Prof Returns from Washington

After six months away from the ivory tower calm of the economics department’s Littauer headquarters, economics professor Jeremy C. Stein—who was in the nation’s capital serving out a term as senior adviser to the treasury secretary—is back at Harvard and ready to reflect on the experience.

His meetings with the National Economic Council and with President Barack Obama now in the rearview mirror, Stein has returned to his research and the slow, methodical pace of academic life. He will be teaching an undergraduate course on the financial crisis next semester, he says, and he will be taking care to ensure that the course consists of more than just his own “war stories.” But he’s not entirely free of nostalgia.
 
It was “unbelievably exciting,” Stein says, recalling his government experience recently to Crimson reporters in the quiet of his office, hundreds of miles from the crush of the Capital Beltway. “Here, I have a schedule,” he says. “There, you show up with nothing on your calendar and then run around until 11 at night.”

Last January, the same week Obama was inaugurated, Stein received a phone call from former University President Lawrence H. Summers, now head of the National Economic Council, asking if he would come to Washington to help work on the economic recovery plan.

It was a seminal moment of the financial crisis—the stimulus plan was being drafted just as the stock market headed for record lows.
Within a week, Stein had passed his spring teaching duties to Visiting Professor Owen A. Lamont and was on his way south after nine years at Harvard.

Specializing in finance, Stein worked most intensely on the financial stability plan, which he describes as “the effort to deal with the current problems of the banking and what some call the ‘shadow banking’ system.”

“There was an awful lot going on,” Stein says. “We were trying to put out the fire and write a new fire code at the same time.”

Attending meetings and debating policy points, Stein was part of a team of top financial analysts from the NEC and the Treasury Department, working together to form government policy towards banks and other troubled corporations.

He says many a night was spent with long-time friend Summers, “sitting up at night arguing parts of economic theory.”

Summers “had an unbelievable appetite” for understanding the economics of the decisions being made, says Stein, who has known Summers since the mid-80s when Stein first began as an associate professor at the Business School.

Stein also described a less familiar experience—presidential briefings. “[Obama] was keenly interested,” Stein says. One briefing developed into a six hour meeting, he says.

Throughout the experience in Washington, Stein explains, there was a great sense of urgency. At the worst point, “you felt like you were staring into the abyss.”

The situation made for late nights at work and little social life. Stein lived “like a college kid again,” he says—out of a suitcase, without a car, eating Chinese food and returning home to Massachusetts on weekends—if the economy allowed—to be with his family.

“[Stein] really was the right man at the right time,” says University of Chicago Business School Professor Anil K. Kashyap, who has been working with Stein for more than 20 years. “I give the President and Larry Summers a lot of credit. They convinced him to uproot his life and his teaching to go down there.”

Stein’s return hardly marks the end of the line for Harvard’s presence in Washington. Yesterday, Business School Professor David S. Scharfstein began work with the administration. Scharfstein could not be reached for comment over the last week.

And as for Stein? The rigors of Washington have made him none the worse for wear, colleagues say.

“He’s back, he’s teaching his course, and everything is normal,” says Lamont, who remained at Harvard for the fall semester. “It’s not like he’s bald. He is his old healthy self.”

—Staff writer Noah S. Rayman can be reached at nrayman@fas.harvard.edu.

—Staff writer Elyssa A.L. Spitzer can be reached at spitzer@fas.harvard.edu.