WSJ: Jack Lew 'Financial Forrest Gump'

WSJ: Jack Lew 'Financial Forrest Gump'

President Obama’s Treasury Secretary Jack Lew has done something unique in Washington: he has united both left and right sensibilities in opposing or criticizing his nomination on the grounds of incompetence, dishonesty, and hypocrisy.

Liberal Washington Post columnist Dana Milbank said “it’s a bit, well, rich that Obama chose as his new Treasury secretary a man who received a big corporate payout for dubious work and who socked away money in the Cayman Islands.” And the Wall Street Journal called Lew a “financial Forrest Gump” who “keeps walking into the frame of the business-political dramas of the last decade. But unlike the lovable movie character, Mr. Lew is playing the villain of liberal financial lore.”

The same bipartisan critique against Lew has come from the halls of Congress as well. Self-described socialist Sen. Bernie Sanders (I-VT) says Jack Lew is precisely the kind of man Obama has railed against–a Wall Street one-percenter: 

“As a supporter of the president, 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.”

And conservative Republican Alabama Sen. Jeff Sessions, who led the fight against Lew early on, said flatly: “Jack Lew must never be Secretary of Treasury. His testimony before the Senate Budget Committee less than two years ago was so outrageous and false that it alone disqualifies”

At the heart of the increasingly bipartisan opposition to the Lew nomination lie at least five flashpoints that critics say raise serious questions of Lew’s competence and ethics.

Dishonest Prior Testimony

On Feb. 13, 2011, Lew appeared on CNN’s State of the Union with Candy Crowley and said of Obama’s proposed budget:

Our budget will get us, over the next several years, to the point where we can look the American people in the eye and say we’re not adding to the debt anymore; we’re spending money that we have each year, and then we can work on bringing down our national debt.

During Senate testimony, Sessions blasted Lew’s false statement and said he was “flatly in error.”

Lew, who is a former director of the Office of Management and Budget (OMB), has at times displayed a striking level of ignorance over how the budgetary process operates.

During the Crowley interview, Lew said that the reason Mr. Obama has failed to pass a budget in the Senate is because such bills can be filibustered. But as anyone familiar with the process knows, budgets are considered “privileged,” meaning they do not require a filibuster-proof majority 60 votes and can instead be passed with a simple majority.

Lew repeated the elementary error to NBC’s David Gregory. “One of the things about the United States Senate that I think the American people don’t realize,” said Lew confidently, “is that it takes 60 votes, not 50, to pass something.”

One would think the former head of OMB–the nation’s top budget post–would know how the budget process works. But either Lew does not or he was being less than honest.

$56,000 Cayman Islands Account

During the 2012 presidential election, Obama used Gov. Mitt Romney’s Cayman Island accounts as a political bludgeon with which to administer blistering attacks.  However, when it was revealed that Obama’s Treasury Secretary Jack Lew previously held at least $56,000 in Cayman Island accounts, the Administration offered little more than a shoulder shrug and a scratch of the head from its nominee.

“I always reported all income, I always paid all taxes,” explained Lew. “I was aware that it was an international fund investing in emerging markets… I actually didn’t know [its location] at the time.”

As it turns out, Lew’s $56,000 Cayman Islands fund was registered to Ugland House, the exact building that President Barack Obama has called “the largest tax scam in the world.”

Wall Street Bailout Bonus

President Barack Obama has blasted Wall Street bonuses as “obscene,” calling them examples of “fat cats who are getting awarded for their failure.”

But even as Citigroup received billions in bailout money from taxpayers, Jack Lew was busy bagging a nearly $950,000 bonus. Lew served as Citigroup’s former chief operating officer of Citigroup’s Alternative Investments unit–a group that bet billions against homeowners paying their mortgages.

In total, Citigroup received $476.2 billion in cash and guarantees from the federal government.  Citigroup claims taxpayers made a profit on the bailout and says Mr. Lew “was not responsible for investments or fund management.”  

When Sen. Charles Grassley (R-IA) asked Lew whether it was morally acceptable for Lew to make so much money one day before Citigroup took taxpayers’ money, Lew said he was “compensated in a manner consistent with other people” in the industry–the very industry that President Obama blasts regularly as “fat cats.”

Allegedly Violated Federal Medicare Laws

Ranking Member of the Senate Budget Committee Jeff Sessions (R-AL) says Lew may have violated federal laws by failing to provide Medicare funding warnings during his tenure as OMB director. 

In a letter, Sessions wrote:  “The question must be asked: What role did Lew have in the decision to ignore the legal requirement to address Medicare’s funding imbalance? What confidence should members of Congress have that he will protect that program if he assumes the Treasury Secretary position–which also serves as Chair of the Board of Trustees of the Medicare Trust Funds?”

NYU-Citigroup Cronyism

During Lew’s tenure as New York University Vice President of Operations, a student-loan kickback scheme was approved making Citibank NYU’s primary private student loan lender.  Lew then left NYU and was hired by Citibank. But during his confirmation testimony, Lew said he does not know whether he approved the lucrative NYU-Citibank deal. 

“I do not believe that I approved the selection of Citigroup as a preferred lender for NYU students,” said Lew.

While serving as an NYU vice president in charge of the university’s budget and finances from 2001 to 2006, Lew drew an annual salary of $840,339, a figure higher than that of most of the nation’s university presidents. Lew then went to work for Citigroup, where he made a base salary of $350,000, plus bonuses, including one for nearly $950,000. That payment came just days after taxpayers spent billions bailing out the bank.

Whether Lew helped broker the NYU deal with Citi, only to then land a job working at Citi, is presently unclear.

Either way, says Grassley, Lew’s convenient memory loss is troubling. 

“Mr. Lew has a lack of knowledge or a poor memory of some of the perks he received through his tenure at New York University and Citigroup,” said Grassley in a statement. “His lack of recall is distressing.”

The committee responsible for Lew’s confirmation, the Senate Finance Committee, is slated to vote on Tuesday on whether Jack Lew should become the next Treasury Secretary of the United States.