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1:40 am
Tue February 12, 2013

Treasury Nominee's Citigroup Experience Raises Questions For Some

Originally published on Tue February 12, 2013 7:02 am

Jack Lew, the man President Obama has chosen to help oversee the country's biggest banks, has said it plainly — he's no expert on banking. Lew said as much when the Senate was vetting him to head the White House Office of Management and Budget in 2010.

Sen. Bernie Sanders, I-Vt., asked Lew if he thought deregulation of Wall Street caused the financial crisis. Lew said he didn't consider himself the best person to answer that question.

"I don't consider myself an expert in some of these aspects of the financial industry," Lew said. "My experience in the financial industry has been as a manager, not as an investment adviser."

On Wednesday, Lew will again face a confirmation hearing, this time to be Treasury secretary. Members of the Senate Finance Committee are expected to question him about his knowledge of financial markets and his brief stint at Citigroup between the Clinton and Obama administrations.

Just A Manager

Insisting he was just a manager may be the way Lew will wash his hands of a messy time at Citigroup, when he was chief operating officer for one of the bank's riskiest investment units. By calling himself a "manager" at Citigroup, he can suggest he wasn't the one who made some of the financially disastrous decisions there.

And actually, for Lew's defenders now, "manager" already seems to be the go-to word. Robert Rubin, a former Treasury secretary and ex-Citigroup chairman, seized on the term during a recent phone interview. He's the one who helped Lew get a job at Citi.

"That was a job that required somebody who had managerial effectiveness, and Jack had been a very effective manager of the government and a very effective manager at NYU, and that's what they were looking for — manager," Rubin said.

To some people, the word "manager" suggests you're one of the people in charge, and they can't help but notice that Lew was at the helm of a company that suffered such massive losses — Citigroup got the biggest federal government bailout of any bank.

Republican Sen. Chuck Grassley of Iowa said he wants to know exactly what role Lew played in those losses.

"Did he contribute to the conditions at Citi that led to the bailout?" Grassley asked.

He also pointed out that Lew received a $940,000 bonus from Citigroup shortly before the bank got bailed out.

"I think we ought to know whether or not he gave Wall Street any favors, because he has to be independent from special interest and put the taxpayers first in this new role that he's playing," Grassley said.

A No-Drama Guy

But to some, questions like these are just an attempt to create drama around someone who is described as a no-drama guy.

Lew is a quiet, bookish man behind glasses, a Washington power broker with a soft step. He has the resume of that kid in school who seems to be good at everything: He was White House budget director — twice, a top administrator at New York University, deputy secretary of state and chief of staff to the president.

Now Lew is in a strange situation. While some people say he may have been too close with Wall Street, others say one of his best qualifications for the Treasury job is his distance from the financial world.

"Right after a huge crash in the financial markets, I at least would not think it would be the right image for a secretary of the Treasury to have spent his life on Wall Street," said Alice Rivlin, one of Lew's predecessors as head of the White House budget office. "So Jack has had, I think, just about the right amount of experience in the financial community."

Lew didn't seem to have his sights set on a Wall Street career when he was growing up in Queens, N.Y.

At 12, he was handing out fliers for Eugene McCarthy's presidential campaign. By the time he was 23, he was a top aide to then-House Speaker Tip O'Neill. Lew spent the next three decades as a fixture in Washington, departing on weekends for his home in New York, where he and his wife have a place in an affluent section of the Bronx called Riverdale.

Devotion To His Faith

Friends like Rabbi Levi Shemtov describe Lew as a humble man who doesn't like to attract attention.

"When he walks into synagogue, and not just ours, but any — because everyone who goes to the other places he prays at says the same thing — that when he walks in, it's like any usual congregant. No fuss, no muss," said Shemtov. "It's never about him, and he never wants it to be about him."

Despite having worked for years in Washington under two different presidents, Lew is hardly a household name. Most of the chatter around him, so far, has been from handwriting experts analyzing his loopy, indecipherable signature, which will appear on all U.S. currency if he's confirmed.

Those close to Lew often comment on how deeply committed he is to his Orthodox Jewish faith, and the great lengths he'll go to observe the Sabbath under his hectic schedule. This means no email, no phone and no riding in cars from sundown every Friday to sundown Saturday.

Lobbyist Steve Elmendorf remembers spotting Lew at the airport one Friday afternoon with a briefcase full of blank paper.

"You know, it was in the middle of some budget crisis. He said, 'I'm not allowed to communicate electronically, but they can fax me stuff. So I have to have a lot of paper to put in the fax machine,' " Elmendorf said with a laugh.

Supporters of Lew say they dare senators to come up with anything truly controversial to say about him.

The most recent brouhaha seems to be over Lew's failure to comply with a little-known legal requirement involving Medicare funding. If Medicare trustees release a warning that the program is in bad financial shape, the White House budget chief is supposed to send a legislative proposal to Congress to resolve the issue. Lew never did that, and Republicans say they just may block his confirmation for that.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

RENEE MONTAGNE, HOST:

And the Senate will hold a confirmation hearing tomorrow for the Obama administration's choice of a new treasury secretary. Jack Lew has worked for years in Washington under two different presidents, yet he is hardly a household name. In fact, most of the chatter around him so far has been from handwriting experts, analyzing his loopy, indecipherable signature, which will appear on all U.S. currency if he's confirmed.

NPR's Ailsa Chang takes a closer look at the man, and a brief stint that he spent at Citigroup between the Clinton and Obama administrations.

AILSA CHANG, BYLINE: The man President Obama has picked to help oversee the country's biggest banks has said it plainly - he's no expert on banking. He told the Senate that in 2010, when they were vetting him to be director of the Office of Management and Budget.

Senator Bernie Sanders, an Independent, asked Lew if he thought deregulation on Wall Street caused the financial crisis.

JACK LEW: Senator, I, as when we discussed, I mentioned to you I don't consider myself an expert in some of these aspects of the financial industry. My experience in the financial industry has been as a manager, not as an investment advisor.

CHANG: I'm just a manager. That may be the way Lew will wash his hands clean of a messy time at Citigroup, when he was chief operating officer for one of the bank's riskiest investment units.

If Lew says again at his next confirmation hearing that he was only a manager at Citigroup, it might be to suggest he wasn't the one who made the financially disastrous decisions there. In fact, if you talk to Lew's defenders now, it seems manager is already the go-to word.

Former Treasury Secretary and former Citigroup Chairman Robert Rubin was the one who helped Lew get a job at Citi.

ROBERT RUBIN: That was a job that required somebody who had managerial effectiveness, and Jack had been a very effective manager of the government and then a very effective manager at NYU, and that's what they were looking for - manager.

CHANG: Of course, to some people, the word manager suggests you're one of the people in charge, and they can't help but notice that Lew was at the helm of a company that suffered such massive losses, it got the biggest federal government bailout of any bank.

SENATOR CHUCK GRASSLEY: Did he contribute to the conditions at Citi that led to the bailout?

CHANG: That's going to be one of the questions Republican Senator Chuck Grassley will shoot at Lew during the confirmation hearing. To a lot of people, a question like that is just an attempt to create drama around a no-drama guy.

Jack Lew is a quiet, bookish man behind glasses. He has the resume of that kid in school who seems to be good at everything. He was director of OMB twice, a top administrator at NYU, deputy to the secretary of state and chief of staff to the president. Now he's in a strange situation. While some people are saying he may have brushed too closely with Wall Street, others are insisting he's a near-stranger to that world.

Alice Rivlin, former OMB director, says it wouldn't set the right tone to have a Wall Street insider for a treasury secretary these days.

ALICE RIVLIN: So Jack has had, I think, just about the right amount of experience in the financial community.

CHANG: Lew sure didn't seem to have his sights set on a Wall Street career when he was growing up in Queens, New York. At 12, he was handing out fliers for Eugene McCarthy's presidential campaign. By the time he was 23, he was a top aide to Speaker of the House Tip O'Neill. Lew spent the next three decades as a fixture in Washington, departing on weekends for his home in New York.

Friends like Rabbi Levi Shemtov describe Lew as a humble man who doesn't like to attract attention.

RABBI LEVI SHEMTOV: When he walks into synagogue, and not just ours, but any - because everyone who goes to the other places he prays at says the same thing - that when he walks in, it's like any usual congregant. No fuss, no muss. It's never about him, and he never wants it to be about him.

CHANG: Those close to Lew often comment on how deeply committed he is to his Orthodox Jewish faith - and the great lengths he'll go to observe the Sabbath, even under his hectic schedule. It means no email, no phone and no riding in cars from sundown every Friday to sundown Saturday.

Lobbyist Steve Elmendorf remembers spotting Lew at the airport one Friday afternoon with a briefcase full of blank paper.

STEVE ELMENDORF: Yeah, it was in the middle of some budget crisis. He said, I'm not allowed to communicate electronically, but they can fax me stuff. So I have to have a lot of paper to put in the fax machine.

(LAUGHTER)

CHANG: Supporters of Lew dare the Senate to come up with anything truly controversial to say. And the most recent brouhaha seems to be over Lew's failure to comply with a little-known legal requirement involving Medicare funding.

If Medicare trustees warn that the program is in bad financial shape, the OMB director is supposed to submit a resolution of this issue to Congress. Lew never did that, and Republicans say they just may try to block his confirmation for that.

Ailsa Chang, NPR News, New York. Transcript provided by NPR, Copyright NPR.

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