February 12, 2013
GOP to Grill Lew on Tenure at Citi
Senate Democrats are pushing to quickly confirm Jacob Lew as Treasury secretary, but at a hearing Wednesday, Republicans plan to grill him about his tenure in the financial world.
Mr. Lew, the White House's former budget director and chief of staff, has spent nearly 30 years negotiating tax-and-spending deals in Washington, experience that supporters say makes him an ideal candidate to lead Treasury. The U.S. government has a large budget deficit and Congress is preparing for battles on tax-and-spending policy in coming months.
"It is my hope that—after this thorough vetting process—Jack Lew will be quickly confirmed so he can help tackle our country's pressing economic issues," said Sen. Max Baucus (D., Mont.), chairman of the Senate Finance Committee, which is holding the hearing.
Of the 12 Democrats on the panel, eight have said they would support Mr. Lew. The other four haven't yet said how they will vote but many expect Mr. Lew to be confirmed because Republicans haven't mobilized any opposition.
Still, his nomination gives Republicans an opportunity to press the Obama administration on its future budget proposals. Several Republicans have said they have concerns about White House economic policy and Mr. Lew's work.
Mr. Lew has less experience in business and finance than in government budgeting—a fact that Republicans could highlight. And his business experience—primarily working at Citigroup Inc. C +1.48%from 2006 until 2009—will draw attention because the bank needed a taxpayer-funded bailout to survive the financial crisis, Republican aides said.
Citigroup has paid the government back for its bailout loans, including interest on the taxpayer money.
Mr. Lew was chief operating officer of a couple of Citigroup units during his time there, and people familiar with his work said he played a behind-the-scenes operational role and wasn't directly involved in investment or risk strategy. At the hearing, he likely will be asked to provide more detail about his stint at Citi.
"If taxpayers are going to prop up failed banks, they have a right to know what a key executive like Mr. Lew did at that time," Sen. Orrin Hatch (R., Utah) said Monday. "The American people will want to know what his role was there and how that might have prepared him for this critical job after the most severe financial crisis and prolonged economic downturn in generations."
A person familiar with the confirmation process said Mr. Lew, during his time at Citi, worked to consolidate costs on the firm's management side but saw firsthand the importance of preventing banks from taking on too much risk. The official said Mr. Lew would work to ensure that banking policy was in place to prevent a similar crisis from occurring again.
Republicans have said they are going to press Mr. Lew on his decision in 2007 to invest $56,000 in a Citigroup hedge fund based in the Cayman Islands. In the past, President Barack Obama has criticized Caymans-based investments, calling them an "outrage" and a "tax scam," but White House officials have said Mr. Lew paid all his taxes on the investment, which he exited in 2010.
The Treasury secretary post can be one of the most influential in the federal government. Holders in recent administrations have played pivotal roles in managing domestic and international financial crises. The 2010 Dodd-Frank financial-overhaul law put Treasury in charge of coordinating financial regulators' efforts to spot and respond to emerging risks. Treasury also manages the government's debt and directs tax policy.
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