, and that was reflected in compensation structures, where it was really, really low if you took the risks that they wanted, and you did only well — really well — if you lost. Here’s what happened: a relatively well-run industry, over a period of 15 years, grew and morphed into something that made 1930s regulatory structures irrelevant. … The regulatory structure did not in any way keep up with the road that was the financial services industry. And then you have the element of effectively free money. This is when you cause an industry, which is in charge of somewhere between five and 15 percent of U.S. corporate profits, to become [in charge of] 40 percent of corporate profits. So you have a very aberrant time.
HPR: So, are you concerned about the Geithner public-private partnership plan? Do you agree with Joseph Stiglitz that the Geithner plan only works if and when the taxpayer loses big time?
JH: I think that the Public-Private Investment Plan is going to work for a number of institutions, in particular those which turn out to be solvent or close to solvent. I’m not sure it works for the clearly insolvent or the ones that turn out to be clearly insolvent. Some of these banks simply need to be unwound or handled the way the FDIC handles much smaller insolvent things. You need to think of it as this: you’ve got financial institutions that are healthy, you’ve got some that are probably badly insolvent, and you’ve got some that are sort of marginal. I think the PPIP works pretty well for those that are not fundamentally and clearly insolvent. … That poses a certain political risk. The PPIP suggests that it could end up being very profitable for the private entities. And it’s okay for it to be profitable for the private entities, but you surpass some unknown mind and it becomes a sort of political rage.
HPR: So, shifting gears a little bit, you’re something of an expert on Latin America, having actually been born there. What are some of the problems facing that part of the world? And how do you foresee America’s relationship with Latin America changing during the Obama administration?
JH: Now, I think it’s bound to improve. The Bush Administration showed very little interest in Latin America generally, and they showed a sort of contempt toward multilateralism around the world. … I think generally the Bush Administration largely ignored Latin America, and was unilateralist. … Latin America is always subject to a push-pull between the rejection of democratic capitalism and embrace, and obviously the rejection is personified by people like Hugo Chávez. I think as our economy struggles, there’s work to be done to reestablish the legitimacy of that model.
HPR: You just got to Washington a few months ago, what do you make so far of the culture of the town? Do you think there’s any hope for bipartisan cooperation or do you think the parties are too polarized in talking past each other?
JH: I think it’s a complicated topic. On the one hand, we want opposition. The Democrats will govern better if they are criticized constructively, in a classic loyal-opposition model. So I actually think partisanship in that standpoint is important. It keeps us sharp. On the other hand, I often see point-scoring getting in the way of the national interests, such as Republicans who would be unanimously against the Recovery Act not because every single Republican thinks the recovery is a bad idea, but because of political strategy. If the economy is in rough shape years from now, they can say, look how smart each and every one of us was and look how dumb the Democrats were. And that’s unfortunate because the reality is that the stimulus plan and Recovery Act was not a perfect bill but it was one pretty much universally called for by the economists.
HPR: Have you made any friends in the Republican Caucus? Have you made any friends with whom you have or envisage having a productive working relationship?
JH: Washington doesn’t make cross-party friendships easy. I understand generations ago this wasn’t the case. But now, most of the Republicans I know, I know because they were new members with me, and we all went through the new-member orientation together.
HPR: The HPR’s readership has a large population of people who think that they, too, will be running for Congress barely 20 years after graduating from college. Do you have any advice for them?
JH: Politics is a tough profession to plan for because almost every instance involves all of the things that traditionally bred success, like hard work and intelligence, but it also involves some luck, some being in the right place at the right time. And [luck] certainly had an influence — a substantial influence — on my election. It’s a tough game to plan, but I guess the best advice I can give somebody that is thinking about going into politics is to go out there and do something else first. Go work in business and get a feel for what the private sector feels like, or go work for a nonprofit and understand the pressures that exist on a nonprofit. I think those who seek to govern should get themselves a pretty good understanding of the conditions under which people are governed or under which people in institutions live.
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