Political Animal

Blog

February 23, 2013 4:13 PM Union-buster, Cayman Islands tax evader, engineer of kickbacks from rip-off student loans, lavishly compensated recipient of sweetheart personal loans— say hello to your new Democratic Treasury Secretary, Jack Lew!

By Kathleen Geier

As a Democrat, I sometimes wonder why I bother. Don’t get me wrong — there are many excellent reasons to remain a Democrat, in spite of it all. The Dems do occasionally pass some desperately needed pieces of legislation, and of course the Republicans are far worse, on every conceivable issue. But it’s important to bear in mind that while the lesser of two evils is always preferable, it’s still an evil. Our soon-to-be new Treasury Secretary, Jack Lew, is a perfect case in point.

Many progressives were unhappy with his nomination from the outset. In any halfway functional political system, one of the most powerful economic officials in the most progressive mainstream political party would not be an unrepentant union basher (as Lew most certainly was when he was an administrator at NYU. As In This Times’ Josh Eidelson has reported, at NYU, Lew was “the point man” for a management that practiced “every single ruthless tactic from the playbook of union-busting”). Nor would he be a former investment banker (Lew was a chief operating officer at Citigroup) who doesn’t believe that deregulation caused the financial crisis.

Okay, those items are pretty awful. And yet it turns out … there’s worse! Credit where credit is due: like a stopped clock, even the Wall Street Journal editorial page is correct once in a while. And their piece about Lew in yesterday’s edition of the paper amounts to a devastating bill of indictment. Consider the following:

— During his time as an executive VP at NYU, Jack was a busy lad indeed. When he wasn’t crushing labor unions, he was helping to engineer scams that were stone rip-offs of the students. NYU is anything but cheap, and as the Journal points out, “NYU students shoulder one of the highest collective debt burdens in the country.” But when he was working for NYU, Lew acted like a reverse Robin Hood, shaking down the students and enriching the already obscenely wealthy school. He helped set up a scheme whereby NYU would steer students to make loans with preferred lenders. This didn’t work out so well for the students, who were charged higher than average interest rates. But it turned out to be totally awesome for NYU, which got kickbacks from the lenders, in the form of a cut of the loan revenue. Better yet, it worked out swimmingly for Mr. Lew personally, who, after leaving NYU, got hired by Citigroup … which just so happened to be one of those “preferred lenders” Lew had been working with back at NYU. Oh my, what a coinkydink!

— But even before moving on to investment banking land, Jack Lew was doing quite well for himself at NYU. Amazingly well, actually. His compensation at NYU was generous, to say the least. During one year, he made $840,339, which, as the Journal notes, was “more than most of the country’s university presidents that year, including his own boss, John Sexton.” And that’s not all. During his tenure at NYU, the school lent Lew “at least $1.4 million” for “housing assistance.” Now I know that rents in New York are high, but seriously … over $1.4 million? Couldn’t he at least go to a bank to get a loan, like the rest of us mere mortals? And btw, do keep in mind that Jack Lew was raking in all these bucks on the taxpayers’ dime, because NYU, as a not-for-profit institution, is tax subsidized.

— And yet, compensation that ginormous apparently still was not enough to gratify the likes of Jack Lew. Like Mitt Romney, Lew invests a substantial portion of his income in the Cayman Islands, a strategy that enables him to legally avoid paying his fair share of taxes.

Even by 2013 standards, this is a remarkably sleazy record, and kudos to the Journal for reporting on it, and other far-from-populist sources like the New York Post and Senator Charles Grassley, for uncovering much of this info. But I want to emphasize one thing: while clearly I believe that Jack Lew is a bad apple, it’s equal clear that he’s the product of a rotten system. He did some exceedingly sketchy things at NYU, but his actions seem to have been perfectly legal, and besides, if it wasn’t him, some other cog in the machine would likely have done the same.

And while I and many others may believe that working for an investment bank should be a strong disqualifier for anyone who wants to work for the U.S. Department of the Treasury, the sad fact is that these days, such stints seem to be de riguer. Indeed, any Democratic candidate who had never worked for an investment bank would probably be unlikely to be nominated in the first place.

But this doesn’t mean we have to accept the Jack Lews and the Tim Geithners without a fight. Silence will be read as acquiescence, which will get us more of same. Progressives need to think long and hard about how to create a powerful mass movement. It’s only by building our collective political strength that fwe will be able to force the president’s hand to nominate a treasury secretary that works for ordinary Americans, not Wall Street.

Kathleen Geier is a writer and public policy researcher who lives in Chicago. She blogs at Inequality Matters. Find her on Twitter: @Kathy_Gee

Comments

  • Gandalf on February 23, 2013 7:06 PM:

    Lew may not be perfect but Kathleen guess what? The financial world isn't exactly like a friendly game of scrabble. The players are hardballers and sometimes it takes a shark to deal with other sharks. You don't want to bring a knife to a gun fight.

  • gregor on February 23, 2013 8:13 PM:

    Yeah, but the question is: why couldn't Obama find less of a sleazeball? Or why didn't he.

  • rrk1 on February 23, 2013 8:14 PM:

    With a background like that why would anyone think he has any interest in looking out for the little guy? Clearly he doesn't. Obama's cabinet choices have been such a mixed bag, typical of his presidency, that it becomes extremely hard not to become so cynical as to tune out any involvement in public affairs. Clearly being a Democrat these days means something entirely different from what it once was.

  • Citizen Alan on February 23, 2013 8:21 PM:

    On one hand, I'm appalled and disgusted. On the other hand, what is Obama supposed to do? The Republicans are actively filibustering a former Republican and decorated war veteran for the DOD position! I think the choice right now is (a) nominate someone who would be amenable to the banking industry and pray he gets religion while on the job or (b) accept that the Treasury Secretary's seat will remain vacant at least through the end of 2014.

  • Walker on February 23, 2013 8:36 PM:

    Do you honestly believe anyone to the left of Lew would get confirmed? As it is, the is a lot of chatter about Republicans blocking Lew.

  • gdb on February 23, 2013 9:11 PM:

    "But it’s important to bear in mind that while the lesser of two evils is always preferable, it’s still an evil."

    Agreed. On issue after issue, appointment after appointment (SCOTUS excepted) the poor policy and the poor result stops with BHO. Better than GWB or Mittens, but that's not saying much. Hopefully, in 2016, Dems will nominate a true Progressive-- someone from the Democratic wing of the Democratic party.

  • angler on February 23, 2013 10:34 PM:

    Really, does Emperor Palpitane have any choice other than Lord Vader for the Commander of the Death Star? After the dark side is very strong in the senate these days.


  • exlibra on February 24, 2013 12:30 AM:

    What surprises me is that Lew would be willing to forgo all that lovely lucre, and accept a public service office where the money is likely to be piddling, in comparison (if only because of the constant and intense spotlight)...

  • June on February 24, 2013 2:52 AM:

    I'm sorry -- "EmoProg Alert - Code Red."

  • Basilisc on February 24, 2013 3:11 AM:

    Geithner never worked at an investment bank. In fact his whole career up to now has been in the public sector. That doesn't mean he won't soon be working for some kind of bank or hedge fund - he almost certainly will- nor that he hasn't been too favorable to the banks in the crisis and post-crisis - he certainly has.

    But it does mean that we should try to stay away from this "us vs them" approach to financial regulatory policy. It obscures more than it reveals. Gary Gensler, head of the CFTC and ex-Goldman Sachs, has been pretty tough on derivatives regulation.

  • Bob h on February 24, 2013 7:27 AM:

    He sounds like an ideal Republican; how could they object?

  • 14All on February 24, 2013 7:55 AM:

    Because Obama, of course.
    The primary goal of the Republican party has been, from day one of this administration, to bring any efforts to govern to a screeching halt. Unfortunately, Obama will nonetheless go to his grave thinking that if only he had tried to compromise with them and imitate them a little bit more, he could have healed all the rifts between Left and Right and there would be cookies and flowers for everyone.

  • MuddyLee on February 24, 2013 9:26 AM:

    The repubs would not allow Elizabeth Warren to be confirmed as head of the consumer protection agency - this proves you can't just nominate "good" people. It is difficult dealing with lunatics like McConnell et al. We should hope for a sequester deal that lets the administration make spending cuts disproportionately in repub districts. There is no way to deal with the repubs reasonably. But thanks for the info on Lew - we need to know how "evil" the guys are when we are choosing the lesser of the evils - but he's pretty evil. Thanks for your work, Kathleen.

  • Patroklus2000 on February 24, 2013 11:25 AM:

    Your article has been scrubbed of the "progressive" vocab and now appears under Jennifer Rubin's byline in The Washington Post. (OK, it's just her Right Turn blog, but still.) If I were you, I would be concerned by that fact. At some point, progressives have to look 2 steps ahead for that potential lead-in in some nauseating attempt to kneecap President Obama where it is stated "Even those leftists most in the tank for Obama, like the MSM elite at the Washington Monthly, deplore Obama's cabinet choices, cementing further our contention that, rather than assembling a 'Team of Rivals,' he is assembling a 'Team of Hacks.'" Maybe you feel it is inconsequential that you are furthering that meme, but others may beg to differ

  • somethingblue on February 24, 2013 12:41 PM:

    Concern Troll is concerned.

  • patroklus2000 on February 24, 2013 1:59 PM:

    Here's a link to that Jenn Rubin piece.

    http://www.washingtonpost.com/blogs/right-turn/wp/2013/02/24/distinguished-pol-of-the-week-10/

    Read it and see if your purity insists that you reaaaalllyy have to be associated with her agenda.

  • angler on February 24, 2013 2:22 PM:

    Because it's from Jen Rubin, Lew must be defended. Or enemy of enemy = friend. See Hagel nomination. One could read that piece and conclude that the administration does itself no favors by muddying the narrative of a party for the people (Dems) v. a party for the rich (GOP). It's Obama nominating Lew that gave Rubin ammo not Kathleen Greer posting about Lew on this blog.

    Ultimately this another round of a very old fight within the Democratic party. Duncan Black had a good take on the logic of advising "the left" to keep quiet about issues like this: http://www.eschatonblog.com/2010/12/jane-hamshers-of-left.html

  • zandru on February 24, 2013 2:27 PM:

    Patroklus2000 has a point. We lefties are great at eating our young. Haven't yet figured out how to disagree and disapprove of actions by Democratic officials without first demonizing them, re-evaluating all their previous actions as obviously having been motivated by eeee-vil, and concluding by throwing up our hands and giving up.

    After all, it always works so well! - At proving everything is futile. Hmmm....

    In a related note, leftie icon Dennis Kucinich was hired by Fox News. Maybe they really ARE "fair&balanced"™!! ... No, don't expect Kucinich to give his standard progressive talk-the-walk on issues. He's there, like Fox's other talking heads, to attack the President and his fellow Dems - but from the left.

  • Crissa on February 24, 2013 3:17 PM:

    Thanks, Patroklus2000 a link to an article that claims Lew is redistributing wealth to liberals.

    Such a bold faced lie! Wow.

    And in response to an article where we lament that Republicans have made confirmation such a process that we can't even get bland middle of the road Republicans confirmed, let alone bland Democrats or liberals.

    Such irony.

  • FlipYrWhig on February 24, 2013 4:10 PM:

    Lew is also a Paul Wellstone protégé. This piece and others like it remind me of all the angst vented about the insufficient progressive cred of Kirsten Gillibrand when she was first appointed to the Senate.

  • Robert on February 24, 2013 7:45 PM:

    Geithner never worked at an investment bank. Some very basic research would have revealed that.

  • Aaron Morrow on February 25, 2013 8:24 AM:

    Do we have a credible source for any of these new rumors? The Wall Street Journal opinion page has been full of lies for 20 years, long before the paper was bought by News Corp.

    I actually think that there are some credible facts already on the record about Jack Lew that we liberals shoud be complaining about. I also know that I was surprisingly pleased by his government work, as he was the loudest administration voice for protecting Medicaid. For that reason, I am conflicted.

    By all means, attack and mock Jack Lew for his union busting, as we know that happened. But let's not go crazy and assume the Wall Street Journal opinion page hasn't stopped being a pack of lies. Next up, you'll be asking us to trust Joe Klein!