Monday, January 14, 2013

Jack Lew -- From K Street to Wall Street to Treasury

Tim Carney has an important piece out on President Obama's nominee to head the Treasury, Jack Lew. Among other points, Carney notes that:
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.

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.[...] ome 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.

Read the full piece, here. 

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