Today President Obama will nominate his Chief of Staff Jacob "Jack" Lew to be Secretary of the Treasury. Before I get to the business at hand, I would like to lament the departure of Timothy Geithner, who I won't get to kick around any more. Tim was so effective at protecting the interests of the Big Banks during his tenure. Occasionally he would testify before Congress on the need to raise the debt ceiling. That testimony was somewhat awkward because Tim was engaged in rendering the word "trillions" meaningless. And of course Timmy has been Obama's closest economic adviser. I think we can all agree that the economy is booming, thanks to Tim and others like him.
Good job, Mr. Geithner — I for one am sorry to see you go.
On Janurary 14, 2012 I wrote about Jack Lew in Obama's New Chief Of Staff—Smells Like Change! I cited an article by Glenn Greenwald called The new WH Chief of Staff and Citigroup. You should read that post, or go right to the source and read Greenwald. I won't rehash that material today, but see below.
Lew is the consummate Washington Insider.
Lew’s career in Washington began in 1973. He spent eight years as principal domestic policy adviser to the late House Speaker Tip O’Neill of Massachusetts. Lew was the speaker’s “liaison to the Greenspan Commission, which negotiated a bipartisan solution to reform Social Security in 1983 and was responsible for domestic and economic issues, including Medicare, budget, tax, trade, appropriations, and energy issues,” according to his White House biography.
His first stint as budget director came under President Clinton. He was director of the Office of Management and Budget from 1998 until 2001.
Lew worked for Citigroup and New York University after leaving the Clinton administration. He returned to government service in the Obama administration, first as deputy secretary of state for management and resources, then in a second stint as OMB director in late 2010. He succeeded Bill Daley as White House chief of staff in early 2012.
How are so-called "progressives" reacting to the Lew nomination? I don't know, but here's Noam Scheiber at The New Republic reacting to Lew's appointment as Obama's chief of staff (January, 2012).
Just wanted to follow-up on yesterday’s Jack Lew post to clarify the point I was making: One common reaction to the Lew announcement, voiced by liberals like Salon’s Glenn Greenwald, is to groan that Obama has just replaced one former banker (Bill Daley) with another, as Lew spent two years at Citigroup before joining the administration in late 2008.
My feeling about this is twofold: First, liberals aren’t wrong to groan. It may well be that Obama has just appointed a chief of staff whose experience is way too similar to the other men and women he’s put in top positions over the years, especially on the economic team.
Second, if that critique is accurate, it’s probably not primarily because of Lew’s tenure at Citigroup.
While the Citigroup experience is something Lew has in common with Mike Froman, David Lipton, and Lew Alexander, to name a few current and former top administration officials, my reporting indicates it never really took. He just wasn’t especially interested in being a banker or in the work bankers did.
The ways in which Lew may be too similar to the rest of the Obama team is that he’s spent too much time in Washington bureaucracies soaking up Washington conventional wisdom, and, therefore, was too eager to do something like trade Medicare cuts for an elusive and in any case premature deficit-cutting deal.
The Citigroup experience isn't exactly ennobling. But it's probably not where his blind spots are (unlike, I'd argue, Daley, who really did internalize the banker/corporate worldview).
Noam is a lot like your pet dog, or Obama's pet dog, running around the house fetching things and wagging his tail all the time. Don't get me wrong—I like dogs, as pets. I'm not sure I like dogs masquerading as commentators at "progressive" publications like The New Republic.
Noam is definitely house-broken. He won't make a mess. That's the good news.
3. He worked in the worst part of the finance industry
In 2008, during a short leave from politics, Jack Lew was working at Citigroup as chief operating officer of the Alternative Investments unit, a $54 billion hedge fund and private equity operation that made some big bets against the housing market. Lew’s defenders argue that as COO, his role was primarily administrative, and he didn’t make decisions about where or what to trade. The AI unit is the precise sort of operation that the Volcker rule should, if properly implemented, render illegal.
It is worth mentioning in this context that Jack has some self-serving opinions about the causes of the financial meltdown. These views are generally popular Inside The Beltway.
Jacob "Jack" Lew, Obama's nominee to lead the Office of Management and Budget, the White House agency entrusted with ensuring that federal regulations reflect the president's agenda, was asked Thursday during his confirmation hearing before the Senate Budget Committee by Sen. Bernie Sanders whether he believed that the "deregulation of Wall Street, pushed by people like Alan Greenspan [and] Robert Rubin, contributed significantly to the disaster we saw on Wall Street."
Lew, a former OMB chief for President Bill Clinton, told the panel that "the problems in the financial industry preceded deregulation," and after discussing those issues, added that he didn't "personally know the extent to which deregulation drove it, but I don't believe that deregulation was the proximate cause."
And I love this quote, from Is Jack Lew A Friend to Wall Street?
Into this den of super-sophisticated—and savage—lions of finance will walk the gentle-mannered figure of Jack Lew, who is expected to be easily confirmed. Hopes for change—any real progress in containing the power and systemic size of the banks—are not high.
“By going with Jack Lew, Obama is making the decision: ‘I don’t want a fight over Treasury secretary. I want someone who’s going to maintain the status quo.’ That’s what Jack Lew represents,” says Jeff Connaughton, who as a senior Senate staffer fought for financial reform and later, in despair, wrote a book titled Wall Street Always Wins.
One could argue, if we lived in a perfect world, that Jack and his trader buddies at Citigroup should be put in jail for making big bets against the housing market and endangering (to some unknown extent) the financial position of the way-too-big-to-fail bank, which Washington Insiders like Jack Lew then proceeded to bail out.
It was deregulation of the banking industry that made such behavior possible. Glass-Steagall, which had been protecting The People since 1933, was taken off the books so bankers could run wild. Glass-Steagall put a firewall between commercial banking (loaning out money, which is boring) and investment banking (gambling with your money, which is very exciting).
Jack received a $944,578 bonus from Citigroup in January 2009. He got the bonus a few weeks before he joined the Obama administration. The exact amount surfaced on an "ethics" disclosure form Lew was required to fill out.
No, Jack is not serving time. Jack is not even under investigation. Jack is going to be nominated today to be Obama's Secretary of the Treasury.
Same as it ever was — it's Jack Lew, and Screw You.
And now, for your edification, here's some kool-aid...