President Barack Obama called Jack Lew, whom he’ll nominate as U.S. Treasury secretary to succeed Timothy F. Geithner, a “master of policy” and a man of integrity.
“I trust his judgment, I value his friendship,” Obama said of Lew as he announced he’s choosing his chief of staff for the Cabinet post. The president praised Geithner, saying he will “go down as one of our finest secretaries of the Treasury.”
Lew, 57, whose career has included work in government, academia and on Wall Street, coordinated the White House side of talks with Congress that averted more than $600 billion in spending cuts and tax increases earlier this month. He was intentionally left out of direct negotiations with congressional Republicans in anticipation of his nomination as Treasury chief and instead was a chief administration envoy to the business community during the talks.
If the Senate confirms Lew as the next Treasury chief, he’ll play a leading role in working with Congress to raise the government’s $16.4 trillion debt ceiling. The U.S. reached the statutory limit on Dec. 31, and the Treasury Department began using extraordinary measures to finance the government. It will exhaust that avenue as early as mid-February, the Congressional Budget Office says.
Senate Finance Committee Chairman Max Baucus, a Montana Democrat, and Orrin G. Hatch, a Republican from Utah and a ranking member on the same panel, are discussing timing, vetting and other aspects of Lew’s confirmation hearing, said Hatch spokeswoman Antonia Ferrier.
“A lot has to be done before a hearing is even scheduled - - the Finance Committee has a very thorough vetting process for all nominees,” Ferrier said today in an e-mail.
The panel has sole jurisdiction over Treasury Secretary nominees. The Senate reconvenes Jan. 21.
“Jack Lew has immense experience, and I look forward to a speedy but thorough nomination process,” Baucus said today in a statement. “We must ensure Treasury has the leadership it needs as we tackle our country’s pressing economic issues and work together to continue our recovery and create jobs.”
The debt limit will be the first in a series of negotiations this year over the budget and spending between the Obama administration and Republicans, who have a majority in the House of Representatives.
The new Treasury secretary will help manage economic ties with Europe and China, the world’s second-largest economy. The Treasury is also in charge of collecting federal taxes through its Internal Revenue Service bureau, and manages the nation’s public debt.
Lew served as Obama’s director of the Office of Management and Budget from November 2010 to January 2012, and was part of failed talks during the summer of 2011 that sought to cut the nation’s debt by $4 trillion over a decade.
“What we need to do is shift our attention from these kind of divisive political fights and do the things that we can do to create jobs,” Lew said on CNN’s “State of the Union” on July 1 last year, according to a transcript of the program. “The president has given Congress many ideas, ranging from putting policemen and firemen and teachers back to work to helping people who are underwater refinance their homes, to helping veterans get jobs.”
Senator Jeff Sessions, a Republican from Alabama and Senator Bernie Sanders, an independent from Vermont, said they would oppose the nomination.
“As a supporter of the president, I remain extremely concerned that virtually all of his key economic advisers have come from Wall Street,” Sanders said in a statement on his website today. “In my view, we need a Treasury secretary who is prepared to stand up to corporate America and their powerful lobbyists and fight for policies that protect the working families in our country. I do not believe Mr. Lew is that person.”
While Lew spent most of his career in government, he made a brief detour to Wall Street, where he worked as a managing director for Citigroup Inc. from July 2006 until he joined the Obama administration in 2009. That period spanned the U.S. government’s $45 billion bailout of the bank, which was later repaid, during the 2008 global credit crisis.
Lew’s first boss at Citigroup was Todd Thomson, head of the global wealth management unit. Thomson said he hired Lew on the recommendation of Robert Rubin, the former Treasury secretary who led the New York-based firm’s executive committee.
“I had a lot of respect for Bob, so if he thought highly of somebody, certainly they would get the benefit of the doubt,” Thomson said in an interview. “He was always an advocate of bringing very talented people into the organization.”
Lew helped Thomson manage the unit’s thousands of brokers and financial advisers as the bank, then the biggest in the U.S., sought to better integrate divisions. The unit ran “more smoothly” once Lew joined, said Thomson, a former Citigroup chief financial officer who left in January 2007.
“I think of Jack as a very smart, devoid of politics, fact-based person who’s simply trying to get the job accomplished,” said Thomson, who’s now chairman of Dynasty Financial Partners. “That’s a terrific personality to work with.”
Lew moved in 2008 to Citi Alternative Investments, which managed billions of dollars in private-equity and hedge-fund investments, some of which were under pressure as the financial crisis neared. A group of the unit’s municipal bond funds lost most of their value that year, placing the bank at the center of a regulatory probe and a wave of litigation from investors. Lew also helped oversee the closure of Old Lane Partners LP, a hedge fund that the bank bought for $800 million about a year previously.
The Financial Services Forum, which represents some of the nation’s biggest financial institutions, welcomed Obama’s selection of Lew.
“Given his experience in the government and private sector, Mr. Lew is well-suited for the job,” Rob Nichols, president and chief executive officer of the group, said in a statement. Lew “understands the important role the financial sector plays in our economy, as well as our continued economic recovery.”
Before moving to OMB in 2010 for his second tour as director -- a position he previously held from July 1998 to January 2001 in President Bill Clinton’s administration -- Lew was deputy Secretary of State for management and resources under Secretary of State Hillary Clinton. He worked as a managing director for Citigroup Inc. from July 2006 until he joined the State Department at the start of Obama’s first term. He earlier was chief operating officer and a public administration professor at New York University for five years.
A graduate of Harvard College and Georgetown University Law Center, Lew began his Washington career as a congressional staff member, eventually working as a policy adviser to the late House Speaker Thomas P. “Tip” O’Neill Jr., a Massachusetts Democrat.
“Jack is no pushover,” said Bill Galston, a domestic policy adviser in the Clinton administration, who worked with Lew. “Jack Lew is an extremely experienced negotiator. He knows what it means to roll up his sleeves and get into a room and stay there for a long time, trying to work through differences analytically.”
The new Treasury secretary will confront an economy that remains saddled with 7.8 percent unemployment in December, down from a three-decade high of 10 percent in Oct. 2009.
The U.S. economy grew at a 3.1 percent annual rate in the third quarter, the Commerce Department said Dec. 20, reflecting the first gain in state and local government spending in three years, more consumer purchases and a smaller trade gap.
The world’s largest economy will be hard-pressed to maintain that pace of growth this quarter as global demand cools and companies limit spending and hiring ahead of looming tax increases and spending cuts.
The federal government has run up budget deficits in excess of $1 trillion in each of the past four fiscal years as the recession and efforts to combat it boosted spending and reduced revenues. The shortfall totaled $1.09 trillion in the year ended Sept. 30, down from $1.3 trillion in 2011 and a record $1.42 trillion in 2009, according to figures from the Treasury Department.
“It is essential that we have strong leadership, like Jack Lew, at the Treasury Department as we work to stem our growing debt and tackle comprehensive tax reform,” Senator Ben Cardin, a Democrat from Maryland, said in a statement. “America needs the stability and predictability that can only come from a new secretary of the Treasury who already is intimately familiar with the economic and budget reality facing our country and someone who has the experience to articulate a balanced solution to our problems.”