A 'fat cat' in the Treasury?
A look at Jack Lew's time at Citibank
- Duration 5:34
- Date Feb 2, 2013
A look at Jack Lew's time at Citibank
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People will not excuse or tolerate such arrogance and greed.
The road to recovery demand so we all act responsibly -- main street.
To Wall Street he had some people on Wall Street who took these unbelievable risks.
What other people's money.
It's also imperative that those in Wall Street boardrooms and on trading floors be held accountable for the decisions that they make.
President Obama criticizing those he famously called fat cat bankers on Wall Street the very same people he blamed.
For the financial crisis now it appears one of them.
Will likely be our next Treasury Secretary the president's nominee for that post is none other than Jack -- The current White House chief of staff and former executive at Citi bank perhaps the most troubled.
Of the too big to fail banks and recipient of a 45 billion dollar tax Payer bail out Wall Street Journal.
Assistant editorial page editor James Freeman.
Has been looking into mr.
and -- lose time at Citibank so first let's put this in context for viewers Citibank was a particular.
Particularly big player in the financial crisis.
Yeah that's right I really one of the banks at the center of the mortgage meltdown not written in 2007.
City was one of the first to have my difficulties when they had been.
Managing these off balance sheet.
Vehicles to invest in mortgages those started to go south they ended up at the end of that year having to take them in the house again and stand behind them which put a lot of financial pressure on the on the firm but this is I think is -- to be a test this nomination of whether Americans are still outraged about the bailouts all right so.
And and a 45 billion dollar tax Payer capital injection that's very well as a guarantee of federal guarantee more than 300 billion dollars in bad.
Loans there's no question your mind that Citibank would have failed without federal intervention.
The question I think one of the question in my mind is whether they should've let it fail and we're at the time it was a selling Sheila -- -- FDIC chair at the time did as well but of course there's posed by she was opposed by other people.
In the administration so let's get to check -- And his role like Citibank what was his job.
Well he the most maybe the most interesting one is in early oh wait he takes the helmet what's called Citigroup alternative investments that.
-- ran hedge funds ran some of these exotic.
Off balance sheet vehicles had just taken them in house when he came on board if it was basically a unit that if it wasn't the inspiration for the Volcker Rule that wanted to stop by.
Prefer -- -- -- gambling with taxpayers' money -- it easily could have been it was a disaster the losses were enormous.
Amount of but the defensive him would be lucky came on that in 2008.
All the bad decisions have already been made so when I mean you can't blame Jack -- for things that other bankers at Citigroup did well OK but he's now setting himself up he is he -- now the -- is that fair though.
I mean is that a fair point in his -- it's fair that oh certainly a lot of mistakes where he made a lot of the bad bets wording made whether whether they could have.
Made some different decisions starting in early oh wait you know possibly but but I think the key issue for him is his name his job as secretary of the treasury would be now after Dodd-Frank the 2010 law.
Would be basically being in charge of -- -- risks in the financial marketplace he is running something all the financial stability oversight council if he becomes Treasury Secretary.
And this is -- being certain companies systemically important identifying risks of the financial system.
Did he was he able to identify any risks that Citigroup -- ECB expert coming and why would -- find something if unit if it was already headed for the right now.
And so what what is the answer it was he clueless he had no idea the risks they were running or is he gonna say no I saw the risks.
And if so.
Why did he say anything -- I don't remember him being a big whistle blower in early 2008 I don't think anyone else does either so.
I think there are difficult questions for him and and of course this was not his first job at city -- In 06 when he first started there he ran out something you read their private wealth he was -- chief operating officer of their wealth management division.
And the big questions there to do because that they've been sued for selling -- went her alleged to be have been bad assets that they knew were bad and that say and that's a lawsuit that is going through the courts right now what they've paid 85 million in settlements on an undisclosed number of other private settlements that are going to be paying more and -- question is what did he think.
Were they mistreating customers were they pushing people into risky.
Mortgage and municipal bond investments without properly -- well how big an issue -- is going to be in his confirmation.
Well I think at this is a question.
I think it ought to be a big issue because he extensively wasn't running overseeing their legal affairs which really relates directly to disclosure you know -- argue we've argued though that you can't hold bankers' -- and responsible by themselves for this that the federal government had a big role to play it right what what we said look there's greed on Wall Street there was -- in 2008 -- always has been that's a part of this story it's not the whole story there are a lot of regulatory mistakes that got us here.
But but to say -- that that someone should be prosecuted is different than saying.
He ought to be the secretary of the treasury he ought to have the most important job in international finance and -- -- -- -- his his experience and expertise ought to be challenged.
And I think it -- -- obviously.
The senate is very focused on Chuck -- once they move by the Jacqueline could be some questions okay James thanks so much still ahead.