Geithner,Summers, & now Lew. How can business leaders continue to claim that President Obama is an anti-business president. President Obama has bent over backward in fact at the expense of the middleclass to ensure that the financial and corporate sectors were stabilized securing the supremacy of our style of corrupt capitalism. It is sad that we have those that still cannot come to the realization that limited regulation IS the genesis of our financial demise.
Look, I understand that the forces the President must navigate, specifically Senators and Congress people of both parties owned by the corporate structure as opposed to the electorate, makes it difficult for him to get a populist that have the best interest of the middleclass at hand. That said, the optics of him choosing somebody that worked for Citigroup is disconcerting. At least we got Elizabeth Warren. Many are so scared of her support of the middleclass that she has both Democratic and Republican Senators wanting to weaken her role.
Jacob Lew, Obama Nominee And Former Citigroup Executive, Doesn’t Believe Deregulation Led To Financial Crisis shahien@huffingtonpost.com | HuffPost Reporting
A former top executive at Citigroup who participated in the deregulation of Wall Street during the Clinton administration and recently was tapped by President Barack Obama for a top White House post told a Senate panel last week that deregulation didn’t lead to the recent financial crisis.
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."
Experts and policymakers, including U.S. Senators, commissioners at the Securities and Exchange Commission, top leaders in Congress, former financial regulators and even Obama himself have pointed to the deregulatory zeal of the Clinton and George W. Bush administrations as a major cause of the worst financial crisis since the Great Depression. Lew, however, doesn’t appear to agree, putting him at odds with an administration and a party that tout their efforts at re-regulating Wall Street in pitches to voters and cast blame for the crisis in part on the deregulatory policies pursued by Bush and his fellow Republicans in Congress.
During an Oct. 30, 2008, campaign event in Florida, then-candidate Obama told a crowd of his then-opponent, Sen. John McCain, that: "Twenty-one times just this year John McCain has said we need to deregulate the financial industry, right at a time when we know that it’s because of deregulation that Wall Street was able to engage in the kind of irresponsible actions that have caused this financial crisis." The Arizona Republican lost in part to perceptions over how he would handle the worsening crisis.
If the Senate confirms Lew for his post, he’ll oversee an agency that’s responsible for making sure federal rules conform with Obama’s agenda. The Dodd-Frank financial regulation bill passed in the wake of the crisis requires at least 243 new rules, according to a July 21 note to clients by the law firm of Davis Polk & Wardwell. The firm says that number is likely a "significant underestimate."
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Lew served as OMB chief from May 1998 to January 2001 during the Clinton administration, when Clinton signed into law the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000 — two pieces of legislation at the heart of the deregulation of Wall Street. The first repealed the law that had long kept commercial banks from offering products or engaging in services more common with investment banks; the second "eliminated virtually all regulation" over the kind of derivatives that trade outside regulators’ view, according to Brooksley Born, the former head of the Commodity Futures Trading Commission and a current member of the Financial Crisis Inquiry Commission.
The Obama pick worked at Citi from 2006 until he joined Hillary Clinton’s State Department in January 2009, rising to chief operating officer of the bailed-out bank’s Alternative Investments unit, a Citi division that engaged in proprietary trading and invested in hedge funds and private equity groups. The Huffington Post reported in July that Lew’s unit invested in a hedge fund king who made billions correctly predicting that U.S. homeowners would not be able to make their mortgage payments.
Lew made millions at Citi, including a bonus of nearly $950,000 in 2009 just a few months after the bank received billions of dollars in a taxpayer rescue, according to disclosure forms filed with the federal government. The bank is still partly owned by taxpayers.
During two separate hearings last Thursday, neither the Senate’s Budget Committee nor its Homeland Security and Governmental Affairs Committee bothered to ask a single question about Lew’s tenure at Citigroup, transcripts of the proceedings show.
The White House declined to clarify Lew’s remarks from last week, instead writing in an e-mail that "Mr. Lew gave a nuanced and thoughtful answer to a question on a matter on which he, admittedly, is not an expert," said Kenneth Baer, communications director for OMB.
While experts agree on most of the several factors that led to the crisis, there remains some debate over the particulars. The causes of the collapse are the subject of an independent commission created by Congress to investigate the roots of the financial crisis. The FCIC’s report is due in December.
And Lew, a longtime public servant, spent just a few years on Wall Street. He also was testifying before Congress, so he may have wanted to be extra cautious when answering questions he may have been unsure of.
But when it
comes to the financial crisis and the role played by deregulation, there appears to be little disagreement among members of the Democratic Party.
