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The nomination of Jack Lew for Treasury Secretary has uncovered a lot of dirt about the man, but it also has a lot of dust swirling, regarding the incestuous relationship between the Obama administration and Wall Street that the White House would probably prefer to have kept buried. The story surely tarnishes the President’s image as “a man of the people, standing up to Wall Street.”
In Lew we find much of what President Obama publicly derides—but, as Forbes reports, is “prepared to accept from his closest associates.”
In 2009, Obama said it was the “height of irresponsibility” and “shameful” for “executives at major financial firms who turned to the American people, hat in hand, when they were in trouble, even as they paid themselves their customary lavish bonuses.” And added: “For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis isn’t just bad taste—it’s bad strategy—and I will not tolerate it as President.” Yet, Lew, during a short stint at Citi received an “obscene” bonus of $950,000—after we, the taxpayers, bailed out Citi to the tune of $476.2 billion.
In both the 2008 and 2012 campaigns, Obama railed against investments in the Caymans. In 2008, during a Democrat primary debate, he talked about “closing tax loopholes and tax havens” and specifically addressed a building in the Cayman Islands that supposedly houses 12,000 corporations. “That’s either the biggest building or the biggest tax scam on record.” In 2012, the Obama campaign vilified Mitt Romney for investments in Cayman accounts. Yet, Lew was invested in a Citigroup venture capital fund registered in the Cayman Islands.
Despite these, and other disconcerting discoveries—such as Lew’s executive vice president for operations position with New York University at the time NYU was receiving kickbacks from Citibank for steering student loans to the bank (Lew then left NYU for his job at Citigroup)—a Senate vote is expected to be held this week where it is believed that Lew will be confirmed as Treasury Secretary.
But, a bigger story is exposed through the litany of Lew’s lavish embarrassments—and that is the “commingling of Wall Street interests and the public trust,” as exemplified by former Treasury Secretary Robert Rubin.
Rubin left Treasury in 1999 and moved to Citigroup—where, it is reported, that he “advocated ratcheting up the risk-taking.” Rubin’s responsibilities at Citi were to craft the “management and strategic decisions.” As part of the enticement Citi offered, he received $15 million a year and unlimited use of the corporate jets. “On his watch, the federal government was forced to inject $45 billion of taxpayer money into the company and guarantee some $300 billion of illiquid assets”—yet he was still paid “around $126 million in cash and stock.” Rubin’s bank-friendly policies, implemented during his time at Treasury, are believed to be what weakened the financial system and ultimately brought about the collapse.
Rubin is important to the story because Lew was hired on at Citi due to a recommendation from Rubin. Lew was with Citi from 2006 to 2009—during the financial disaster. His last position was as COO of Citi’s Alternative Investment Group—which according to Forbes, “lay at the epicenter of the financial crisis.” In the first quarter of 2008, Lew’s group lost $509 million while he was “paid $1.1 million for less than a year’s work.”
Obviously Lew learned well from Rubin.
Lew left Citi for a “full-time high level position,” as deputy secretary of state under Hillary Clinton. In 2010, he became head of the Office of Management and Budget replacing Rubin-protégéPeter Orszag, who went to Citi. (Note: Treasury Secretary Timothy Geithner is also a Rubin protégé.)
If you are reading carefully, you’ve noted that “Citi” comes up over and over. This is no mistake. Citi and the Obama Administration appear to breathe as one.
In 2008, Citigroup was one of the Obama campaign’s biggest donors and several Citi executives served as campaign bundlers. The majority of Citigroup’s 61 lobbyists previously held government positions.
Michael Froman was one such Citi executive—also serving as COO of Citi’s Alternative Investment Group—who raised campaign cash and then went to work for the Obama Administration, where he was responsible for coordinating policy on issues such as energy and climate. Froman had previously served as chief of staff to Treasury Secretary Robert Rubin. (Other Citi/Obama connections include Richard Parsons and Luis Susman as shown in Christine Lakatos’ newest expose: Citi’s Massive “Green” Money Machine.)
In his second term, Obama has pledged to make climate change a priority. Since 2007, Citi has been committed to “climate change activities.” In fact, they brag about being “a leader in alternative energy transactions across sectors, geographies and products.” In its 2011 Global Citizenship Report, Citi crows about having the “largest market share” of US Department of Energy financings for alternative energy.
If you’ve followed the work Lakatos and I have done exposing Obama’s green-energy crony-corruption scandal, you know Citi’s claims mean that they are making big bucks from the green energy sector of the 2009 stimulus-spending spree. Lakatos has found that that 58 percent of Citi’s “clients,” listed in the documents from the “Renewable Energy Seminar” Michael Eckhart held in March 2012, have received government subsidies, the majority from the 2009 Stimulus bill, totaling approximately $16 billion of taxpayer money—and there could well be more.
Michael Eckhart joined Citigroup in February 2011, after spending the last decade as the founding President and a member of the Board of Directors of the American Council on Renewable Energy (ACORE). Not surprisingly, within ACORE we find many of government’s green-grant “winners.” According to Chris Horner, Eckhart “helped design the Department of Energy grant programs.”
This is just a sampling of the Citigroup swamp from which Treasury Secretary nominee Lew comes. As Lew’s employment agreement with Citi—that allowed him to keep his pay perks if he left Citi for “full-time high level position with the United States government or regulatory body”—and Rubin’s enticements show: Citi likes to keep their friends close.
According to the Washington Post as Treasury Secretary Lew will be “charged with implementing new rules regulating Wall Street.” Breitbart describes the job this way: “Secretary of the Treasury is the government’s chief operating officer for the private economy. It is also the government’s chief spokesman to the world markets. The office … is meant to assure markets and the business community that America’s fiscal policy is under adult supervision.”
I question whether Lew’s motivation will be “a desire to serve the people, or an opportunity to serve himself and his friends”—as was said about Rubin. Will he assure the markets that America’s fiscal policy is under adult supervision?
This may be the one time I agree with Independent Vermont Senator Bernie Sanders who, said the following when Obama nominated Lew: “I remain extremely concerned that virtually all of his key economic advisers have come from Wall Street. In my view, we need a Treasury Secretary who is prepared to stand up to corporate America and their powerful lobbyists and fight for policies that protect the working families in our country. I do not believe Mr. Lew is that person.”
Obviously Obama will “tolerate” Wall Street walking all over the White House.
[First posted at Townhall.]