The New Republic

Earlier today, Treasury Secretary Tim Geithner was up at the House Financial Services Committee testifying on the administration's proposal for dealing with threats to the financial system ("Too Big To Fail," etc.). One day earlier, he and White House chief of staff Rahm Emanuel held a closed-door meeting with Democrats on the committee to field questions about the proposal and urge them to hang together.

For Rahm, it was at least the second time this week he'd participated in an event with top Treasury officials. He spent part of Monday at an off-site retreat for senior Treasury staff.

One Wall Street lobbyist familiar with yesterday's meeting insists Rahm's presence is a sign the White House is getting antsy--"the president needs a scalp, a pelt on the wall," this person says, "he's got nothing to show for reg reform." But I'm told the meeting was a pretty calm, substantive affair. (Lots of wonky questions for the most part.)

That is, with the exception of California Rep. Brad Sherman, who's been rather outspoken in his opposition to the administration's regulatory agenda. Sherman insists the proposal amounts to "TARP on steroids"--he seems to think it involves some sort of permanent bailout authority--even though the idea is largely the opposite: to closely monitor financial institutions that pose a risk to the system, to raise their capital  requirements, and to establish so-called resolution authority, which would allow the government to wind down firms in an orderly way if they implode. Anyway, Sherman apparently got up at the meeting and "speechified" for several minutes, according to a Hill aide in attendance, before Barney Frank cut him off and said, "We need to get to a question, Brad." Judging from Sherman's questioning at today's hearings, he was not appeased. (At one point during their back and forth, Geithner responded, "What you were describing is something I would have opposed... [I] would not want to have to live under it and administer it.")

As for Rahm's presence at the meeting, says the aide, don't over-interpret it: "We've had him here before. ... They have a vested interest." 

Update: Rep. Sherman says through a spokesman: "At the meeting, Chairman Frank was gracious and fair. I'm still working on trying to convice him to agree with me on my substantive points."

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