Lew, OMB Director Nominee, Passes First Committee Vote, Gets Hit Unfairly By the Huffington Post
by Sam Rosen-Amy, 9/21/2010
Earlier today, the Senate Homeland Security and Government Affairs Committee unanimously approved Jack Lew, Obama's nominee for director of the Office of Management and Budget (OMB). Lew must now wait for the Senate Budget Committee, which has yet to schedule a vote on the nomination, before his nomination can proceed to a floor vote.
The vote came on the same day as the Huffington Post published a bit of a hit piece against Lew. The article highlights an answer he gave at one of last week's hearings (and in case you missed it, you can read our review of the committees' two nomination hearings here), an answer which seems to show Lew defending financial deregulation. Sen. Bernie Sanders (I-VT) asked Lew if he thought the deregulation of Wall Street in the 1990s helped bring about the 2008 financial collapse. Here's the Huffington Post paragraph with Lew's response to the question:
Lew, a former OMB chief for President Bill Clinton, told the panel that "the problems in the financial industry preceded deregulation," and after discussing those issues, added that he didn't "personally know the extent to which deregulation drove it, but I don't believe that deregulation was the proximate cause."
The Huffington Post piece tries to make this seems like a big deal, comparing Lew's statement to remarks by other Democrats, most significantly President Obama, who repeatedly blamed deregulation on the 2008 campaign trail. Sanders himself didn't have a response to Lew's answer, but Sen. Kent Conrad, the chair of the Budget Committee, which held the hearing in question, pushed back, saying that deregulation was a significant cause of the collapse.
In reality, though, Lew's statement probably isn't that significant. In the first place, I'm not sure what it's supposed to show. The Huffington Post article makes it seem like Lew is a shill for Wall Street, playing up the fact that Lew was an executive at Citigroup from 2006 through 2009. But his full answer somewhat betrays that notion. Lew actually said that he thought the collapse was mostly driven by Wall Street's unsafe leveraging practices, combined with its reliance on complex, little-understood financial products. Neither problem puts Wall Street in a good light, and both problems could be fixed by, wait for it, more regulation. A true defense of Wall Street would probably involve blaming irresponsible homeowners, whose recklessness brought down the lifeblood of America, investment bankers.
In fact, at no point during either hearing did Lew ever say that regulations were bad or that deregulation was good, or even that deregulation had nothing to do with the financial crisis. Instead, Lew merely said that he didn't believe deregulation was the proximate cause of the collapse, and considering the complexity of the nation's financial system, I think reasonable people can argue for days, months, years over what was the "proximate" cause of the crisis. Which makes the article's headline, "Jacob Lew, Obama Nominee And Former Citigroup Executive, Doesn't Believe Deregulation Led To Financial Crisis," factually inaccurate. He didn't say that. It should read, "Jacob Lew, Obama Nominee and Former Citigroup Executive, Doesn't Believe Deregulation Was the Proximate Cause of the Financial Crisis." I admit my title is less sexy, but hey, who ever said the truth was sexy?
Image by Flickr user The White House used under a Creative Commons license.