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February 13, 2013

At Confirmation Hearing Lew Faces Questions Over Citigroup Bonuses, Tax Shelters

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Treasury Secretary nominee Jack Lew went before the Senate Finance Committee today for his confirmation hearing. The hearing was mostly deferential with Lew finding considerable agreement with the Republicans on the committee, particularly on trade and corporate tax policy, but Lew did face questions over his bonuses at Citigroup and tax shelters in the Cayman Islands.

At issue was Lew earning $2.65 million at Citigroup in 2007 and 2008 much of it payed out in bonuses while Citigroup was under TARP. Lew was given the job due to the recommendation of former Treasury Secretary Robert Rubin who¬† while in government lead the effort to legalize Citibank’s merger with Travelers Group and later would make over $100 million as chairman of the new financial entity – Citigroup.

Lew also had to answer for his investment in a Citigroup venture capital fund registered in the Cayman Islands at a facility that President Obama criticized in his 2012 reelection campaign.

The CVCI Growth Partnership II fund’s registered office is listed as the Ugland House, according to a securities filing, a Cayman Island office building with thousands of companies registered that has become a symbol of offshore tax evasion. Ugland House was criticized by Obama when he was campaigning for president.

Lew weathered the questions on bonuses and tax shelters without incident only stumbling when talking to Senator Sherrod Brown. When asked by Brown about Glass-Steagall and Too Big To Fail, Lew claimed Glass-Steagall was “anachronistic” and that the Dodd-Frank legislation had successfully dealt with the Too Big To Fail issue. Senator Brown was unconvinced.

Lew made it clear he supported additional cuts in government spending and would be a strong advocate for Corporate America within the executive branch on tax and trade policy.


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