Jack Lew answers questions. Kind of.

23 Feb

Updated below.

I do not care to spend much time on this subject, because there is simply no point, but wanted to at least touch on it.  Look, they could be nominating gerbils to these positions and hold these pretend “tough” question and answer sessions; the direction of this country and the intent of Congress is now baked into the cake, as they say.

Bernie Sanders’ view of Jack Lew, Obama’s nominee for Treasury Secretary (this is the opinion I agree with):

[…] 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.

We don’t need a treasury secretary who thinks that Wall Street deregulation was not responsible for the financial crisis.  We need a treasury secretary who will work hard to break up too-big-to-fail financial institutions so that Wall Street cannot cause another massive financial crisis.

We don’t need another treasury secretary who believes in ‘deficit neutral’ corporate tax reform. We need a treasury secretary willing to fight to make sure that large, profitable corporations pay their fair share in taxes to reduce the deficit and create jobs.

We don’t need a treasury secretary who will advise the president that he should negotiate with the Republicans to cut Social Security, Medicare, and Medicaid benefits. We need someone who is going to strengthen these programs.

We don’t need another treasury secretary who believes that NAFTA and Permanent Normal Trade Relations with China have been good for the American economy. We need someone in the White House who works to fundamentally re-write our trade policy to make sure that we are exporting American goods, not American jobs.

Here’s part of the “grilling” Lew received from the Senate:

[…] The questioning was largely respectful and free of drama. Even the top Republican on the committee, Orrin Hatch, one of Lew’s most persistent critics, had only nice things to say at the end of the 3-1/2-hour vetting.

“Frankly, I think you’ve done really well,” he told Lew. […]

Hatch said he was unclear about what Lew did as chief operating officer at two Citigroup units, one of which engaged in proprietary trading. As treasury chief, Lew would oversee rules that seek to prevent such trading.

“If you were to be confirmed, it could lead to an awkward situation in which … you would effectively be saying to financial firms: Do as I say, not as I did,” Hatch told Lew.

Lew said there were no conflicts of interest. While at Citigroup, he said he was mainly in charge of managing an operating budget and was not involved in investment decisions.

Lew was also grilled about a $56,000 investment he once had in a Citigroup venture capital fund registered in the Cayman Islands. Republican Senator Pat Roberts briefly displayed a blown-up picture of Ugland House, a Cayman Island office building where thousands of companies registered, including the fund in which Lew invested.[…]

Lew told the panel he did not initially know his investment was registered in the Cayman Islands. He said he did not receive any tax benefit from the investment, as he sold it at a loss.

According to wikipedia, while at Citi, part of Lew’s job description was: “also had oversight of Citigroup subsidiaries in countries including Bermuda, the Cayman Islands, and Hong Kong; and during his time at Citigroup, Citigroup subsidiaries in the Cayman Islands increased to 113.”  Now, in light of his above answers, that there is a right interesting part of his curriculum vitae.

Getting back to the Senate Q & A, this from a different article:

At last we know how the grease is funneled to that revolving door between Wall Street and Washington. One only gets a $940,000 bonus from Wall Street’s Citigroup if you can land a “full time high level position with the United States Government or a regulatory body.” It can’t be just a part-time job, mind you; and you can’t be rank and file. Citigroup’s dangling carrot will only pay $940,000 if the company can add a “high level” government mover and shaker to their gold-plated Rolodex.

This was the bombshell dropped by Senator Orrin Hatch yesterday in Jack Lew’s confirmation hearing for one of the highest offices in the land – Secretary of the U.S. Treasury who will also head the body that makes critical decisions impacting Citigroup – the Financial Stability Oversight Council. (Lew held an executive position with Citigroup at the time of its collapse.)

Hatch made the disclosure as follows:

“First, could you explain what you did in 2008 for Citi that warranted payment to you of close to $1 million, most of which was a bonus. Second, what was it about your performance that merited your bonus from a company that was being propped up by taxpayer money and are there any records of your performance assessment – or are there any assessments of your performance. Third, your employment agreement included a clause stating that ‘your guaranteed incentive and retention award’ would not be paid upon exit from Citigroup but there was an exception that you would receive that compensation ‘as a result of your acceptance of a full time high level position with the United States Government or a regulatory body.’ Now is this exception consistent with President Obama’s efforts to ‘close the revolving door’ that carries special interest influence in and out of the government?” […]

Of course, Senator Hatch is completely misguided if he believes that Obama has made any effort whatsoever to “close the revolving door”;  Obama has permanently propped that door wide open and the wind is whistling mightily through the halls. Hatch seems unaware – or perhaps just wants to appear unaware – that by placing this clause in Lew’s package, Citigroup was actually signaling its anticipation of a Lew governmental position.  Now, how would they know to word it this way?  The question I have, in light of the Citigroup clause, is: “How long in advance was Citi made aware that Lew was headed back to a governmental position and who struck this deal with them?”  Also, it seems to me that the blame for the “revolving door” lies not with Lew, who merely made himself oozingly available in his greasy banker way (perhaps knowing in advance that some deal had been struck), but with whomever in the government was actually behind the peculiar structure of Lew’s package.  Surely Citi did not write that clause without impetus and a strong belief that this was the direction Lew’s career path would take and to influence his future career.  And to benefit from that.  How can this clause even be legal?  He is being paid by Citi to take a position in the government where he can influence policy and regulations directly benefiting Citi.   Compensated handsomely by a private company to take that influential government position.  (Who exactly is his employer in this case?)

What’s the payoff for Treasury Secretary?  An extra zero or even a comma, in an offshore account managed in a blind trust that he “doesn’t really know much about”?  The man has proven he takes money to influence policy.

The Senate Q and A session did not end right there as it obviously should have, with Lew being leg-cuffed and frog-marched out of there and his nomination process stopped cold.  He was not disqualified immediately?  He was paid a million dollars, by contract, to take the most influential position in government that he could.  Unbelievable.  This is open corruption, in my view; perhaps I am totally naive and this is now common practice in the world of US government and business.  I have not seen this particular clause mentioned in any mainstream papers – I would have expected this to be headline news; not that there is corruption, but that there is corruption by written contract and Congress doesn’t raise a ruckus.

I would have thought that between the compensation clause flim-flam and the misdirection Lew gave in his answers about his Cayman Island investments and duties while at Citi, the guy’s nomination would have been completely derailed.  But then, I thought for sure Timmeh had hoist himself on his own petard when it came out he cheated on his taxes.  (HA HA HA HA HA HA HA, oh, me, how young and foolish I was back then.)

Well, I suppose there is always the possibility that a bright star arose over the crib of Jack Lew and shone all around it, and the magis of Wall Street in the North, recognizing the portent as prophecy fulfilled, left their homes in the New York City, mounted their camels and traveled laden with many gifts – including a New Clause to the Compensation Package of Jack Lew written on finest parchment –  to the City Upon the Hill to share the Good News with The One there ensconced.   The One received them warmly and, loathe to impede prophecy Most Divine, studied the testaments of the magi and took Jack Lew verily unto his bosom.

But I doubt it.

As my Dad is wont to remark, “Ye saw I was a stranger and ye took me in.”

The position of Treasury Secretary is perhaps the most important position in the US right now, the most holy, so to speak.  Whoever sits in that seat is all that stands between Bernanke and his infinite monetary gifts, giving 80 billion dollars a month to the five largest banks (roughly 10 bb/month to Citi alone).  A strong Treasury Secretary could oppose this practice and stand against this clear and unbelievably large criminal financial fraud.  A complicit Secretary, such as Geithner and Hank Paulson before him, and now Lew, ensures the government is just greasing the skids for the private corporation called the Federal Reserve and that the shadow banking system finally reaches a worth of over a quadrillion dollars.  That is a Thousand Trillion.  $1,000,000,000,000,000.  The estimated size of the securities derivatives market is over one quadrillion dollars.

Now tell me about that sequestration thingie again.

[Edited after initial publication.]

UPDATE, Thurs. 28 Feb.
Jack Lew has been confirmed as the next Treasury Secretary.  His nomination “sailed through” with a Senate vote of 71 – 26, only one day after the Finance Committee approved him.

I particularly like the juxtaposition of the final two sentences of the below linked article, which may or may not have been intentional on the part of the editors.  A bit of sadistic humor, which we Americans thrive on, kind of like the clips on “America’s Funniest Home Videos” – half of which show boys being hit in the groin with various objects and then writhing in pain (ha, ha, what a hoot) and the other half showing doting American parents grinding birthday cakes into the faces of their beloved toddlers (isn’t that a riot?  Happy birthday, ya little fucker).  In this case, we are collectively the butt of the cruel joke, but still we will enjoy it, if we even notice that it has been played on us.  We are just stupid that way.

[…] The huge payout he received when he left the bank to join the Obama administration, a bonus reportedly stipulated by his contract, sparked questions that he is too close to the banks and would be too accepting of the practices that stoked the financial crisis.

Lew is expected to be sworn in on Thursday morning.



Posted by on February 23, 2013 in Congress, corporatocracy, Wall St and banks


3 responses to “Jack Lew answers questions. Kind of.

  1. paxhonu

    February 24, 2013 at 5:15 pm

    This is a really important post, Teri. Nowhere else outside of this column have I seen any reference at all to the Lew contract with Citi wherein he is/was provided a serious monetary incentive to take an important and influential position in government where he would ensconce himself while obviously beholden to a corporation the interests of which are clearly at odds with those of the government or the American people.

    This matter of Citi and/or other corporations providing written contractual bribes for executives to leave their direct employ and move into influential positions in government, and the Congress not caring about it, is mind-boggling.

    Such relationship is quite clearly poisonous to governance, whether it be private Federal Reserve Banks buying a Treasury Secretary to collude in the largest financial fraud ever perpetrated or Koch Bros buying suitable heads for DOE and EPA. And in the case of Secretary of the Treasury the problems are so obvious and overwhelming as to be nearly incomprehensible.

    The figure you provide of $80 Billion per Month is the stated minimum amount (the actual amount remains undisclosed) of money that the so-called Federal Reserve creates and hands over to the Banks Which Own It in ridiculously monikered “QE” effectively “launders” not only primary securities such as US Treasury bonds and MBS/CMBS, but all successive derivative layers, including CDO and CDS and the other crazily fabricated bets between and amongst the Member/Owner Banks. It monetizes those scraps of paper (those post it note IOU’s where Goldman has bet a trillion dollars it never had against Morgan’s trillion dollars it never had on the performance of some index or security it may or may not control). Money is given these Member/Owner Banks in exchange for “securities”, many of which have little discernible market value absent the Fed manipulation, and all of which were created by its Member/Owner Banks in the usual manner of adding more and deeper derivative layers of illegitimate paper in a growing cascade of inventory held by and amongst those same Member/Owner Banks.

    And that’s just QE3, where the Fed gives as much money each month to its Member/Owner Banks as the awesomely Kabuki’d Sequestration Show would amount to over a full year. The other special TARP and TALF era Fed facilities, also available exclusively to and benefiting only its Member/Owner Banks, now total an estimated $20 Trillion or more. More than the National Debt. More than GDP. All this benefits only the usual tiny handful of Banks, with the only “trickle-down” being to the set of well connected, similarly dominant (monopolistic) within their own respective industry, corporations in their immediate circle, e.g., Bechtel, Exxon, Monsanto, Haliburton, Walmart, Verizon, maybe 300 or 400 others collectively enjoying abundant access to banking and credit in this country.

    So, the Fed exchanges real, albeit newly digitally created, money for the toilet paper gathering dust in Jamie Dimon’s basement. The stuff he thought he’d never get rid of. The stuff which if “marked to market” (which has been suspended since 2008) would render JP Morgan Chase and each of the other top five banks in the country, bankrupt and insolvent. To repeat, all of the Fed largesse goes to or through just that tiny handful of Banks, the Fed’s Member/Owners, that actually have inventories of such securities. Citi is of course one of the top 5 and takes its share with the lions, but the whole set of Member Banks and the whole set of Banks that Own some portion of the privately held Federal Reserve, and the respective amount of their ownership interest, is not publicly available information. That data is protected even from Congress, as is any accounting on any topic at all by the Fed. There may be about 80 banks and other financial institutions or entities, some foreign, that enjoy access to the Fed Discount Window. But exactly who and how much and how often? Easier to get classified info from CIA than any accounting from the Fed.

    If unimpeded, the Fed could eventually monetize the entire over One Quadrillion Dollar collective inventory of bullshit shadow banking paper. And that, if it happens, means the effective global money supply just grew ten-fold. With nearly every bit of it placed straight into the hands of Dimon, Blankfein, Corbat, Stumpf, and Moynihan, and a few, 80 or 400 or so, other criminals along for the ride.

    What we do know is that the Treasury Secretary could derail instead of enable that train. Could insist on real world actions that help the people and the persons that are the citizenry of the United States. At present, Geithner has Treasury doing what the Fed wants and needs it to do to continue the farce, and has raised no objection or roadblock to the continuance of Fed Policy which states that “We are going to continue to give trillions of dollars and interest-free facilities to these 80 or so, private, for-profit Criminal Banks, Entities, and Individuals until such time as the national unemployment rate declines.” Never mind that the only measurable relationship between exclusive banker wealth and national unemployment is one of inverse correlation.

    I hope that your column might help shine light on how openly cynical and systemic the corruption of this failed system has become. I have little faith that any other outlets will pick up the cry, however, or that any correction in course might result. Not with this nomination, nor more critically, with the system writ large. Americans seem to find these topics too mundane or too depressing (to give the benefit of the doubt here) to bother with. And let’s face it, an informed and engaged public would have demanded the repeal of the Federal Reserve Act of 1913, oh, about a century ago! Anyone could have seen it was gonna be a rilly rilly big shoe.


  2. Kitt

    March 3, 2013 at 10:18 am

    “We are just stupid that way.” Yep: Twittered and Facebooked. Thanks, Teri, for another informative post – complete with some well deserved digs at the slovenly attitude or lack of ‘give a damn’ of the US public in general.


    • Teri

      March 3, 2013 at 11:00 am


      Thank you for reading and tweeting and all.

      I failed to mention in my post that Jack Lew had a heavy hand in the whole “sequester” idea as Oblahblah’s budget director. I generally like Paul Krugman, but when he claimed the other day that Lew was just the ticket (because he can ‘negotiate with the Repubs’), I yelled at the computer. There is no difference between Lew and either Simpson or Bowles (the catfood commission duo – also Obama’s brainchild) – these guys are not “negotiating” with anyone. They are hauling everything out the back door and putting in the van for the thieves. Furthermore, the idea that our treasury secretary’s primary duty is to negotiate with nutjobs and grifters is just idiotic.

      We are headed for deep shit now; even if Congress repeals the “sequester”, they have managed to turn the conversation away from the criminals on Wall St. and Congress’ own corruption to: which of our “entitlements” shall we give them first? I haven’t even heard one person on national television point out that the deficit is actually shrinking (it’s as low now as it was when Clinton took office) or that legally social security is not allowed to be part of the federal budget and thus cannot affect the deficit one way or the other.

      They want it all, and they have the firepower now – thanks to Homeland Security, etc., to back up their taking of it. But I don’t think we’ll argue much. We are stupid that way.




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