Sunday, January 13, 2013

Jack Lew

Previous posts have discussed "revolving doors" linking government service both to the interest group community and the press. One example is White House chief of staff Jack Lew, the president's nominee for Treasury secretary.  Open Secrets reports:
Lew is known inside Washington circles first and foremost as a budget wonk and has recently gained a reputation as a shrewd negotiator in the White House. But he also has a revolving door past, a history that includes deep ties to the federal government and Wall Street, an industry he'll work closely with if he gets the job.

Lew has twice served as head of the Office of Management and Budget, most recently from 2010-2011, and had a leading role at the State Department in between. His first major D.C. posts, however, were on Capitol Hill. Lew worked for two lawmakers in the 1970s and '80s, including as a senior policy advisor for former Democratic Speaker of the House Tip O'Neill.

Lew's Wall Street history was comparatively brief but notable: He was a managing director of Citigroup Alternative Investments. Lew rode out the 2008 financial crisis from that perch. His sizable compensation package has left some, including Sen. Bernie Sanders (I-Vt.), with questions about why Lew was paid so handsomely at a time of such industry upheaval.

Prior to his Wall Street years, Lew also practiced law as a partner at the firm Van Ness Feldman and Curtis, where he gained an intimate familiarity with energy-based issues -- as well as many prominent energy firms.
The Washington Post elaborates:
In early 2008, he became a top executive in the Citigroup unit that housed many of the bank’s riskiest operations, including its hedge funds and private equity investments. Massive losses in that unit helped drive Citigroup into the arms of the federal government, which bailed out the bank with $45 billion in taxpayer money that year.
The group had been under pressure to compete with similar units at other big Wall Street firms and, some analysts say, took on too many risks as it played catch-up.
“The mismanagement of risk was comprehensive at that organization,” said Simon Johnson, an economist at the Massachusetts Institute of Technology.