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Thu Jan 10, 2013, 10:39 PM

Jack Lew had major role at Citigroup when it nearly imploded

Source: WP

Treasury secretary nominee Jack Lew has spent most of his career in government, but during the financial crisis, he was embedded inside one of the country’s biggest banks as it nearly imploded.

From 2006 to 2008, he worked at Citigroup in two major roles, a notable line in his résumé given that as Treasury secretary, he would be charged with implementing new rules regulating Wall Street.

But Lew did not have just any position at the bank. In early 2008, he became a top executive in the Citigroup unit that housed many of the bank’s riskiest operations, including its hedge funds and private equity investments. Massive losses in that unit helped drive Citigroup into the arms of the federal government, which bailed out the bank with $45 billion in taxpayer money that year.

snip

“The mismanagement of risk was comprehensive at that organization,” said Simon Johnson, an economist at the Massachusetts Institute of Technology.

Read more: http://www.washingtonpost.com/business/economy/jack-lew-had-major-role-at-citigroup-when-it-nearly-imploded/2013/01/10/a913431e-5b6b-11e2-9fa9-5fbdc9530eb9_story.html



Bernie Sanders adds:

“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,” Sanders said. “I do not believe Mr. Lew is that person.”

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Reply Jack Lew had major role at Citigroup when it nearly imploded (Original post)
brentspeak Jan 2013 OP
TwilightGardener Jan 2013 #1
brentspeak Jan 2013 #4
TwilightGardener Jan 2013 #5
brentspeak Jan 2013 #6
geek tragedy Jan 2013 #19
blueclown Jan 2013 #21
geek tragedy Jan 2013 #23
dionysus Jan 2013 #25
rhett o rick Jan 2013 #2
blueclown Jan 2013 #3
840high Jan 2013 #7
SpartanDem Jan 2013 #11
blueclown Jan 2013 #12
geek tragedy Jan 2013 #18
TheKentuckian Jan 2013 #13
brentspeak Jan 2013 #24
JackRiddler Jan 2013 #28
Javaman Jan 2013 #14
geek tragedy Jan 2013 #15
blueclown Jan 2013 #16
geek tragedy Jan 2013 #17
blueclown Jan 2013 #20
geek tragedy Jan 2013 #22
Purveyor Jan 2013 #8
doc03 Jan 2013 #9
blkmusclmachine Jan 2013 #10
mpcamb Jan 2013 #26
JackRiddler Jan 2013 #27

Response to brentspeak (Original post)

Thu Jan 10, 2013, 10:42 PM

1. Oh well, maybe he learned something that he can carry forward into his new job.

I am loathe to bash ANY of Obama's cabinet nominees, really--why help Republicans in their assholery?--but Lew does not sound like a bad guy.

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Response to TwilightGardener (Reply #1)

Thu Jan 10, 2013, 10:48 PM

4. Meanwhile, many of Obama's cabinet and admin have bashed you

and me...and everyone else.

Timothy Geithner - has protected and bailed-out Wall St. banks which have victimized much of the US

Ron Kirk - Trade Representative who is currently working to get the TPP ratified -- more lost jobs for Americans

Michael Taylor -- former Monsanto executive who is using his position as USDA advisor to screw over the public

Eric Holder - 'nuff said

Every now and then, Obama has hired some decent people (like the departing Lisa P. Jackson) -- but they seem to be the exception.

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Response to brentspeak (Reply #4)

Thu Jan 10, 2013, 10:54 PM

5. It's hard to have a discussion with someone who thinks that every Obama cabinet

member or advisor is a major disaster in some way. They will all do stuff you don't like, or carry in baggage. Obama does not have a roster of progressive saints and superheroes standing by, ready to jump into some of the most extremely difficult high-profile jobs. Ultimately, they do Obama's bidding anyway, and I know that's where you're really coming from.

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Response to TwilightGardener (Reply #5)

Thu Jan 10, 2013, 10:56 PM

6. Strange defense of odious behavior n/t

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Response to brentspeak (Reply #6)

Fri Jan 11, 2013, 11:04 AM

19. Mere assertions from people who hate Obama and anyone associated

with Obama of 'odious behavior' are not substitutes for evidence.

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Response to geek tragedy (Reply #19)

Fri Jan 11, 2013, 11:18 AM

21. Hate Obama?

Those are harsh words, and untrue words at that. I would venture a guess that there is not a single person here on this forum who didn't vote for President Obama in 2012. However, that does not mean that we cannot criticize certain aspects of his record, or do some vetting of his cabinet picks.

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Response to blueclown (Reply #21)

Fri Jan 11, 2013, 11:25 AM

23. I'm gonna guess the OP didn't vote for him--the OP does nothing but

post anti-Obama stuff here. He disappears during election season because those antics would get him banned.

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Response to geek tragedy (Reply #23)

Fri Jan 11, 2013, 01:07 PM

25. you Better Believe It!

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Response to brentspeak (Original post)

Thu Jan 10, 2013, 10:44 PM

2. Sen Sanders represents We THe People. Maybe the president should take a lesson. nm

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Response to brentspeak (Original post)

Thu Jan 10, 2013, 10:46 PM

3. In charge of Citigroup's proprietary derivatives unit...

The same unit that thought they were playing with house money aka taxpayer money in the lead-up to the financial crisis.

He should be in prison. Or fined substantially civilly for all the money he costed the American people during his tenure at Citi.

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Response to blueclown (Reply #3)

Thu Jan 10, 2013, 11:52 PM

7. Bet he got a handsome bonus.

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Response to blueclown (Reply #3)

Fri Jan 11, 2013, 02:54 AM

11. Lew wasn't making the bets

For what it’s worth, one thing I don’t think liberals should get too exercised about, though they probably will, is Lew’s tenure at Citigroup, where he worked between 2006 and 2008. Lew was basically the chief administrator at Citi Alternative Investments, which runs the company’s portfolio of hedge funds and private-equity funds. That is, he was the guy who kept watch over the books and the paperwork, not a guy going out and placing multimillion-dollar bets or making hundred-million dollar deals. Lew was basically the chief administrator at Citi Alternative Investments, which runs the company’s portfolio of hedge funds and private-equity funds. That is, he was the guy who kept watch over the books and the paperwork, not a guy going out and placing multimillion-dollar bets or making hundred-million dollar deals.

http://www.motherjones.com/mojo/2012/01/flashback-lews-time-citi-and-other-disappointments

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Response to SpartanDem (Reply #11)

Fri Jan 11, 2013, 08:43 AM

12. That's the worst part.

He wasn't just a small fish in the pond... a simple day trader. He was in charge of oversight of this unit. He should have known the risks of risky proprietary trading and nipped them in the bud. But he didn't.

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Response to blueclown (Reply #12)

Fri Jan 11, 2013, 11:03 AM

18. Operations officers aren't the ones making the major business and investment

decisions. They handle logistics.

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Response to SpartanDem (Reply #11)

Fri Jan 11, 2013, 09:46 AM

13. Is there some reason that is OK? Oh, he was just the fox that was supposed to watching the hen house!

He wasn't actually a fox that raided the hen house, they worked for and were supposed to get oversight from him is all.

I don't want the plunderers and exploiters to be reassured nor a comfort level for the establishment forces that are ripping the country apart to pad their pockets.

This isn't the first term, the excuses have now passed into lame.

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Response to SpartanDem (Reply #11)

Fri Jan 11, 2013, 12:56 PM

24. "I don’t think liberals should get too exercised about"

Yes, The New republic's representative for Wall Street, Noam Scheiber, is lecturing that "liberals" shouldn't get in a huff over Lew.

As one of TNR's readers commented, the truth about Lew can be found on Salon, while Scheiber has a mortgage to pay, and hence masters to obey.

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Response to SpartanDem (Reply #11)

Fri Jan 11, 2013, 03:14 PM

28. It's worse than that. He was a fiduciary.

He was COO of the unit. CEO, CFO and COO are the primary fiduciary positions. They bear responsibility for what happens. In law and in theory, if not in reality. It's not supposed to be an excuse that they weren't paying attention. That's just as bad as direct participation. They send the signal of what's acceptable within a unit.

The initial investment in John Paulson's planned failure fund was $18 million. Doesn't sound like much compared to the many billions of total assets under management by that unit, but it's big enough that it would have been a visible line in reports and subject to top-management oversight.

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Response to blueclown (Reply #3)

Fri Jan 11, 2013, 10:45 AM

14. another one who fails up.

unreal.

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Response to blueclown (Reply #3)

Fri Jan 11, 2013, 10:54 AM

15. He took over after the unit had made all of its horrid decisions

Moreover, he wasn't in charge of making those decisions.

Hopefully you will never serve on a criminal jury in real life.

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Response to geek tragedy (Reply #15)

Fri Jan 11, 2013, 10:55 AM

16. Where is your proof that he was not in charge of making those decisions?

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Response to blueclown (Reply #16)

Fri Jan 11, 2013, 11:00 AM

17. These were his job responsibilities:

In January 2008, he switched to Citigroup’s alternative investments unit. A press release announcing his new position as chief operating officer of the group said he would “oversee coordination between the operations, technology, human resources, legal, financial and regional departments.”


See anything about investment decisions in there?

Moreover, he obviously didn't have anything to do with their pre-2008 investments--which is when all of the subprime crap would have been bought.

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Response to geek tragedy (Reply #17)

Fri Jan 11, 2013, 11:08 AM

20. An executive doesn't have a fiduciary duty to report wrongdoings?

Your explanation doesn't fly.

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Response to blueclown (Reply #20)

Fri Jan 11, 2013, 11:23 AM

22. What wrongdoings was he supposed to report?

The fact that Citigroup had made a lot of shitty and risky decisions was common knowledge by then.

What you're suggesting is akin to jailing Obama for what Bush did.

The group was hemorrhaging money just as Lew joined. In the first three months alone, it lost $509 million, according to SEC filings. By contrast, just a year earlier during that quarter, the unit made $222 million.

“He stepped into the hedge-fund buzz saw,” said Mark Williams, a lecturer in finance at Boston University and a former bank examiner for the Federal Reserve. “His timing wasn’t the best.”


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Response to brentspeak (Original post)

Fri Jan 11, 2013, 12:05 AM

8. Has the President nominated ANYONE that anyone has been happy with? Perhaps Romney

should have won after all...

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Response to brentspeak (Original post)

Fri Jan 11, 2013, 12:34 AM

9. Shouldn't all these people be looking through government bars instead of

getting government jobs.

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Response to brentspeak (Original post)

Fri Jan 11, 2013, 12:42 AM

10. Insider

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Response to brentspeak (Original post)

Fri Jan 11, 2013, 02:06 PM

26. Why can't this administration find

Last edited Fri Jan 11, 2013, 03:39 PM - Edit history (1)

Someone- anybody -who was calling bull-jive when corporate America was crashing the economy??
Why do we always have to find somebody who was driving the bus, pull them out of the ashes and give them the job of running things?

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Response to mpcamb (Reply #26)

Fri Jan 11, 2013, 03:08 PM

27. Because elections don't change the real power configuration...

Or any candidate who'd genuinely threaten to do so doesn't have a chance.

Now, before the swarm attacks:

There are important differences between the two big parties. We're practically forced to choose the better one, because these differences radically affect millions of us. And because movements for change experience better conditions under one party than another. And because the local and state levels, where the differences between the parties can be much more radical, are very important.

But these differences are within a limited scope. It's not just generalized corruption thanks to the power of money, it's also the weight of history and tradition with which we must contend. "The ghosts of the past."

The power of Wall Street and its divine right to extract surplus value as rent income from all sectors of the productive economy and from the 99% will not be questioned. The finance-captured government will do all to preserve that power, to cover up Wall Street fraud, to hold no one accountable, to reward miscreants and sociopaths with higher office, to follow Wall Street ideology, and to rescue Wall Street from its inevitable crashes - regardless of cost.

This is part of the larger dominance of the oversize and transnational corporations, their money in politics, their ownership of the mass media and sponsorship of academia and policy-making institutes, and the whole global structure of dominance they've set up through devices like WTO, IMF, World Bank, NAFTA and other "free trade" agreements, EU, etc.

Also never to be questioned is the predominant role of the war machine as the primary item in the Call it what you will: The National Security State. The Pentagon system. The military-industrial-Congressional-lobbyist-corporate-media complex. The global military empire. The doctrine of full-spectrum dominance. The geostrategic wankery that upholds American Exceptionalism and the USG as a legitimate decider on what should happen everywhere on the planet. The deep state and its parapolitical extensions. "Top Secret America." The federal surveillance and control state. The cycle of manufacturing threats and enemies that supposedly compel interventions, wars, new orders and phases of transition and rebuilding, with opportunities for profit at each stage.

The drug war might fall in the foreseeable future, though. That would be an important break. What will the banks do without $400 billion in extra cash flow a year to launder? What will the surveillance and security agencies do without this important pretext?

The insane energy system also may be shakier than it looks, for unavoidable reasons of physics and ecology.

And the straight-jacket culture is loosening up on some fronts.

So it's not hopeless.

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