Lew Criticized For Citigroup Connection During Senate Confirmation Hearing
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Now to the nation's capital, where senators are considering the president's nominee to manage the country's finances. Jacob "Jack" Lew is slated to replace Timothy Geithner as secretary of Treasury, and the Senate Finance Committee posed questions to him today. As NPR's John Ydstie reports, everyone was on their best behavior. It was nothing like the slugfest Geithner had at his confirmation four years ago.
JOHN YDSTIE, BYLINE: Maybe it's Jacob Lew's mild-mannered personality. He has the disposition of a collie compared to Geithner's feisty terrier. Or maybe it's his reputation as a bipartisan dealmaker. Former Republican Senator Pete Domenici touted that trait as he presented Lew to the committee for consideration. Domenici recalled Lew's involvement as an aide to House Speaker Tip O'Neal in the landmark bipartisan Social Security reform of the early 1980s.
Later, in the 1990s, Domenici, then chairman of the Senate Budget Committee, worked with Lew, who was President Clinton's budget director, to reach a balanced budget agreement.
PETE DOMENICI: We worked together to reach an honorable compromise and balance the budget. I can say without equivocation that Jack was always willing to listen, to work with members of both parties, to seek and find common ground.
YDSTIE: In his opening statement, Lew, who is currently President Obama's chief of staff, rejected the current view that bipartisanship is a thing of the past.
JACOB LEW: I disagree. I've reached across the aisle to forge honorable compromises my entire professional life. I've been involved in almost every major budget - bipartisan budget agreement over the last 30 years and I can honestly say that the things that divide Washington right now are not as insurmountable as they might look.
YDSTIE: But while committee Republicans welcomed the commitment from Lew to work for major tax reform and cut corporate taxes, it wasn't all sweetness and light. And during questioning they focused on Lew's rare foray into the private sector as an executive at Citigroup from 2006 to 2009, just as the financial crisis hit.
Republican Charles Grassley of Iowa wanted Lew to explain a $940,000 bonus he received from Citigroup just as the firm was being propped up by the government.
SENATOR CHARLES GRASSLEY: 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 taxpayers' support.
LEW: Senator, in 2008, I was an employee in the private sector. I was compensated in a manner consistent with other people who did the kind of work that I did in the industry and I was compensated for my work. I'll leave for others to judge.
YDSTIE: Later in the hearing, Lew said he'd performed well during that period, managing the sale of company assets to keep Citigroup afloat. Lew said his role was administration of the company, not managing its financial portfolio. Grassley was also interested in another issue related to Lew's time at Citigroup, a personal investment Lew made in an offshore private equity fund.
Its address was a building in the Cayman Islands, which President Obama has referred to as the largest tax scam in the world. Lew said when he made the investment, he wasn't aware of its Cayman Islands address. He said he sold the investment in 2010.
LEW: I took a loss when I sold the investment. I always reported all income. I always paid any taxes that were due.
YDSTIE: As for more contemporary matters, North Carolina Republican Richard Burr was interested in the massive automatic spending cuts that will happen March 1st if the Congress does nothing, an idea suggested by Lew back in 2011 to force the Congress to act.
SENATOR RICHARD BURR: Do you regret suggesting sequestration?
LEW: You know, Senator, I look back at a time when a lot of people thought we were going to default. That was not an acceptable option.
YDSTIE: Lew says he thinks the tactic can still work. Sequestration's $85 billion in automatic budget cuts are so objectionable, he says, that the Congress and the White House must come up with an alternative to avoid damaging the economy. Lew is widely expected to be confirmed. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.