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Matt Taibbi & Bill Black: Obama's New Treasury Secretary a 'Failure of Epic Proportions'

Taibbi and Black dissect the career of Jack Lew, who has been a cheerleader for the financial industry at the public's heavy expense.
 
 
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JUAN GONZÁLEZ: President Obama is facing criticism for nominating another former Wall Street executive to become treasury secretary. On Thursday, Obama tapped his own chief of staff, Jack Lew, to replace Timothy Geithner. Lew was an executive at Citigroup from 2006 to 2008 at the time of the financial crisis. He served as chief operating officer of Citigroup’s Alternative Investments unit, a group that bet on the housing market to collapse.

Lew has also long pushed for the deregulation of Wall Street. From 1998 to January 2001, he headed the Office of Management and Budget under President Clinton. During that time, Clinton signed into law two key laws to deregulate Wall Street: the Financial Services Modernization Act of 1999 and the Commodity Futures Modernization Act of 2000.

On Thursday, independent Senator Bernie Sanders of Vermont criticized Lew’s nomination, saying, quote, "We don’t need a treasury secretary who thinks that Wall Street deregulation was not responsible for the financial crisis."

At a press conference at the White House Thursday, President Obama praised Jack Lew’s record.

PRESIDENT BARACK OBAMA: Jack has the distinction of having worked and succeeded in some of the toughest jobs in Washington and the private sector. As a congressional staffer in the 1980s, he helped negotiate the deal between President Reagan and Tip O’Neill to save Social Security. Under President Clinton, he presided over three budget surpluses in a row. So, for all the talk out there about deficit reduction, making sure our books are balanced, this is the guy who did it—three times. He helped oversee one of our nation’s finest universities and one of our largest investment banks. In my administration, he’s managed operations for the State Department and the budget for the entire executive branch. And over the past year, I’ve sought Jack’s advice on virtually every decision that I’ve made, from economic policy to foreign policy.

AMY GOODMAN: For more on the nomination of Jack Lew, as well as other news about Wall Street, we’re joined by two guest. William Black, author of  The Best Way to Rob a Bank Is to Own One_, he’s associate professor of economics and law at the University of Missouri-Kansas City, former senior financial regulator. His recent article for the  Huffington Post is called "Jacob Lew: Another Brick in the Wall Street on the Potomac."

We’re also joined by Matt Taibbi, contributing editor for  Rolling Stone magazine, his latest  piece, "Secrets and Lies of the Bailout," which we’ll talk about in a bit, author of  Griftopia: A Story of Bankers, Politicians, and the Most Audacious Power Grab in American History.

We welcome you both to  Democracy Now! Professor Black, let’s start with you. Your assessment of Jack Lew?

WILLIAM BLACK: Well, on financial matters, Jack Lew has been a failure of pretty epic proportions, and he gets promoted precisely because he is willing to be a failure and is so useful to Wall Street interests. So, you’ve mentioned two of the things in terms of the most important and most destructive deregulation under President Clinton by statute. But he was also there for much of the deregulation by rule, and a strong proponent of it, and he was there for much of the cutting of staff. For example, the FDIC, the Federal Deposit Insurance Corporation, lost three-quarters of its staff, and that huge loss began under Clinton. And the whole reinventing government, Lew was a strong supporter of that. And, for example, we were taught—instructed by Washington that we were to refer to banks as our "clients" in our role as regulators and to think of them as clients.

 
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