Treasury Nominee’s Citigroup Experience Raises Questions For Some
Tuesday, February 12, 2013
Jack Lew, the man President Obama has chosen to help oversee the country's biggest banks, has said it plainly -- he's no expert on banking. Lew said as much when the Senate was vetting him to head the White House Office of Management and Budget in 2010.
Sen. Bernie Sanders, I-Vt., asked Lew if he thought deregulation of Wall Street caused the financial crisis. Lew said he didn't consider himself the best person to answer that question.
"... I don't consider myself an expert in some of these aspects of the financial industry," Lew said. "My experience in the financial industry has been as a manager, not as an investment adviser."
On Wednesday, Lew will again face a confirmation hearing, this time to be Treasury secretary. Members of the Senate Finance Committee are expected to question him about his knowledge of financial markets and his brief stint at Citigroup between the Clinton and Obama administrations.
Just A Manager
Insisting he was just a manager may be the way Lew will wash his hands of a messy time at Citigroup, when he was chief operating officer for one of the bank's riskiest investment units. By calling himself a "manager" at Citigroup, he can suggest he wasn't the one who made some of the financially disastrous decisions there.
And actually, for Lew's defenders now, "manager" already seems to be the go-to word. Robert Rubin, a former Treasury secretary and ex-Citigroup chairman, seized on the term during a recent phone interview. He was the one who helped Lew get a job at Citi.
"That was a job that required somebody who had managerial effectiveness, and Jack had been a very effective manager of the government and a very effective manager at NYU, and that's what they were looking for -- manager," Rubin said.
To some people, the word "manager" suggests you're one of the people in charge, and they can't help but notice that Lew was at the helm of a company that suffered such massive losses -- Citigroup got the biggest federal government bailout of any bank.
Republican Sen. Chuck Grassley of Iowa said he wants to know exactly what role Lew played in those losses.
"Did he contribute to the conditions at Citi that led to the bailout?" Grassley said.
He also pointed out that Lew received a $940,000 bonus from Citigroup shortly before the bank got bailed out.
"I think we ought to know whether or not he gave Wall Street any favors because he has to be independent from special interest and put the taxpayers first in this new role that he's playing," Grassley said.
A No Drama Guy
But to some, questions like these are just an attempt to create drama around someone who is described as a no-drama guy.
Lew is a quiet, bookish man behind glasses, a Washington powerbroker with a soft step. He has the resume of that kid in school who seems to be good at everything: He was White House budget director -- twice. A top administrator at New York Univeristy. Deputy secretary of state. Chief of staff to the president.
Now Lew is in a strange situation. While some people say he may have been too close with Wall Street, others say one of his best qualifications for the Treasury job is his distance from the financial world.
"Right after a huge crash in the financial markets, I at least would not think it would be the right image for a Secretary of the Treasury to have spent his life on Wall Street," said Alice Rivlin, one of Lew's predecessors as head of White House budget office. "So Jack has had, I think, just about the right amount of experience in the financial community."
Lew didn't seem to have his sights set on a Wall Street career when he was growing up in Queens, N.Y.
At 12, he was handing out fliers for Eugene McCarthy's presidential campaign. By the time he was 23, he was a top aide to then House Speaker Tip O'Neill. Lew spent the next three decades as a fixture in Washington, departing on weekends for his home in New York, where he and his wife have a place in an affluent section of the Bronx called Riverdale.
Devotion To His Faith
Friends like Rabbi Levi Shemtov describe Lew as a humble man who doesn't like to attract attention.
"When he walks into synagogue, and not just ours, but any -- because everyone who goes to the other places he prays at says the same thing -- that when he walks in, it's like any usual congregant. No fuss, no muss," said Shemtov. "It's never about him, and he never wants it to be about him."
Despite having worked years in Washington under two different presidents, Lew is hardly a household name. Most of the chatter around him, so far, has been from handwriting experts analyzing his loopy, indecipherable signature, which will appear on all U.S. currency if he's confirmed.
Those close to Lew often comment on how deeply committed he is to his Orthodox Jewish faith, and the great lengths he'll go to observe the Sabbath under his hectic schedule. This means no email, no phone and no riding in cars from sundown every Friday to sundown Saturday.
Lobbyist Steve Elmendorf remembers spotting Lew at the airport one Friday afternoon with a briefcase full of blank paper.
"You know, it was in the middle of some budget crisis. He said, 'I'm not allowed to communicate electronically, but they can fax me stuff. So I have to have a lot of paper to put in the fax machine,'" Elmendorf said with a laugh.
Supporters of Lew say they dare senators to come up with anything truly controversial to say about him.
The most recent brouhaha seems to be over Lew's failure to comply with a little-known legal requirement involving Medicare funding. If Medicare trustees release a warning that the program is in bad financial shape, the White House budget chief is supposed to send a legislative proposal to Congress to resolve the issue. Lew never did that, and Republicans say they just may block his confirmation for that.
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