Thu Jan 10, 2013, 10:45 AM
octoberlib (6,030 posts)
What You Need To Know About Jack Lew, Obama’s Treasury Nominee
Lew got his start in politics as a 12-year-old working for antiwar presidential candidate Eugene McCarthy, worked under former Sen. Paul Wellstone (D) as a professor at Carleton College, was an aide for progressive Rep. Bella Abzug (D) in New York, advised former Speaker of the House Tip O’Neill (D) in the 1980s, and has held numerous positions in both the Clinton and Obama administrations. Here is a breakdown of where he stands on the issues of the day:
Budget and Spending: Lew is known as a sharp budget negotiator, and he is largely credited with crafting the deal that averted a government shutdown in the spring of 2011. That deal hoodwinked Republicans into thinking they had brokered $100 billion in spending cuts, but Lew structured it so that most of the cuts were to money that wasn’t ever going to be spent anyway. The result: real spending cuts were only about $30 billion. Lew also helped build Obama’s American Jobs Act proposal, and he was an ardent critic of Republicans during and after the debt ceiling debacle last year, saying they were “willing to provoke a crisis” to get spending cuts.
Taxes: Lew drafted the proposal to pay for the American Jobs Act in part with increased taxes on the wealthy, and he was part of Obama’s team that dealt with negotiations over allowing the high-income Bush tax cuts to expire at both the end of 2010 and 2011. Defending Obama’s 2013 budget, which featured $1.3 trillion in tax increases, he said the increases hit people who “don’t need” tax cuts and are going to “have to pay their fair share.” He angered Republicans by calling for tax increases during the 2011 debt ceiling fight, an important note, since Obama is insisting on further tax increases as part of any deficit deal this spring.
Entitlements: Lew’s record on entitlements is mixed. He’s known as a fierce defender of safety net programs, especially Medicaid, and the New York Times reported that he “morphs into a warrior” while defending them in budget negotiations. When he drew up the plan that snookered Republicans on spending cuts, many of the programs he protected were those that benefit low-income Americans. But he also worked on former Speaker Tip O’Neill’s (D) staff when Democrats agreed to raise the Social Security retirement age in the 1980s, and he has supported similar changes to Medicare (he and Geithner were known as chief proponents of raising the Medicare eligibility age as part of negotiations).
Financial Regulation: Lew, a former Citigroup banker, has often cited his inexperience and lack of expertise when asked about financial regulations. Pressed by Sen. Bernie Sanders (I-VT), he testified that he did not “believe that deregulation was the proximate cause” of the financial crisis, though he said he “would defer to others who are more expert about the industry to try and parse it better than that.” An anonymous banker has said Wall Street would be “just fine” with Lew’s appointment. And though Lew has Wall Street experience — he worked for a unit that profited from subprime mortgages — he may not be cut from the same inside-Wall Street cloth as Geithner. The New Republic’s Noam Scheiber reported that Lew “never really took” to Wall Street. “He just wasn’t especially interested in being a banker or in the work bankers did,” Scheiber wrote. Geithner, who joined the administration straight from his work inside the financial crisis, was a fierce proponent of the Dodd-Frank Wall Street Reform Act. Where Lew will stand on those issues remains to be seen.
11 replies, 1377 views
What You Need To Know About Jack Lew, Obama’s Treasury Nominee (Original post)
|Mutatis Mutandis||Jan 2013||#1|
|Jakes Progress||Jan 2013||#3|
|Jakes Progress||Jan 2013||#10|
|Jakes Progress||Jan 2013||#11|
|Guy Whitey Corngood||Jan 2013||#7|
Response to octoberlib (Original post)
Thu Jan 10, 2013, 11:20 AM
Mutatis Mutandis (90 posts)
1. The Roots of Jack Lew's Pro-Wall Street Policies (Robert Rubin, etc)
Like Tim Geithner, the new Treasury nominee may owe his views to Robert Rubin. So don't expect him to pursue much in the way of bank reform.
It was a little noted event when last fall, during the height of the presidential election campaign, the Treasury Department released Timothy Geithner’s phone records. To the extent anyone paid attention at all—and let’s face it, almost no one did—financial reporters were struck that the Treasury secretary’s most frequent contact was Larry Fink of BlackRock, the world’s largest money manager and Geithner’s principal conduit to his many friends on Wall Street. But the even more telling name of Geithner’s regular confidants, as the Financial Times noted, was the second one on the frequent-contact list: Robert Rubin.
That might seem odd; after all, it’s been nearly a decade and a half since Geithner worked for Rubin, who is long retired from public life. But Bob Rubin was no ordinary employer. The former Treasury secretary under Bill Clinton all but created Timothy Geithner as we know him today, raising him from a junior Tokyo Embassy staffer to undersecretary of the Treasury in the mid-to-late-’90s, and later sponsoring the still-boyish bureaucrat as president of the New York Fed in 2003 (against resistance from the head of the search committee, Paul Volcker, who according to The Wall Street Journal barked: “Who’s Geithner?”). As he almost always has, Rubin prevailed, and for nearly four years his former protégé has lorded over America’s financial system.
Rubinomics: It’s the cult that never quits. Now the nation is faced with a potential new acolyte. Is Jacob Lew, who is expected to be named Thursday as the replacement for Geithner, yet another Rubinite who will largely follow the policies of his predecessor? Calm, brilliant, competent at everything he’s tried—from the Office of Management and Budget to deputy secretary of State to chief of staff—Lew has smoothly run the White House in the year since William Daley left. He has a reputation for unimpeachable integrity and total honesty, as well as a mastery of the budget that will be critical over the next four years of fiscal fights. But many critics fear that the picture is different when it comes to Wall Street. On financial reform, Lew is a virtual cipher who, in his few public pronouncements, has appeared to toe the Rubin-Geithner line of minimal interference with America’s giant banks.
And Lew is taking over as Treasury secretary at a critical time. Two and a half years after enactment, the Dodd-Frank financial law is still not fully implemented. Even as the winds of financial turbulence threaten from Europe, financial-industry officials admit the Federal Deposit Insurance Corp. has not developed the capacity to liquidate banks in the event of a crisis. Although it never became a 2012 campaign issue, financial regulation has lagged well behind schedule (no one even seemed to care, for example, when Mitt Romney failed to propose an alternative to Dodd-Frank, even though he had promised to do so). Wall Street’s lobbyists have managed to delay the “Volcker Rule” —the closest thing we have today to a Glass-Steagall law separating federally insured commercial banking from risky investment banking—by six months. The banks are also engaged in a behind-the-scenes effort to escape U.S. oversight of their derivatives activities overseas.
Flashback: Lew's Time at Citi And Other Disappointments
As White House budget director Jack Lew prepares to take over for departing chief of staff Bill Daley, it's worth revisiting Shahien Nasiripour's blow-by-blow of Lew's brief, less-than-illustrious stint at a unit of Citigroup that made money by betting against the housing market as it prepared to implode:
Multi-Adviser Hedge Fund Portfolios LLC was a unit of Alternative Investments' Hedge Fund Management Group, the 36th-largest such "fund of hedge funds" in the world when Lew came aboard, according to a ranking by Alpha magazine, a publication that covers the hedge fund industry. That Multi-Adviser fund in particular had $407 million by the end of 2007, a week before Lew was named as Alternative Investments' chief operating officer…At that time, it had $18 million invested in Paulson Advantage Plus LP, worth $26.4 million, comprising about 6.5 percent of the Multi-Adviser fund's total capital.
The Paulson fund was run by hedge fund king John Paulson, the man who made billions off the deterioration of the housing industry by making bearish bets on securities tied to home mortgages—particularly subprime home mortgages. Under Lew, the Multi-Adviser fund doubled its investment in Paulson's fund to nearly $42 million by March 2008; by the next quarter, it'd cranked that investment up to just over $60 million, making it the biggest piece of the Multi-Adviser fund, Nasiripour reported. So how'd it go for Lew and Citi?:
Citi paid Lew $1.1 million for his year at Alternative Investments, according to an ethics disclosure report filed in January 2009. He was also eligible for an undisclosed bonus….His unit, though, lost as much as billions of dollars in 2008 as its bets turned sour. In the first quarter of 2008 alone the unit lost $509 million; the company stopped publicly disclosing the unit's individual numbers soon thereafter, but the part of the company that absorbed Alternative Investments lost $20.1 billion in 2008, according to the bank's filings with the Securities and Exchange Commission.
Citigroup, as you might recall, also received $45 billion in TARP money.
Response to octoberlib (Original post)
Thu Jan 10, 2013, 12:21 PM
Jakes Progress (8,988 posts)
3. Yet another Wall Street banister handling our money.
Thanks, Mr. President. You had a chance to rid yourself of the blood-suckers and chose to continue with their advice.
Response to octoberlib (Original post)
Thu Jan 10, 2013, 05:37 PM
Cha (184,176 posts)
6. Thanks for the link,
The New Republic’s Noam Scheiber reported that Lew “never really took” to Wall Street. “He just wasn’t especially interested in being a banker or in the work bankers did,” Scheiber wrote. Geithner, who joined the administration straight from his work inside the financial crisis, was a fierce proponent of the Dodd-Frank Wall Street Reform Act. Where Lew will stand on those issues remains to be seen.
Response to Cha (Reply #6)
Sat Jan 12, 2013, 12:09 AM
Jakes Progress (8,988 posts)
11. Why is it good that his stand remains to be seen?
There are many qualified people whose position on financial regulation is known to be progressive. Why one who admits that he does't know a lot about this stuff. Who do you think will tell him what to think?