Treasury nominee Jacob Lew is a big part of the banking problem

Timothy Geithner was often criticized for being intimately involved in the failed Wall Street bailout.  Obama’s choice to replace him as Treasury Secretary, Jacob Lew, may be even worse.

While Geithner was working out the plan to rescue the lifestyles of the rich and famous, Jacob Lew was one of the rich and famous being rescued.

Lew is addicted to government money, though I’m sure we can count on him to promote cuts to the social system for the rest of us. He’s spent his life working in government, much like social welfare critic Erskine Bowles. Even more than receiving a direct government paycheck for years (and government healthcare), Jacob Lew was a recipient of big money on Wall Street following the 2008 collapse.

Jacob Lew worked at Citi during some of the worst years (2006-2009) before the collapse. Between working those particular years, and then receiving a nearly $1 million bonus right after the government rescue of Citi, this somehow translates into “top Wall Street experience” and the respect of both Wall Street and the Obama administration. Strange, isn’t it?

220px-Jacob_LewBloomberg has already published a piece that may have been written by Lew’s mother (or perhaps his wife) that discusses his involvement with every budget deal since 1983. So assuming you like the direction the US is going, with more inequality, increasingly expensive healthcare, and cutbacks to the social state, you’re gonna love Jacob Lew.

However, if you’re one of those nitpicky people who think the US has been on the wrong track since the Reagan years, you might have reason to be uncomfortable.

The big question now is why the President believes that a Wall Street guy from the worst years on Wall Street is the right person to run the US Treasury. Does Obama think that Lew was part of fixing the system when he walked away with big money after the bailout? The much larger problem is that the President doesn’t seem to really care what any of us think about the Wall Street abuse or the general direction of inequality in America.  And Lew’s nomination is Exhibit A (well, Exhibit B — Exhibit A was Geithner).

By choosing Jacob Lew, President Obama is choosing to elevate someone who does not believe banking deregulation was the problem behind the 2008 Wall Street collapse. While this opinion may make Lew popular with the Robert Rubin crowd, back on planet earth, it puts him in the minority of sane people.

Huffington Post, September 2010:

Lew, a former OMB chief for President Bill Clinton, told the panel that “the problems in the financial industry preceded deregulation,” and after discussing those issues, added that he didn’t “personally know the extent to which deregulation drove it, but I don’t believe that deregulation was the proximate cause.”

Experts and policymakers, including U.S. Senators, commissioners at the Securities and Exchange Commission, top leaders in Congress, former financial regulators and even Obama himself have pointed to the deregulatory zeal of the Clinton and George W. Bush administrations as a major cause of the worst financial crisis since the Great Depression. Lew, however, doesn’t appear to agree, putting him at odds with an administration and a party that tout their efforts at re-regulating Wall Street in pitches to voters and cast blame for the crisis in part on the deregulatory policies pursued by Bush and his fellow Republicans in Congress.

Maybe the President has also changed his own position on deregulation, and he also thinks deregulation had nothing to do with the worst economic meltdown since the Great Depression. Perhaps the President is fine with the ongoing and massive transfer of wealth from the middle class to the super rich on Wall Street. If he’s not, he has a strange way of showing it.

The GOP crazies like to talk about President Obama and his “class warfare,” but they wrongly believed that he was the one positioning the poor against the rich. It’s not. He keeps siding with the rich, and Jacob Lew is sadly more proof of that fact.

An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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10 Responses to “Treasury nominee Jacob Lew is a big part of the banking problem”

  1. karmanot says:

    Bingo!—when snark is truth.

  2. dula says:

    I’m sure the Obamabots are sticking to their excuse that Obama has to nominate someone who helped create our economic problems because only they would have the insider understanding of how everything works in bankerland.

  3. BeccaM says:

    He’s right, in a way: Deregulation wasn’t the ‘proximate cause’. Human greed and selfishness was the cause. Deregulation — the regression into robber-baron lawlessness — enabled that greed to take form and begin to metastasize throughout the economy.

    It’s like saying a lack of adequate supervision was the reason a child stole cookies from the jar. No, the cause is the kid wanted a cookie and thought he could get away with it. The lack of supervision enabled it to happen…and upon discovery of the misdeed, a lack of appropriate correction only ensures that it happens again and again.

    Or to put it another way, and to extend the metaphor, if you find your kid with a heaping armload of stolen cookies and all you do in response is take away one of them — while allowing the child to assert he did nothing wrong — well, you’d best plan on devoting most of your paycheck to buying Costco-sized crates of cookies.

  4. Ford Prefect says:

    It’s hard to expect any better from a guy who appointed Citibank to be his Chief of Staff.

  5. Brian2234 says:

    The world will change for the better when people
    decide they are sick and tired of being sick and tired of the way the
    world is, and decide to change themselves.

  6. lynchie says:

    Another administration official making sure he does and says nothing to screw up the jobs on Wall Street that will open up for him after Barry takes a walk (more like a waddle with his pockets full of cash from the same group of crooks).

  7. MyrddinWilt says:

    Proximate cause is a legal term, it means that the event in question would not have happened but for the proximate cause.

    When folk use terms like that to discuss issues like the crash it is pretty clear that they are hair splitting. What he said is probably literally true, the ‘proximate cause’ of the crash was the fact that the Bush administration had deliberately inflated a property boom so that the ailing economy did not look so shitty. I don’t think you can just blame the regulations, the fact that the regulators were determined to to implement them was probably a bigger factor.

    The GOP would love to pin the collapse on Clinton. But the problem is what was not regulated and the fact that the idea of regulation had become a dirty word. The fundamental flaw was that the banks had no stake in the soundness of the loans that they were originating. They would lend a half million dollars to someone with no job, package the mortgage up with a buch of similar crap and then pay a bond rating agency to assert that the manure pile was stink-free so they could sell it. And then the buyers didn’t care about the viability of the loans either because the bond was insured by AIG and its ilk and they (rightly as it turned out) bet that the government would bail out AIG if it defaulted.

    All those 1%-ers who are now 90%-ers because the Bush SEC did not want to investigate Madoff are probably not so happy with the lack of regulation right now.

    One part of the bailout package that has not been implemented so far is the clawback. The idea was that the bailout would be no cost to the government and any shortfall would be repaid by raising a financial speculation tax on Wall Street. Nobody seems to have mentioned that recently, funny that.

  8. dula says:

    Mike Malloy spoke about that on his radio show last night. Lew used Bush’s anti-Union laws to smash NYU students union…not that that would upset Obama in any way.

  9. Tod Westlake says:

    He’s also one of the architects of the smashing of the NYU graduate students labor union. A swell guy to run the casino.

  10. Drew2u says:

    bbbbut his curly signature!! Why aren’t you talking about that??? The entire mediasphere is covering it being on our new notes, so OBVIOUSLY that’s the most important thing about this guy!

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