White House Chief of Staff Jack Lew has emerged as the frontrunner to be President Barack Obama’s pick for the next Treasury secretary, but some have questioned his credentials.
The New York Times published a glowing biography of the White House chief of staff this weekend in which Lew was presented as a “master of the Washington budget deal” with a “nearly impeccable record.”
The sole blemish in Lew’s long career mentioned by the Times is his work in last summer’s unsuccessful debt ceiling negotiations, which resulted in a downgrade of the country’s long-term credit rating.
“If Mr. Lew gets the Treasury job, the business world will not be unhappy,” wrote the Times, which cited the three years he spent with Citigroup.
However, Lew’s years at Citigroup were riddled with controversy and largely unsuccessful. He was managing director and chief operating officer of Citigroup Alternative Investments, which controversially made millions by betting against the housing market in 2008.
Despite making millions off the housing market’s collapse, Lew’s unit still reported losses of $509 million in the first quarter of 2008.
Lew received $1.1 million for his work at Citigroup and noted on an Office of Government Ethics form that he was also eligible for “discretionary compensation for 2008 which I will receive prior to assuming the duties” of deputy secretary of state.
Citigroup received $45 billion in TARP bailout funds from the Treasury in 2008. Banks that received bailout money were not permitted to give large bonuses to its executives. Both Lew and State Department spokesmen Robert A. Wood refused to disclose details about the bonus when pressed by the Washington Times.
Lew has also failed to exhibit a strong understanding of finance in public appearances. When asked by Sen. Bernie Sanders (I., Vt.) during his Senate confirmation hearing whether deregulation contributed significantly to the financial collapse, Lew prefaced his response by confessing to a lack of financial expertise.
“I don’t consider myself an expert in some of these aspects of the financial industry,” Lew said.
He followed by qualifying his response as coming from “someone who has generally been familiar with these trends.” He then recommended that the Senator speak to somebody who knows more about the finance industry.
“I would defer to others who are more expert about the industry to try and parse it better than that,” he said.
“Somebody who can’t answer that question, to me that sends up red flags,” said Michael Greenberger, University of Maryland law professor. Greenberger wrote that the Treasury secretary should be “someone intimately familiar with what went wrong in 2008 and what's gone wrong since then.”
Business Insider wrote, “A Treasury secretary definitely needs to be an expert in this issue.”
Lew’s lack of expertise may be a result of not having much experience working in the finance industry.
He has spent the majority of his career working in Washington, D.C.. He began his career working on Capitol Hill, including an eight-year stint with then-Speaker of the House Tip O’Neill. During the Clinton administration Lew rose to director of Office of Management and Budget, a post that he would reclaim during the Obama administration. Obama also appointed him to be deputy secretary of state.
Outside of Washington, Lew spent five years as a partner at law firm Van Ness Feldman. According to a White House press release, Lew specialized “in issues related to power plant development” with the firm.
He also had a stint as executive vice president of New York University where he had roles ranging from budget management to teaching classes in public administration.
Lew is no stranger to talking himself into a hole. He incorrectly stated in an appearance on CNN’s "State of the Union" that, “You can’t pass a budget in the Senate of the United States without 60 votes, and you can’t get 60 votes without bipartisan support.”
Lew made the same mistake on NBC’s "Meet the Press."
“You know, one of the things about the United States Senate that I think the American people have realized is that it takes 60 not 50 votes to pass something,” he said.
According to the Center for Budget and Policy Priorities, passing a budget resolution in the Senate requires only a simple majority.