Matt Taibbi & Bill Black: Obama's New Treasury Secretary a 'Failure of Epic Proportions'
Continued from previous page
He goes from there to Wall Street, where he was a complete failure. You noted that part of what Citicorp did was bet that housing would fall. That was actually one of their winning bets. But they actually made a bunch of losing bets, as well. And the unit that he was heading would have not been permissible but for the deregulation of getting rid of Glass-Steagall under President Clinton. And you saw, as an example of Citicorp, why we shouldn’t be doing this. Why would we create a federal subsidy where all of us, through the U.S. government, are on the hook for Citicorp’s gambling on financial derivatives for its own account, you know, running a casino operation? That makes absolutely no public policy sense.
Then he comes into the Obama administration, and he was disastrously wrong. He tried very hard to impose austerity on the United States back in 2011, which is—he wanted, you know, the European strategy, which has pushed the eurozone back into recession, and Spain, Greece and Italy into Great Depression levels of unemployment.
And this is the guy, after all of these failures, who also is intellectually dishonest. He will not own up to his role and deregulation’s role and de-supervision’s role in producing this crisis—and not just this crisis, but the Enron-era crisis and the savings-and-loan debacle.
JUAN GONZÁLEZ: Well, Matt Taibbi, your reaction to the nomination of Jack Lew by President Obama?
MATT TAIBBI: I think there’s a couple things. I agree with everything that Professor Black said. I think it’s—the symbolism of this choice is, I think, very important for people, just the mere fact of picking somebody from Citigroup and from that same Bob Rubin nexus that Timothy Geithner came from. And, you know, you heard Barack Obama, as he’s introducing Jack Lew, praising Tim Geithner as somebody who’s going to go down in history as one of the great treasury secretaries of all time. I think what this tells everybody is that Jack Lew is going to represent absolute continuity with the previous treasury secretary, who had a very specific agenda when it came to Wall Street. And I think we’re just going to expect more of the same, more of the same really being overt and covert support of these too-big-to-fail institutions that Lew worked for, Citigroup being the worst and most disastrous example of that kind of company. So I think it’s—the choice of somebody from that particular firm is fraught with pretty upsetting symbolism for the country, I think.
AMY GOODMAN: I want to go back to 2010, when Jack Lew appeared before the Senate Budget Committee for a confirmation hearing after he was nominated by President Obama to head the Office of Management and Budget. During the hearing, he was questioned by Senator Bernie Sanders.
SEN. BERNIE SANDERS: Do you believe that the deregulation of Wall Street, pushed by people like Alan Greenspan, Robert Rubin, contributed significantly to the disaster we saw on Wall Street several years ago?
JACK LEW: Senator, I—as when we discussed, I mentioned to you, I don’t consider myself an expert in some of these aspects of the financial industry. My experience in the financial industry has been as a manager, not as an investment adviser. My sense is, as someone who has, you know, generally been familiar with these trends, is that the problems in the financial industry preceded deregulation. There was an increasing emphasis on highly abstract leveraged derivative products that got us to the point that, in the period of time leading up to the financial crisis, risks were taken. They weren’t fully embraced. They weren’t well understood. I don’t personally know the extent to which deregulation drove it, but I don’t believe that deregulation was the, you know, proximate cause. I would defer to others who are more expert about the industry to try and parse it better than that.