The Best Thing About Jack Lew's Nomination: He's Not Erskine Bowles

Lew & Geithner-- you'll never know the difference

It's not a shock that Obama picked his chief of staff, Jacob "Jack" Lew as his Treasury Secretary to replace Tim Geithner. It's unlikely anyone will ever know Geithner's gone and Lew took his place-- except on Saturdays when the Orthodox Lew doesn't work. (I wonder if Obama is looking into a Shabbos Goy if anything important comes up on a Saturday... Colin Powell, Mario Cuomo, Martin Scorsese and Elvis Presley have all played that role; no, really.)

The White House spin machine has put it out there that Lew is "a liberal" who was down with Eugene McCarthy and Paul Wellstone, which scares me since there's a good chance that if they're saying that, he's probably really a horrible conservative. What we do know about him is that when he was chief operating officer of Citi's Alternative Investment department, he invested in a hedge fund that was betting on the collapse of the housing market.

Under Lew, the Multi-Adviser fund doubled its investment in Paulson's fund to nearly $42 million by March 2008; by the next quarter, it'd cranked that investment up to just over $60 million, making it the biggest piece of the Multi-Adviser fund, Nasiripour reported. So how'd it go for Lew and Citi?:

Citi paid Lew $1.1 million for his year at Alternative Investments, according to an ethics disclosure report filed in January 2009. He was also eligible for an undisclosed bonus... His unit, though, lost as much as billions of dollars in 2008 as its bets turned sour. In the first quarter of 2008 alone the unit lost $509 million; the company stopped publicly disclosing the unit's individual numbers soon thereafter, but the part of the company that absorbed Alternative Investments lost $20.1 billion in 2008, according to the bank's filings with the Securities and Exchange Commission.

Citigroup, as you might recall, also received $45 billion in TARP money.

The White Houset says he's a "budget wiz" (like Paul Ryan?) and worked as director of the OMB for both Clinton and Obama. (Before taking the OMB job, Lew worked for Hillary at the State Dept. as deputy secretary for management and resources, providing the perfect excuse for Lindsey Graham or some other deranged right-wing obstructionist in the Senate to put a hold on the nomination until they get answers to their silly Benghazi smears. But probably not. He'll likely be confirmed-- once again-- by the Senate and make Wall Street very happy that they have one of their own-- once again-- as Treasury Secretary.

He's famous for his awful signature. Below is what it might look like on a dollar bill. I wonder if he could also sign the trillion dollar coin. As you may recall, I would have preferred Brad Miller or Paul Krugman get the job, but both are progressive and Obama... isn't. And he only accepts pressure from the far right, not from the moderate left. Don't talk to Obama (or Lew) about breaking up the big criminal bankster operations.

The biggest Wall Street banks are now far bigger than they were four years ago when they were considered too big to fail. The five largest have almost 44 percent of all US bank deposits.

That’s up from 37 percent in 2007, just before the crash. A decade ago they had just 28 percent.

The biggest banks keep getting bigger because they can borrow more cheaply than smaller banks. That’s because investors believe the government will bail them out if they get into trouble, rather than force them into a form of bankruptcy (as the new Dodd-Frank law makes possible).

That’s why it’s necessary to limit their size and break up the biggest.

Washington may be getting the message. A few months ago Dan Tarullo, the Fed governor who specializes in bank regulation, proposed capping the size of the banks’ balance sheets.

Some former titans of Wall Street are saying much the same thing. Even Sandy Weill, who created Citigroup (which required $445 billion in TARP loans and asset guarantees) is proposing the biggest banks be broken up.

The new Congress may also be supportive. The new chairman of the House Financial Services Committee, Texas Republican Jeb Hensarling, has been a strong ally of small banks in their push to rein in their bigger rivals, and has expressed concern about the largest being too big to fail.

It’s not irrelevant that the Dallas branch of the Federal Reserve Board, in Hensarling’s home district, has also proposed breaking up the biggest.

Meanwhile, over in the Senate, Ohio Senator Sherrod Brown, is a strong advocate for breaking up the big banks and is now on the Senate Finance Committee. And Elizabeth Warren, scourge of Wall Street, will sit on the Senate Banking Committee.

In other words, the timing is right. The oven is ready. All we need is another multi-billion dollar banking loss-- like JP Morgan Chase’s last year-- and the biggest banks are cooked.

Let's see if anyone asks Mr. Lew about it.

UPDATE: BERNIE SANDERS-- A NO VOTE ON LEW!

Senator Sanders:

“Jack Lew is clearly an extremely intelligent person and I applaud his many years of public service to our country. I believe that he will be confirmed by the Senate. Unfortunately, he will be confirmed without my vote. At a time when the middle class is collapsing and millions of workers are unemployed, I do not believe he is the right person at the right time to serve in this important position.

“As a supporter of the president, I remain extremely concerned that virtually all of his key economic advisers have come from Wall Street. 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.

“We don't need a treasury secretary who thinks that Wall Street deregulation was not responsible for the financial crisis. We need a treasury secretary who will work hard to break up too-big-to-fail financial institutions so that Wall Street cannot cause another massive financial crisis.

“We don’t need another treasury secretary who believes in ‘deficit neutral’ corporate tax reform. We need a treasury secretary willing to fight to make sure that large, profitable corporations pay their fair share in taxes to reduce the deficit and create jobs.

“We don't need a treasury secretary who will advise the president that he should negotiate with the Republicans to cut Social Security, Medicare, and Medicaid benefits. We need someone who is going to strengthen these programs.

“We don’t need another treasury secretary who believes that NAFTA and Permanent Normal Trade Relations with China have been good for the American economy. We need someone in the White House who works to fundamentally re-write our trade policy to make sure that we are exporting American goods, not American jobs."