Hatch Speaks on Nomination of Jacob Lew to Serve as Treasury Secretary
Utah Senator Says, “Mr. President, if confirmed, Mr. Lew will be the Secretary of the Treasury of the United States, and not Secretary of the Obama Treasury. He must remember that. He must work for all the American people and not simply one political party. If he does those things, I will be willing to work with him.”
WASHINGTON – As the Senate begins consideration of Jacob Lew’s nomination to serve as Treasury Secretary, Finance Committee Ranking Member Orrin Hatch (R-Utah) today spoke on the Senate floor on the nomination, his concerns and that his support stems in large part from a deference to a President’s choice for his Cabinet. The Finance Committee approved Mr. Lew’s nomination yesterday by a vote of 19 to 5.
“Obviously, my vote in favor of Mr. Lew comes with no small amount of reservation. And, I don’t fault any of my colleagues for choosing to vote against him. Indeed, I share many of their same concerns. As I mentioned earlier, Mr. Lew has promised to be responsive to Members of Congress in their requests for information,” Hatch said today. “He has also promised to work in a bipartisan manner to address the many problems facing our nation. My hope is that he does not view these promises as merely boxes checked off on the way to confirmation.”
“Mr. President, if confirmed, Mr. Lew will be the Secretary of the Treasury of the United States, and not Secretary of the Obama Treasury. He must remember that. He must work for all the American people and not simply one political party. If he does those things, I will be willing to work with him,” Hatch continued. “However, I have to say that, if he fails to live up to the promises he’s made, if he becomes just another Obama acolyte using his high-powered position in the administration to attack political opponents, I will be sorely disappointed. And, if that ends up being the case, he will have no greater adversary in the Senate. Given my many reservations and concerns about Mr. Lew, I hope that he and the President take note that I am bending over backwards to display deference to the President’s choice of Treasury Secretary. This gesture, I hope, will not be in vain.”
Below are Hatch’s full remarks delivered on the Senate floor this morning:
Mr. President, I rise today to speak on the nomination of Mr. Jacob Lew to be Secretary of the Treasury.
This is an important nomination. With our still struggling economy and our growing fiscal problems, the next Treasury Secretary is going to have a lot on their plate.
That being the case, we have worked on the Finance Committee to vet Mr. Lew, to examine his background and credentials, and provide a complete picture of his qualifications for this post. I would like to offer a few comments about our review process, what we learned, and the reservations about the nominee that remain with me now that the process is complete.
Mr. President, let me begin by saying a few words about the process itself. For well over a decade, the Finance Committee has followed a specified procedure when considering Executive Branch nominations. Sadly, that procedure was not followed in the case of Mr. Lew.
After publicly announcing Mr. Lew’s nomination, the White House waited 16 days before submitting any of his paperwork. That was an atypically long delay and, in addition to slowing the vetting process, it ensured that Mr. Lew would not be confirmed in time to prevent a vacancy at the Treasury Department.
A nomination hearing was scheduled to be held only 12 calendar days after the paperwork was received, even though the nominee had not yet answered all the questions submitted to him.
That is simply not the way our process has worked in the past and the undue haste seriously hampered our ability to thoroughly examine Mr. Lew’s background and qualifications.
Once the hearing was completed, as is customary, members of the Finance Committee submitted written questions for the record. Since that time, anonymous administration sources have decried the very notion that members of the Finance Committee had the audacity to ask hundreds of question of Mr. Lew as part of their constitutional advice-and-consent responsibilities.
Mr. President, let me be clear: I will vigorously defend the right of any Member of Congress, regardless of party, to ask questions of nominees until they are satisfied that they have obtained all the relevant information.
In the case of Mr. Lew, there were several reasons why he ended up being asked numerous questions.
First, the nomination process, as I mentioned, was abbreviated due to the haste of the administration. That meant that questions which, in the ordinary course of business, could have been resolved through discussion had to be asked in written form.
Second, due to the general unresponsiveness of the administration to requests for information over the last few years, there is a pent up demand for information and any semblance of responsiveness from the Executive Branch.
Third, Mr. Lew’s responses to many questions have been opaque. He has dissembled often. That being the case, it seemed that the only way to get answers to straightforward questions was to continue to ask for clarifications in an attempt to break through the wall of obfuscation that Mr. Lew had constructed.
Even after extensive questioning, there remain several serious concerns with Mr. Lew’s background, his lack of responsiveness, and the evasive manner in which he answered many questions posed to him.
Unfortunately, many of these concerns will go unaddressed as Mr. Lew seems to be following the standard stonewalling strategy used by so many officials in the Obama Administration.
For years now, administration officials have gone out of their way to be unresponsive to information requests from Congress and it is simply unacceptable.
Far too often, legitimate inquiries submitted to the Executive Branch go unanswered for months at a time. Requested deadlines are disregarded. Indeed, in some instances, information requests are ignored entirely. When responses are given, substantive and direct questions are given meaningless, political answers.
This has gone on for too long and must stop.
Mr. Lew, for his part, has promised me that he would be responsive to inquiries submitted by Members of Congress. While his answers to questions throughout the confirmation process give me reason to doubt his commitment to being responsive, I intend to hold him to that promise moving forward.
Now, Mr. President, I would like to take a few minutes to address some additional substantive concerns I have about Mr. Lew, his background, and his qualifications for this post.
Let’s consider Mr. Lew’s Citigroup years. At Citigroup, Mr. Lew was Managing Director and Chief Operating Officer of two units: Global Wealth Management and Citigroup Alternative Investments.
Mr. Lew has claimed repeatedly that, while managing, directing, and operating those Citigroup units he essentially undertook backroom operations, like firing people, moving office space, integrating computer systems, eliminating redundancies, and things of that nature.
Mr. Lew has also repeatedly stated that he did not design financial products at Citigroup, or make portfolio decisions, or, in his words, opine on investments. In fact, when asked about investment products that were marketed and sold by the Citigroup units that he oversaw, he couldn’t remember any specific details.
It has to be noted that some of those investments ended up generating enormous losses for investors. For example, funds called MAT, ASTA, and Falcon, which were marketed, sold, and managed by the Citigroup units that Mr. Lew oversaw, ended up being the subject of lawsuits and successful arbitration claims, where success was based investors convincing arbitrators that the funds were misrepresented and mismanaged by Citigroup.
The losses to investors from these funds numbered in the billions. In fact, some financial advisors at Citigroup protested internally that the misrepresented securities caused enormous damage to Citi’s reputation. One of Mr. Lew’s bosses at Citigroup argued on behalf of investors – and against Citi’s stock price and bottom line – by saying that the investors had been wronged and should be made whole.
She was subsequently fired.
From all information I have seen, Mr. Lew did not similarly stand up for wronged investors while on Wall Street. Perhaps that is because he didn’t know what was going on at his firm.
We don’t really know.
Despite the fact that the funds in question led to probably the largest losses in the history of the units that Mr. Lew oversaw, Mr. Lew claims that he cannot recall anything about them.
If you ask anyone familiar with the funds and controversies surrounding them, they will tell you that you would have to have been away on a deserted island to not have heard about the problems these funds faced. Yet, once again, Mr. Lew continues to deny having any memory of them.
But, at the same time, Mr. Lew claims that, while he was at Citigroup, he learned a lot about financial markets and the dangers of risk. Indeed, he’s cited his experience at Citi as a qualification to be Treasury Secretary, even though he appears to have little recollection about any of the actual details of his work.
The question remains: How could Mr. Lew operate, manage, and direct units, and also be in charge of staffing decisions, without having any knowledge of the financial products that were marketed, sold, and managed by those same units?
It remains unclear.
Had there been a traditional vetting process, perhaps we could have gotten to the bottom of this mystery. As it is, we are only left to speculate.
In addition to Mr. Lew’s lack of knowledge about some of the high-profile failures of the units he was overseeing, there are legitimate concerns relating to his compensation while at Citigroup.
On January 29, 2009, President Obama made remarks about Wall Street, saying that institutions were “teetering on collapse and they are asking for taxpayers to help sustain them…”
The President also remarked on Wall Street bonuses at the time, saying: “That is the height of irresponsibility. It is shameful.” About Wall Street executives, he said that: “…there will be a time for them to get bonuses—now is not the time.”
Elsewhere, he referred to Wall Street bonuses as “obscene.”
In late 2008 and early 2009, American taxpayers provided over $45 billion in direct assistance to Citigroup and backed hundreds of billions of Citigroup assets. At the same time, in January 2009, Mr. Lew reportedly received over $940,000 of compensation, most of which was a bonus for work performed in 2008 when Citi was on the verge of collapse. The bonus came a day before Citi received yet another infusion of billions of dollars of taxpayer money to prop the company up.
There is, at the very least, a contradiction between the Presidents rhetoric with regard to Wall Street and his decision to appoint Mr. Lew to be Treasury Secretary. However, rather than acknowledging any such contradiction, Mr. Lew has simply and repeatedly told us all that his compensation was in line with what other similarly situated executives received.
As I’ve said before, that justification seems a bit like saying: Gee Dad, everyone was doing it. Unfortunately, that type of reasoning is exactly what led to the financial crisis.
In addition, an employment agreement that Mr. Lew had with Citigroup had a clause stating that his guaranteed incentive and retention award would not be paid upon his exit from Citigroup. However, there was an exception indicating that he would receive that compensation “as a result of [his] acceptance of a full-time high level position with the United States government or regulatory body…”
It remains unclear how this exception is consistent with President Obama’s efforts to, in his own words, “close the revolving door that carries special interest influence in and out of the government…”
And, of course, as has been widely reported, during the course of our vetting process, we found that, while he was at Citigroup, Mr. Lew actively chose to invest in a hedge fund that served as a venture capital-like fund that invested primarily overseas.
The fund that Mr. Lew invested in was based in the Cayman Islands, at the infamous Ugland House that so many Democrats have viciously decried as a tax haven. In fact, in 2008, while campaigning for President, then-Senator Obama said that the Ugland House was “either the biggest building in the world or the biggest tax scam in the world.”
Throughout the 2012 campaign, President Obama repeatedly attacked Mitt Romney for having funds invested in the Caymans. In making such investments, Governor Romney was, in the words of the Obama Campaign, betting against America.
One can only wonder whether, while serving as White House Chief of Staff for President Obama, Mr. Lew supported this line of attack.
Once again, Mr. Lew has repeatedly refused to acknowledge any contradiction or hypocrisy between the President’s rhetoric and his own actions, defending himself only by saying that this investment was done legally and transparently.
The contrast between the President’s past vilification of certain financial activities and individuals, and Mr. Lew’s very participation in those activities is striking. Yet we are now essentially being told that people should do as administration officials say, not as they did.
In addition to concerns about Mr. Lew’s record, I have serious disagreements with him when it comes to policy.
For example, in response to written questions, Mr. Lew backtracked from the Administration’s previous position on the need for entitlement reform. At one time, common sense reforms like raising the Medicare eligibility age were on the table for the Obama Administration. Such ideas have apparently been discarded by the President and Mr. Lew has made it clear that he shares that position.
As a Social Security and Medicare Trustee, the Treasury Secretary cannot simply wish away the problems with our entitlement programs. If he’s confirmed, Mr. Lew will be tasked with addressing those problems. Sadly, it appears that he’ll be just another voice in the Obama Administration against taking meaningful action on entitlements and in favor of higher taxes.
Mr. President, I think I’ve made my concerns about the Lew Nomination very clear.
That being said, I have always believed that the President – any President, regardless of party – is owed a certain degree of deference when choosing people to work in his Administration. Therefore, though I, personally, would have chosen a different person for this position, I intend to vote in favor of Mr. Lew’s confirmation.
Obviously, my vote in favor of Mr. Lew comes with no small amount of reservation. And, I don’t fault any of my colleagues for choosing to vote against him. Indeed, I share many of their same concerns.
As I mentioned earlier, Mr. Lew has promised to be responsive to Members of Congress in their requests for information. He has also promised to work in a bipartisan manner to address the many problems facing our nation.
My hope is that he does not view these promises as merely boxes checked off on the way to confirmation.
Mr. President, if confirmed, Mr. Lew will be the Secretary of the Treasury of the United States, and not Secretary of the Obama Treasury. He must remember that. He must work for all the American people and not simply one political party. If he does those things, I will be willing to work with him.
However, I have to say that, if he fails to live up to the promises he’s made, if he becomes just another Obama acolyte using his high-powered position in the administration to attack political opponents, I will be sorely disappointed. And, if that ends up being the case, he will have no greater adversary in the Senate.
Given my many reservations and concerns about Mr. Lew, I hope that he and the President take note that I am bending over backwards to display deference to the President’s choice of Treasury Secretary. This gesture, I hope, will not be in vain.
Mr. President, I yield the floor.