Timmy Geithner's D.C. Landlord Hired by JPMorgan Chase

Shock: JPMorgan Chase Hires
Geithner'sD.C. Landlord

by Philip Shenon

The Daily Beast
8/15/10

The revolving door between Washington and Wall Street keeps spinning this summer.

And as it does, government ethics specialists tell The Daily Beast that Treasury Secretary Timothy Geithner will need to be more careful about his dealings with one of American’s most powerful banks.

The bank, JPMorgan Chase, has just rehired one of Geithner’s oldest and dearest friends, Daniel Zelikow, as a top executive, only a year after the Treasury secretary moved out of his rent-free accommodations in Zelikow’s $3.5 million Washington townhouse.

Geithner lived with Zelikow’s family in the six-bedroom house, which is next door to the residence of the ambassador of Monaco and not far from the home of Secretary of State Hillary Clinton, during most of his first eight months running the Treasury Department. At that time, Geithner was overseeing the bailout of several huge Wall Street banks, including JPMorgan, which received $25 billion in federal rescue funds from the TARP program.

Zelikow, a friend of Geithner’s since they were classmates at Dartmouth College in the early 1980s, begins work this month running JPMorgan’s new 12-member International Public Sector Group, which will develop foreign governments as clients.

Spokesmen for the Treasury Department and JPMorgan would not comment for The Daily Beast on how Zelikow’s return to the megabank might affect the Treasury secretary’s dealings with JPMorgan.

But government ethics specialists say under federal ethics rules, Geithner would have to limit his involvement in any JPMorgan project tied to his old friend, especially since Geithner recently took a gift worth many thousands of dollars in free rent from Zelikow.

Geithner did not, technically speaking, break any rules by accepting the free housing. He disclosed his living arrangement, ran it past the Treasury Department’s ethics officers—who approved it—and moved out of the house before his friend was hired back by JPMorgan. And the bank last December completed repayment of the government’s bailout money.

Against that backdrop, the valuable freebie he took from the once and future JP Morgan exec raises questions about whether he’ll need to recuse himself anytime Treasury rules on issues of material interest to the bank that in any way involve Zelikow and his clients—or risk charges of favoritism. Stephen Gillers, a law professor at New York University who is a specialist in government ethics and author of a leading textbook on legal ethics, described Geither’s original decision to move in with Zelikow last year as “just awful”—given the conflict-of-interest problems it seemed to create. Link to complete article