Barack Obama's choice for Treasury Secretary grilled on his finances
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Wednesday 13 February 2013
Jack Lew, President Barack Obama's pick to replace Tim Geithner as Treasury Secretary, was grilled on his tenure at Citigroup, with Republican lawmakers pressing him on his past investments in a Cayman Islands fund and on a nearly $1m bonus he received as Citi was receiving government support during the financial crisis.
In his opening statement, Mr Lew, who served as budget director for presidents Bill Clinton and Obama before becoming the latter's chief of staff, attempted to deflected attention from his two-year stint at Citigroup between 2006 and 2008 by saying that his role was limited to driving "organisational change at one of our nation's largest banks". Under questioning by the Senate Finance Committee, he added that he was not "in the business of making investment decisions" at the bank.
But Republican lawmakers zeroed in on his pay and responsibilities while at Citi. Mr Lew began at the bank's wealth management business before moving in 2008 to a senior post at Citi Alternative Investments. The division managed billions of dollars in hedge fund investments, and it is the kind of business which is being targeted by the so-called Volcker Rule meant to clamp down on risky banking activities.
Senator Chuck Grassley, a Republican from Iowa, queried Mr Lew's $940,000 (£600,000) bonus, which he was paid in January 2009 just as Citigroup was receiving government help, asking the President's nominee why it was "morally acceptable" for him to take close to a million dollars from a company that was "functionally insolvent".
Mr Lew, who is likely to be confirmed for the Treasury post, answered that he was "compensated in the manner consistent with the other people who did the kind of work that I did". Whether it was moral or not, he said, was "for other's to judge".
He was also asked about his personal investment of between $50,000 and $100,000 in a Citigroup fund based in the Cayman Islands, which he divested when he took up a job in the Obama administration in early 2009. Noting President Obama's many critical statement about investments in tax havens such as the Caymans, Mr Grassley said: "There's a certain hypocrisy in what the President says about other taxpayers and your appointment."
Mr Lew said that he has declared his income and paid whatever taxes were due to the American taxman.
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