I had to ask Cerberus Capital Management Chairman John Snow why his firm was named after the dreaded, three-headed hound of Hades.
“Oh, I don’t know,” the former Treasury secretary smiled. “It came from these bright young guys, out of college, who probably had just taken a course in mythology.”
Phew. Glad we got that cleared up.
I had feared this private-equity firm was proudly advertising its intent to ravage every soul in its path. Particularly after sending Snow to Washington to plead for a multibillion-dollar bailout to cover its failed attempt to turn around Chrysler.
Washington has bailed out banks, insurance companies, mortgage makers, auto giants, and by extension, a lot of high-rollers like Cerberus. Our Federal Reserve Bank has dropped trillions, too, to save our financial system from the consequences of its own folly.
Snow, who was Treasury secretary from 2003 to 2006, said this is as it should be, and hopes that for now we keep the spigots flowing.
He’s afraid of the W, which is not the former president he served, but what may be the shape of our economic worries. Just as things appear to be improving, we may only be headed for the next big dip.
“I think the W is a possibility,” Snow told me. “A 1937 redux is a real possibility.”
“That’s why continuing the monetary accommodation, the support, and the stimulus package is so important,” he said. “We might not need it, but it’s an awfully important insurance policy.”
I ran into Snow as he was preparing to collect a fat speaker’s fee at an Aurora Economic Development Council event. He was kind and gracious, and his witty presentation drew enthusiastic applause and kudos from the crowd.
“I am a conservative Republican economist,” he declared in his speech. “But there’s no alternative. The government had to step in. We would have had a financial panic which would have really brought down large parts of the American economy and touched Main Street as well.”
Hey, take it from a man who made his millions shuffling through that big revolving door between the private sector and Washington, D.C.
Armed with a Ph.D. in economics and a law degree, Snow held several Department of Transportation posts during the Nixon and Ford years, including deputy undersecretary.
By 1989, he’d worked himself up to CEO of the giant railroad holding company, CSX Corp.
During his tenure there, CSX dodged tens of millions of dollars in legal claims after investigators concluded that CSX was not properly maintaining tracks, causing deadly Amtrak train crashes. The claims for these disasters went to government-subsidized Amtrak, anyway.
When Snow became Treasury secretary, he reportedly received $60.8 million in cash, stock and pension money from CSX. He reportedly received a pension worth nearly $2.5 million a year, which was based on 44 years of service, even though he’d only been there 25.
At Treasury, Snow championed Bush’s plan to cut taxes despite mounting federal deficits. He compared deficit spending to taking out a mortgage, explaining that the more money one makes, the more mortgage one can manage.
“We can afford this deficit,” Snow declared in February 2004, adding that, yes, it was big, but jobs needed to be created.
Then in September 2005, Snow took sharp aim at the term “housing bubble.”
“I think the bubble is a gross misnomer. I think it is a mischaracterization of the situation,” he said. “The idea that we’ll see a collapse in the housing market is improbable at best.”
Bush traded Snow for Hank Paulson in 2006. Snow ended up at Cerberus. And once we were deep into a recession, but didn’t officially know it, Snow said he was worried about a psychological recession. “The thing I worry about most,” he said in February 2008, “is that we talk ourselves into a recession.”
Before the year was through, Snow would be personally begging Paulson for a bailout to save Chrysler. And now he’s a champion of even more government spending and Federal Reserve dollar drops for the too-big-to-fail.
“Too-big-to-fail is an alien doctrine,” Snow conceded. “On the other hand, you don’t want to have the whole world to collapse.”
So would Snow have done anything different than Paulson or Obama’s Timothy Geithner?
“I’m not going to second-guess,” he said. “You’ve got to be in the middle of it. It’s a not a Monday-morning-quarter-back game. I sure would have liked to have guided some of the decisions, though. You flatter yourself to think you’d have done some good.”
Hey, as long as a three-headed dog can beg, there’s at least a Snow’s chance in Hades.
Al Lewis: 212-416-2617 or al.lewis@dowjones.com. Read Al’s blog at .
