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Jack Lew, President Obama’s nominee for treasury secretary, is a revolving-door K Streeter and Wall Streeter who pocketed a near-million-dollar bonus from Citibank three months after taxpayers bailed out the failed financial titan.
Obama has spent years denigrating revolving-door lobbyists and “fat cats” from Wall Street, yet he has populated his administration with them.
Lew was a Democratic congressional staffer in the 1980s, eventually becoming senior policy adviser to House Speaker Tip O’Neill and executive director of the House Democratic Steering and Policy Committee. When O’Neill retired after the 1986 election, Lew cashed out on K Street.
Lew became a partner at Van Ness Feldman, where he specialized “in energy and regulatory law,” according to a New York Times article at the time. Back then lobbyists and lobbying firms did not need to register as such, but Van Ness Feldman’s focus was mainly Capitol Hill: It was founded by four Democratic congressional aides, and National Journal reported at the time that “lobbying accounts for nearly half the firm’s work.”
With Bill Clinton’s election in 1992, Lew passed back through the revolving door, serving eight years in the White House, including a stint from 1998 to 2001 as director of the Office of Management and Budget.
After that, Lew spent a few years as an administrator at New York University before going to Wall Street.
In June 2006, Lew joined Citigroup, one of the five largest banks in America, where he worked under fellow Clinton alumnus Robert Rubin. In January 2008, Lew became chief operating officer of Citi Alternative Investments.
Lew’s CAI unit engaged in exactly the sort of activity that Democrats blamed for the financial collapse and have aimed to ban through legislation: “proprietary trading.” That means Lew’s unit was investing Citi’s own money as opposed to helping clients make money.
Some of Citi’s “alternative investments” under Lew were tied inextricably to politics. For instance, Citi had a division dedicated to “green” investments that could only be profitable with the right regulations and subsidies. CAI invested in highly subsidized cellulosic ethanol, demand for which came from federal law requiring gasoline blenders to buy it.
GreatPoint Energy was an investment partner with Lew’s unit. The company’s business was coal gasification, and GreatPoint lobbied for climate change legislation that would drive demand for this process. Lew’s unit also tried to make money from investments in greenhouse gas credits, which only have value if the government constrains greenhouse gas emissions.
In autumn 2008, Wall Street began to crumble, and so Washington stepped in with a string of taxpayer-funded bailouts. The U.S. government funneled tens of billions of dollars in emergency aid to Citi, soon buying a huge share in the company. Absent the Troubled Asset Relief Program, Citigroup would likely have collapsed.
On Jan. 15, 2009 — three months after Congress passed TARP and in the midst of a stock market collapse — Lew received a payment of $944,518 from Citi, according to his personal financial disclosure forms. Because the Treasury was covering Citi’s losses in order to save the failed bank from liquidation, that was, in effect, a check from taxpayers to Lew, days before he entered the Obama administration.
Some media accounts have called the payment a “bonus.” His disclosure describes it this way: “Citi compensation – salary, payout for vested restricted stock, discretionary cash compensation for work performed in 2008, rec’d 1/15/09.”
There is nothing extraordinary about a top government official having served time on K Street and Wall Street, but it certainly doesn’t jibe with Obama’s pledges to “end” the revolving door. But Lew’s career path is the norm in the Obama era, as demonstrated by his successors and predecessors in his various jobs over the past four years.
Lew’s first Obama job in 2009 was deputy secretary of state for management and resources, a position now held by Thomas Nides, a former Morgan Stanley lobbyist, Fannie Mae VP and chairman of the leading Wall Street lobby, the Securities Industry and Financial Markets Association.
Lew’s second Obama job was head of the OMB, where he replaced Peter Orszag, who had left for Citigroup.
Currently, Lew is White House chief of staff. Obama’s first chief of staff was Rahm Emanuel, a former Goldman Sachs consultant who made millions in politically loaded deals at a hedge fund after exiting the Clinton White House.
By all accounts, Jack Lew is a serious, smart hard worker. But his resume is everything Barack Obama ran against.
Timothy P.Carney, The Examiner’s senior political columnist, can be contacted at [email protected] His column appears Monday and Thursday, and his stories and blog posts appear on washingtonexaminer.com.
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