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Treasury Pick Tries to Cast His History as Right for the Job

February 25, 2013 by Leave a Comment

As the Senate gears up to vote on the next Treasury secretary, President Obama’s choice for the job, Jacob Lew, has been forced to navigate through something of a political minefield: As White House chief of staff and a former budget director, Mr. Lew has sought to show he has enough Wall Street experience to handle turbulent financial markets, but not enough to prevent him from reining in the powerful banking industry.

Mr. Lew, who is expected to win an initial nod from the Senate Finance Committee on Tuesday and sail on to approval in a full Senate vote, has battled a range of criticism, including questions about his lucrative tenure at Citigroup, a Cayman Islands investment, and housing assistance he received as an administrator at New York University more than a decade ago. To shore up his support, Mr. Lew has met privately in recent weeks with 41 senators and responded to 738 questions for the record. On Tuesday, he is scheduled to head to Capitol Hill for another meeting.

Much of the vitriol surrounding Mr. Lew’s nomination concerns the terms of his employment at Citigroup, which seemed to reward him for leaving the bank if he took a high-ranking position in government. During Mr. Lew’s confirmation hearing, Senator Orrin Hatch, a Republican from Utah, peppered him with questions about the terms of that contract, specifically challenging whether the contract violated the president’s efforts to “close the revolving door.”

Under his contract with Citi, Mr. Lew kept certain bonus compensation if he left the bank for a “high level position with the United States government or regulatory body,” but not a competitor in the private sector, according to several people with direct knowledge of the contract.

Many of the most exacting questions have come from Senator Charles Grassley, Republican of Iowa, related to a money-losing investment in a fund based in the Cayman Islands. Mr. Lew had a $56,000 investment in the Citigroup fund, prompting questions from Republican senators about whether the investment was stashed there to dodge taxes.

At one point in the hearings, Senator Pat Roberts, Republican of Kansas, held up a huge picture of Ugland House, an office building in the Cayman Islands where thousands of companies, including Mr. Lew’s fund, have registered. The display struck a particularly discordant note because Mr. Obama used the Ugland House as a symbol for tax havens in his first campaign for president.

“There’s a certain hypocrisy in what the president says about other taxpayers, and your appointment,” Mr. Grassley said at the hearing. Mr. Lew responded by saying that he had not received any tax advantages because of the investment’s location and ultimately sold it for a loss.

Senator Grassley also pressed Mr. Lew for more details on hundreds of thousands of dollars in loans that New York University provided while he was an executive with the school.

“N.Y.U. provided the financing over a decade ago,” Mr. Lew wrote in a response to Senator Grassley’s follow-up questions, providing details on the dollar figures and construction of the financing. “During the intervening time period, I repaid the university and privately refinanced the mortgage on my home multiple times. I am still living in the same home today.

Mr. Grassley was not satisfied with Mr. Lew’s written responses, saying he still had concerns about the transparency of Mr. Lew’s compensation. “Mr. Lew has a lack of knowledge or a poor memory of some of the perks he received through his tenure at New York University and Citigroup,” the senator said in a statement. “Most people who receive a $1.4 million loan from their employer remember the terms.”

Much of the battle over Mr. Lew’s income and former status on Wall Street is inconsistent, the aides contended, pointing out that Republicans broadly backed Henry Paulson, who left his perch as chief executive of Goldman Sachs to become Treasury secretary in 2006.

This article has been revised to reflect the following correction:

Correction: February 25, 2013

An earlier version of this article incorrectly included one senator as a source of questioning about loans received by Jacob Lew while working at New York University. The questions came from Senator Charles Grassley alone; Senator Orrin Hatch did not join in raising them. The article also misstated when Mr. Lew worked on a Eugene McCarthy presidential campaign. It was while he was in grade school, not after he arrived in Washington.

Article source: http://www.nytimes.com/2013/02/26/business/economy/treasury-nominee-works-to-address-concerns.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

After Solyndra Case, Ex-Businessman to Review Energy Loans

October 29, 2011 by Leave a Comment

In enlisting Herbert M. Allison Jr., a former executive who helped the Bush and Obama administrations rescue the financial system, the White House indicated some concern that it needed to get out ahead of the Congressional investigation into the loan portfolio of the Department of Energy and, in particular, the half-billion-dollar loan to the California manufacturer, Solyndra.

But officials also indicated that the White House would oppose any subpoena of additional internal records related to Solyndra. The administration has given more than 70,000 documents to Republicans investigating what they characterize as the first scandal related to the economic-stimulus package early in the Obama administration.

The White House contends that those documents show that the decisions related to Solyndra and other loan recipients were based on merit and made by nonpolitical career staff members following proper procedures.

In a statement, the White House chief of staff, William M. Daley, said Mr. Allison would analyze “the current state of the Department of Energy loan portfolio, focusing on future loan monitoring and management.” Mr. Allison is to issue a public evaluation and any recommendations in 60 days and can bring in outside experts to help him.

Mr. Daley said Mr. Allison was chosen not only for his résumé, but because “he is tough, always tells it like it is.”

Mr. Allison, a former president of Merrill Lynch and former chief executive of the insurance company TIAA-CREF, was tapped by the Bush administration in September 2008, with the financial sector near collapse, to lead the mortgage-finance giant Fannie Mae when it was forced into a government conservatorship. In 2009, he was nominated by President Obama and confirmed by the Senate to be assistant Treasury secretary for financial stability and to oversee the bank bailout, the Troubled Asset Relief Program. He left in September 2010 when it had become evident that big banks would repay their loans, with interest.

Like Mr. Obama, Mr. Daley, in his statement, stressed that the president remained committed to government investments in clean energy, to create jobs and to compete with foreign rivals.

“And while we continue to take steps to make sure the United States remains competitive in the 21st century energy economy, we must also ensure that we are strong stewards of taxpayer dollars,” Mr. Daley said.

The Energy Department program comprises 40 projects worth $36 billion, including guarantees for large nuclear-power loans and for development of electric vehicles.

Scrutiny has focused on a portfolio with a total loan value of about $16 billion that relates to 28 renewable-energy projects at companies engaged in biofuels, wind farms, battery storage, solar energy generation and solar-panel manufacturing like Solyndra was trying before it declared bankruptcy in September. The company, which received $528 million, is also under investigation for possible fraud by the Federal Bureau of Investigation.

On Friday the leaders of the Republican-controlled House Energy and Commerce Committee — Representatives Fred Upton of Michigan, the chairman, and Cliff Stearns of Florida, the chairman of the oversight subcommittee — announced that the committee would meet on Thursday to vote on whether to subpoena internal White House communications related to the Solyndra loan and its restructuring in 2010.

The Republican majority on the committee has been seeking evidence that the White House ordered the Energy Department to approve the loan guarantee to Solyndra, but so far it has mostly found expressions of intense interest from the White House over the timing of the approval.

Specifically, the committee is now seeking communications from the start of the administration involving some of Mr. Obama’s closest advisers. While the White House has not yet tried to exercise executive privilege to withhold material, any subpoenas could prompt a legal showdown with Republicans.

“Subpoenaing the White House is a serious step that, unfortunately, appears to be necessary in light of the Obama administration’s stonewall on Solyndra,” Mr. Upton and Mr. Stearns said in a joint statement.

The White House said it stood by an Oct. 14 letter to the two lawmakers from one of Mr. Obama’s lawyers, Kathryn H. Ruemmler. She wrote that the White House, the Energy and Treasury Departments and the budget office had taken part in nine briefings to Congressional staff, testified at hearings and produced more than 70,000 pages of documents with nothing to indicate “the White House intervened in the Solyndra loan guarantee to benefit a campaign contributor.”

Stopping short of an invocation of executive privilege, Ms. Ruemmler said the committee’s request for more material “implicates longstanding and significant institutional Executive Branch confidentiality interests.”

John M. Broder contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=0527343147df5cdd49907990b256cd06

Filed Under: Business News Tagged With: , ,

Economix Blog: New Leader for Liberal Research Group

October 25, 2011 by Leave a Comment

A veteran of the Obama and Clinton administrations, Neera Tanden, will be taking over as president of the Center for American Progress, a research organization that represents the views of the president’s more liberal, and somewhat disaffected, base.

She will succeed John Podesta, who ran President Obama’s transition team and served as White House chief of staff to President Clinton, on Nov. 1. Mr. Podesta will remain at the organization as non-executive chairman of the board.

In an interview on Monday, Ms. Tanden said she hoped “big ideas,” both from  her organization and other progressives, would help unite the left in the year leading up to the next presidential election. Recent national polls show that Mr. Obama is behind the Republican candidate on a generic ballot.

“There’s a lack of faith in our ability to solve large-scale problems together, and that weakens the progressive cause,” she said. “There’s big hunger for bigger solutions, and some of the reaction we’re seeing in this country is a rejection of the current discourse in Washington.”

She said she believed that Mr. Obama’s recent push for more economic stimulus intended to create jobs may be winning him back more liberal supporters who had felt alienated by his push for austerity measures.

Ms. Tanden is  the chief operating officer at the Center for American Progress, and served as senior adviser for health reform at the Department of Health and Human Services, where she helped shape the Affordable Care Act. She said that despite continuing criticism of the health care legislation passed last year, she did not anticipate that Congressional Republicans would make a serious attempt to dismantle it before the next election.

“There were two moments where Republicans had had levers over the Senate and the White House to dismantle the Affordable Care Act,” she said. “One was the government shutdown, and the other was the debt limit deal. In neither case did they use those levers to destroy the Affordable Care Act.”

Article source: http://feeds.nytimes.com/click.phdo?i=b6d1b3a9fb654b17b9be8382cef4eb11

Filed Under: Economy News Tagged With: , ,

White House Memo: President on Sidelines in Critical Battle Over Debt Ceiling

July 28, 2011 by Leave a Comment

He spoke repeatedly but without specifics of private conversations and nonstop meetings involving administration officials “up to the highest levels” — White House shorthand for the president. Finally, exasperated, he asked whether reporters expected “a President Bartlet moment” — say, a march up Capitol Hill to whip Congress in line, à la fictional president in “The West Wing” television series.

“Yes,” one reporter replied.

Reality is not so simple. The two parties remain seemingly further apart than just days before the Treasury Department’s Aug. 2 deadline for raising the $14.3 trillion debt limit, threatening a financial crisis that could ripple through the economy. But with the collapse last week of Mr. Obama’s back-channel talks with House Speaker John A. Boehner, the action has shifted to Congress.

Having already deployed the heavy weapons from the presidential arsenal, including a national address on Monday night and a veto threat, Mr. Obama is in danger of seeming a spectator at one of the most critical moments of his presidency. Having been unable to get the grand bargain he wanted — a debt limit increase and up to $4 trillion in debt-reduction through spending cuts and taxes — Mr. Obama’s challenge now is to reassert himself in a way that produces the next-best outcome, or at least one that does no harm to his re-election hopes.

Behind the scenes, administration officials led by Vice President Joseph R. Biden Jr., the White House chief of staff, William M. Daley, and Mr. Obama’s budget director, Jacob J. Lew, are scrambling via telephone, e-mails and trips to the Capitol to try to shape the emerging legislation as Mr. Obama and Congressional Democrats want. Their goal is a $2.4 trillion increase in the debt limit that would extend the government’s borrowing authority past the 2012 election campaign, not the shorter increase the Republicans now want, and also provide a similar amount in deficit reduction over the decade.

On a parallel track the Treasury secretary, Timothy F. Geithner, is “omnipresent” at the White House, by one official’s description, leading the effort with Mr. Lew to plan for emergency actions by the government and the financial system should Congress and Mr. Obama fail to reach an agreement.

No measure can pass without the president’s signature, so Mr. Obama is far from irrelevant. But his limited ability in a divided government to affect the legislation and his inability before now to shape a compromise with House Republicans, many of them dedicated to never compromising with him, is proving the most significant test to date of his campaign promise to bridge the two parties and make Washington work.

Worse, with the health of a still-fragile recovery resting on the outcome, a bad ending could leave Mr. Obama more vulnerable politically than he is now, with 9 percent unemployment, on the issue that is likely to define the 2012 elections — his handling of the economy.

“I don’t think a president is ever completely helpless, but having said that, my interpretation of the nationally televised address that he gave was that he had no arrows left in his quiver,” said Bill Galston, a former Clinton administration official and now a senior fellow at the Brookings Institution, a research organization. “If he’d had another card to play, that was surely the time to play it. He’s the ultimate decider but, on the other hand, I think his capacity to shape what gets to his desk has been substantially reduced” as Republicans stand their ground, Mr. Galston said. Even Mr. Boehner has found it hard this week to get an agreement with the Republicans he ostensibly leads, he added.

Vin Weber, a Republican strategist and former congressman, said Mr. Obama could be hurt by the summer’s saga even though his position in the debt-limit debate — for a balanced package of spending cuts and revenue increase — is more popular than Republicans’ demands for deep spending cuts only, and a reshaping of Medicare and Medicaid.

“I think that his position on the issue is more broadly shared than Republicans would like to think, but he is damaging his leadership image because people don’t see him solving the problem,” Mr. Weber said.

“I’m not saying the president has an easy task ahead of him and he can do it at the snap of his fingers,” Mr. Weber added, in reference to Congressional Republicans’ hard line. “I’m just saying in the end the failure to solve this problem is going to weigh more heavily on him than on anybody in Congress.”

Article source: http://feeds.nytimes.com/click.phdo?i=227aa8daf3732b29276c5e448afb19e1

Filed Under: Economy News Tagged With: , ,