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February 25, 2013

Jack Lew’s Citigroup Contract Included Incentive To Go Into Government

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There may not be anyone left in America that doesn’t know Wall Street sets the agenda in Washington, that the revolving door between finance capital and the so-called regulators of finance capital spins so fast the IAEA should demand inspections. And so we learn that President Obama’s Treasury Secretary nominee not only worked for the Citigroup hedge fund that shorted the housing market, invested in off-shore tax havens, and took a nice bonus from TARP money – he had a provision written into his employment contract that encouraged him to return to government service.

Lew’s employment agreement with Citigroup said his “guaranteed incentive and retention award” wouldn’t be paid if he quit his job, with limited exceptions. One was if he left Citigroup “as a result of your acceptance of a full-time high level position with the United States government or regulatory body.” This applied if he left “prior to the payment of any incentive and retention award for performance year 2008 or thereafter.” Such an award wasn’t guaranteed but would be consistent with the company’s practice, the document said…

When I asked Citigroup what its rationale was for including the government-service exception, a spokeswoman, Danielle Romero-Apsilos, said: “Citi routinely accommodates individuals who wish to leave the firm to pursue a position in government or nonprofit sector.” I pointed out that the contract terms I was asking about didn’t mention anything about a nonprofit, but she declined to elaborate on her statement.

The agreement makes no such mention of “non-profit” work. Is anyone surprised? How would Citigroup capitalize on that? No, Citigroup wants friends in high places, it wants puppets in power to give the bank further subsidies and favoritism. The Too Big To Fail bank seems to have secured itself another term of handouts with the Lew appointment, playing the old bribery game.

Citi has been an especially nice landing spot for big-shot Democrats. Former White House budget director Peter Orszag is now a Citigroup vice chairman and somehow finds time to write a column for Bloomberg News. And there was former Treasury Secretary Robert Rubin, who was paid more than $115 million while encouraging the risk-taking that would have destroyed Citi if not for a taxpayer rescue.

Mr. Rubin was Mr. Lew’s patron at the bank. Mr. Lew’s contract suggests that Citi knew from the start that Mr. Lew was headed back to a powerful job in Washington, and that it wanted him to remember the bank fondly when he left.

Paying someone a few million dollars is a good way to ensure you are thought of fondly. And making sure if they go back into government service – as they may have hinted they will do – that they receive all the bonuses you have just conjured up is so pleasant. It’s not bribery because…

In any case Citigroup will continue its long streak of having undue influence at Treasury, Geithner has already done his part, now it’s Lew’s turn.

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