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At last we know how the grease is funneled to that revolving door between Wall Street and Washington. One only gets a $940,000 bonus from Wall Street’s Citigroup if you can land a “full time high level position with the United States Government or a regulatory body.” It can’t be just a part-time job, mind you; and you can’t be rank and file. Citigroup’s dangling carrot will only pay $940,000 if the company can add a “high level” government mover and shaker to their gold-plated Rolodex.
This was the bombshell dropped by Senator Orrin Hatch yesterday in Jack Lew’s confirmation hearing for one of the highest offices in the land – Secretary of the U.S. Treasury who will also head the body that makes critical decisions impacting Citigroup – the Financial Stability Oversight Council. (Lew held an executive position with Citigroup at the time of its collapse.)
Hatch made the disclosure as follows:
“First, could you explain what you did in 2008 for Citi that warranted payment to you of close to $1 million, most of which was a bonus. Second, what was it about your performance that merited your bonus from a company that was being propped up by taxpayer money and are there any records of your performance assessment – or are there any assessments of your performance. Third, your employment agreement included a clause stating that ‘your guaranteed incentive and retention award’ would not be paid upon exit from Citigroup but there was an exception that you would receive that compensation ‘as a result of your acceptance of a full time high level position with the United States Government or a regulatory body.’ Now is this exception consistent with President Obama’s efforts to ‘close the revolving door’ that carries special interest influence in and out of the government?”
Public shame has clearly lost its utility as a deterrent to repugnant behavior when it comes to Wall Street. Jack Lew proved the point yesterday. Without offering an apology or the return of the $940,000 bonus paid with taxpayer’s funds, the unflappable Lew calmly and politely answered the questions.
Unfortunately, his answers lacked both substance and credibility. One of Lew’s many jobs at the collapsing division of Citigroup he headed was overseeing the Human Resources Department. But on the topic of his own personal performance assessment, this is what he told the Senate chambers:
“I’m not familiar with records that were kept so I don’t have access to things that I don’t know about.” How can one not know about performance reviews when one oversees Human Resources?
As for his compensation, Lew said: “I do believe it was comparable to compensation for people in positions like mine in the industry.”
While it’s true that a lot of bailed out Wall Street firms paid employees obscene bonuses with taxpayer money, it’s unlikely that there are a lot of employees that were contractually bound to get those bonuses only upon moving through the revolving door to a top post in Washington. Lew brazenly ignored that question completely as he did with many other uncomfortable questions.
Below is the amazing exchange between Hatch and Lew:
Orrin Hatch: “American taxpayers provided over $45 billion to Citigroup in late 2008 and early 2009. And taxpayers backed hundreds of billions of dollars of Citigroup assets. Meanwhile, Mr. Lew, you reportedly received over $940,000 in compensation in early 2009, mostly comprised of discretionary compensation for work performed in 2008. And you received that a day before Citi received about $7 billion of taxpayer backing.
“On January 29, 2009, President Obama remarked on Wall Street bonuses at the time and said ‘that is the height of irresponsibility, it is shameful.’ He went on to say ‘there will be a time for them to get bonuses but now is not the time.’ Elsewhere he referred to Wall Street bonuses as ‘obscene.’
“Now, Mr. Lew, you wrote in a 2010 letter to Senator Grassley that ‘my compensation was in line with other management executives at the firm and in similarly complex operations.’ Now that seems a little bit to me like saying ‘Gee Dad, everyone was doing it.’ Unfortunately, that type of reasoning is exactly what I think led to this financial crisis.
“Now I have three questions related to your compensation. Let me just give them to you and you can respond to all three:
“First, could you explain what you did in 2008 for Citi that warranted payment to you of close to $1 million, most of which was a bonus. Second, what was it about your performance that merited your bonus from a company that was being propped up by taxpayer money and are there any records of your performance assessment – or are there any assessments of your performance. Third, your employment agreement included a clause stating that ‘your guaranteed incentive and retention award’ would not be paid upon exit from Citigroup but there was an exception that you would receive that compensation ‘as a result of your acceptance of a full time high level position with the United States Government or a regulatory body.’
“Now is this exception consistent with President Obama’s efforts to ‘close the revolving door’ that carries special interest influence in and out of the government.
“I think that’s a question that has to be asked and I’d appreciate hearing your response.”
Jack Lew: “Senator Hatch, the work that I did in 2008 was running, as I said earlier, the business of the business. In a year when the financial products of that part of the firm were not doing very well, I think I actually performed quite well in managing the business operations: shedding real estate, and parts of the operation that were not necessary; reducing the costs in a very considerable way. I’m not familiar with records that were kept so I don’t have access to things that I don’t know about.
“The experience that I had in the private sector has given me perspective that I think enhances my ability to perform, both in the role I’m nominated for and in the roles I’ve had. I’ve practiced law, I’ve worked at a university, I’ve worked at a financial institution. I think that if I hadn’t had a set of experiences like that I wouldn’t be sitting here today speaking with confidence that I could undertake the responsibility of Secretary of the Treasury.
“As far as my 2008 compensation goes, it was for my work in 2008. I do believe it was comparable to compensation for people in positions like mine in the industry. And it’s a broader discussion on compensation but I don’t think that there’s anything that hasn’t been fully transparent about what I did and what I earned.”
This was the bombshell dropped by Senator Orrin Hatch yesterday in Jack Lew’s confirmation hearing for one of the highest offices in the land – Secretary of the U.S. Treasury who will also head the body that makes critical decisions impacting Citigroup – the Financial Stability Oversight Council. (Lew held an executive position with Citigroup at the time of its collapse.)
Hatch made the disclosure as follows:
“First, could you explain what you did in 2008 for Citi that warranted payment to you of close to $1 million, most of which was a bonus. Second, what was it about your performance that merited your bonus from a company that was being propped up by taxpayer money and are there any records of your performance assessment – or are there any assessments of your performance. Third, your employment agreement included a clause stating that ‘your guaranteed incentive and retention award’ would not be paid upon exit from Citigroup but there was an exception that you would receive that compensation ‘as a result of your acceptance of a full time high level position with the United States Government or a regulatory body.’ Now is this exception consistent with President Obama’s efforts to ‘close the revolving door’ that carries special interest influence in and out of the government?”
Public shame has clearly lost its utility as a deterrent to repugnant behavior when it comes to Wall Street. Jack Lew proved the point yesterday. Without offering an apology or the return of the $940,000 bonus paid with taxpayer’s funds, the unflappable Lew calmly and politely answered the questions.
Unfortunately, his answers lacked both substance and credibility. One of Lew’s many jobs at the collapsing division of Citigroup he headed was overseeing the Human Resources Department. But on the topic of his own personal performance assessment, this is what he told the Senate chambers:
“I’m not familiar with records that were kept so I don’t have access to things that I don’t know about.” How can one not know about performance reviews when one oversees Human Resources?
As for his compensation, Lew said: “I do believe it was comparable to compensation for people in positions like mine in the industry.”
While it’s true that a lot of bailed out Wall Street firms paid employees obscene bonuses with taxpayer money, it’s unlikely that there are a lot of employees that were contractually bound to get those bonuses only upon moving through the revolving door to a top post in Washington. Lew brazenly ignored that question completely as he did with many other uncomfortable questions.
Below is the amazing exchange between Hatch and Lew:
Orrin Hatch: “American taxpayers provided over $45 billion to Citigroup in late 2008 and early 2009. And taxpayers backed hundreds of billions of dollars of Citigroup assets. Meanwhile, Mr. Lew, you reportedly received over $940,000 in compensation in early 2009, mostly comprised of discretionary compensation for work performed in 2008. And you received that a day before Citi received about $7 billion of taxpayer backing.
“On January 29, 2009, President Obama remarked on Wall Street bonuses at the time and said ‘that is the height of irresponsibility, it is shameful.’ He went on to say ‘there will be a time for them to get bonuses but now is not the time.’ Elsewhere he referred to Wall Street bonuses as ‘obscene.’
“Now, Mr. Lew, you wrote in a 2010 letter to Senator Grassley that ‘my compensation was in line with other management executives at the firm and in similarly complex operations.’ Now that seems a little bit to me like saying ‘Gee Dad, everyone was doing it.’ Unfortunately, that type of reasoning is exactly what I think led to this financial crisis.
“Now I have three questions related to your compensation. Let me just give them to you and you can respond to all three:
“First, could you explain what you did in 2008 for Citi that warranted payment to you of close to $1 million, most of which was a bonus. Second, what was it about your performance that merited your bonus from a company that was being propped up by taxpayer money and are there any records of your performance assessment – or are there any assessments of your performance. Third, your employment agreement included a clause stating that ‘your guaranteed incentive and retention award’ would not be paid upon exit from Citigroup but there was an exception that you would receive that compensation ‘as a result of your acceptance of a full time high level position with the United States Government or a regulatory body.’
“Now is this exception consistent with President Obama’s efforts to ‘close the revolving door’ that carries special interest influence in and out of the government.
“I think that’s a question that has to be asked and I’d appreciate hearing your response.”
Jack Lew: “Senator Hatch, the work that I did in 2008 was running, as I said earlier, the business of the business. In a year when the financial products of that part of the firm were not doing very well, I think I actually performed quite well in managing the business operations: shedding real estate, and parts of the operation that were not necessary; reducing the costs in a very considerable way. I’m not familiar with records that were kept so I don’t have access to things that I don’t know about.
“The experience that I had in the private sector has given me perspective that I think enhances my ability to perform, both in the role I’m nominated for and in the roles I’ve had. I’ve practiced law, I’ve worked at a university, I’ve worked at a financial institution. I think that if I hadn’t had a set of experiences like that I wouldn’t be sitting here today speaking with confidence that I could undertake the responsibility of Secretary of the Treasury.
“As far as my 2008 compensation goes, it was for my work in 2008. I do believe it was comparable to compensation for people in positions like mine in the industry. And it’s a broader discussion on compensation but I don’t think that there’s anything that hasn’t been fully transparent about what I did and what I earned.”
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