President Obama's first chief of staff Rahm Emanuel once sat on the board of troubled federal mortgage giant Freddie Mac. Bill Daley, the president's chief of staff whose departure was announced today, was previously a top executive at financial firm J.P. Morgan Chase & Co. So of course there should be little surprise that Obama's latest chief of staff, announced today by the president himself, also has deep ties to the financial industry himself.
From 2006-2008, Jack Lew was chief operating officer of Citibank's alternative investments division. And it was his division that made billions of dollars betting "U.S. homeowners would not be able to make their mortgage payments," as the Huffington Post reported.
The piece also reported: “Lew made millions at Citi, including a bonus of nearly $950,000 in 2009 just a few months after the bank received billions of dollars in a taxpayer rescue, according to disclosure forms filed with the federal government. The bank is still partly owned by taxpayers.”
Of course, one should not begrudge Lew his personal, professional, and financial successes. But one might wonder what kind of message the president is sending with this appointment.
“I welcome constructive input from folks in the financial sector. But what we’ve seen so far, in recent weeks, is an army of industry lobbyists from Wall Street descending on Capitol Hill to try and block basic and common-sense rules of the road that would protect our economy and the American people,” Obama said in 2010. “So if these folks want a fight, that’s a fight I’m ready to have.”
In announcing Lew today, the president mentioned his previous work at the State Department and in the Clinton administration. Obama did not mention Lew's past of making billions of dollars for Citibank just a few years ago.
UPDATE: Danielle Romero-Apsilos, from Citi's public affairs, responds:
The quote you pulled from the Huffington Post stating that we are still partly owned by the US taxpayer is dated 9/21/10. At the end of 2009, Citi repaid the TARP investment the government made in December 2008 with a substantial return for taxpayers, and exited the loss-sharing agreement with the government. On December 6, 2010, the U.S. Department of the Treasury announced that it priced an underwritten public offering of its remaining shares of Citigroup at $4.35 per share. In total, Treasury netted a cumulative profit for taxpayers of $12 billion as a result of its investment in Citi.
Jack Lew was Chief Operating Officer of Citi Alternative Investments (CAI) until his departure in January 2009. He was responsible for operations, technology, human resources, legal, finance and regional coordination. He was not responsible for investments or fund management. Prior to joining CAI in January 2008, Mr. Lew was chief operating officer of Citi Global Wealth Management, which at the time, consisted of Citi Smith Barney, Equity Research, and the Private Bank.
