Treasury nominee Lew grilled by senators
WASHINGTON — Senate Republicans pressed President Obama's choice to head the Treasury Department on Wednesday over an investment in a Cayman Islands fund as well as a bonus deal that came as his then-employer Citigroup was about to need a taxpayer bailout and just before he left the bank to return to the government.
Jacob Lew's confirmation hearing before the Senate Finance Committee lived up to expectations that the longtime Washington insider would face a frosty reception. During more than three hours of questions, Lew sidestepped some of the pointed questions about his brief tenure at banking giant Citigroup.
The questions weren't likely to derail his expected Senate confirmation.
At the hearing's start, committee Republicans pummeled Lew over his participation in an investment fund offered by Citigroup that was headquartered in the very Cayman Islands building that President Obama lambasted as a tax sham in 2009.
The ranking Republican, Sen. Orrin Hatch of Utah, grilled Lew on his time at Citigroup from 2006 to 2008 as a managing director and chief operating officer of a wealth-management unit and an alternative-investment unit at the heart of the near-meltdown of the U.S. financial system.
Hatch noted that the unit Lew managed later was accused of betting against the very financial product it sold, like other Wall Street banks.
The hearing grew notably tenser when Sen. Charles Grassley, R-Iowa, asked Lew whether it was morally acceptable for him to have received a nearly $1 million bonus from Citi a day before the bank was forced to take the huge taxpayer bailout. Lew answered that he was “compensated in a manner consistent with other people” in the financial sector.
When Grassley asked whether it was the right decision in retrospect, Lew replied, “I'll leave it for others to judge.”
Hatch returned to the issue in a second round of questioning, getting Lew to acknowledge that the bonus was on top of a $350,000 base salary at Citi and that it would have been clawed back for most employees who departed the following year. Lew's contract had a clause that allowed him to collect the large bonus if he left to take a top-level government job, which he did.