Wednesday, 30 July 2014
Last updated 8 hours ago
Feb 14 2013 | 12:09pm ET
Former Citigroup hedge fund executive Jacob Lew turned in an impressive performance at a Senate Finance Committee hearing yesterday on his appointment to be Treasury Secretary.
Lew, who has spent the last year as White House chief of staff, calmly handled a number of questions about his time as chief operating officer at Citi Alternative Investments, as well as his own investments, seemingly designed to throw him off guard or to rankle him, as President Barack Obama's pick to lead the Defense Department, Charles Hagel, was earlier this month.
Lew did a good deal better. Asked by Sen. Charles Grassley (R-Iowa) to "explain why it might be morally acceptable to take close to a million dollars out of a company that was functionally insolvent and about to receive a billion dollars of taxpayer support," Lew said, "I was compensated for my work. I'll leave for others to judge." And he noted that he was "not in the business of making investment decisions" at Citi, where he worked from 2006 through 2009.
"I was certainly aware of things that were going on. I was working in a financial institution. I learned a great deal about the financial products. But I wasn't designing them and I wasn't opining on them."
Republicans also questioned him sharply on his investment in a Cayman Islands-based fund; Grassley suggested that Obama, a critic of offshore tax havens, was a hypocrite for nominating someone who had invested in one. But in the end, Lew managed to impress even members of the GOP.
"Frankly, I think you've done really well today," Sen. Orrin Hatch (R-Utah), the top Republican on the panel, said. "My gosh, I have nothing but respect for people like you who give yourself to our government."
Lew, who has twice served as director of the Office of Management and Budget twice and was deputy secretary for management and resources at the State Department for the first year-and-a-half of Obama's presidency, also dealt with more substantive matters, and touted his ability to work with Republicans. He noted that he was involved in "almost every major bipartisan budget agreement over the last 30 years" and pointed to his role negotiating "the groundbreaking agreement with Congress to balance the federal budget" under President Bill Clinton.
He also chided Congress, warning that political dysfunction is the greatest threat to the economy.
"The short-term crisis, deadline-driven practices that we've seen over the last couple of years are undermining the economy," Lew said. "It's the first time in my nearly 30 years in public life that I felt that the actions of government were actually working against the goal of getting the economy moving."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…