Paul Krugman on new Treasury director Jack Lew:
Krugman took questions from commenters here.
In the meantime, the president of Public Citizen lists seven reasons to be unhappy about Jack Lew’s nomination:
1. The Obama administration demanded no meaningful quid pro quo from the Wall Street giants it bailed out in the wake of the 2008 financial collapse.
2. The Obama administration has chosen not to prosecute criminally any of the leading Wall Street firms in connection with the rampant abuses that led to the 2008 financial collapse and the Great Recession.
3. The Obama administration has pursued no meaningful action to moderate, let alone end, the foreclosure crisis.
4. The Obama administration has not supported – and at crucial moments has opposed – measures to break up the goliath Wall Street banks and firms.
5. The Obama administration has opposed a financial speculation tax on Wall Street.
6. Found to have facilitated money laundering by drug traffickers, HSBC was given the opportunity to avoid pleading guilty to a crime. Instead– and emblematically–HSBC was given the kid-glove treatment of a deferred prosecution agreement.
7. Regarding the above, the last thing the Obama administration needs is to continue having Wall Street insiders and fellow travelers shaping its economic policy. Unfortunately, Lew has deep Wall Street connections. Before joining the administration he worked for both Citi Global Wealth Management and Citi Alternative Investments.
Lew’s Citi stint was relatively short – though it involved management positions at a unit involved in aggressive, speculative betting - but there’s good reason to worry that it has helped shape his views, or, in any case, that he reflects a Wall Street perspective on key economic and policy issues. At a 2010 confirmation hearing, he told the U.S. Senate Budget Committee, that he did not believe deregulation was a proximate cause of the financial crisis.
It is imperative that the administration finally break from Wall Street on economic and regulatory policy. Jacob Lew’s nomination suggests we’re in for more of the same.