Obama Turns To Citigroup Chief Financial Officer To Be Nominated As Treasury Secretary

 Bloomberg’s Hans Nichols broke the news on Wednesday that President Obama will nominate Jack Lew to be the next Secretary of the Treasury, replacing Timothy F. Geithner. 

Lew’s nomination as Treasury secretary is subject to confirmation by the Senate. While his relations with Republicans have been at times strained, he’s successfully been through the Senate process before.

Jack Lews shift to the Obama administration from Citigroup has raised questions about the potential for conflicts of interest, and about whether Mr. Obama’s own staff members benefited from the kinds of Wall Street excesses he has criticized.

On January 9, 2012, President Obama announced that Lew would replace William M. Daley as White House Chief of Staff. Lew’s nomination was followed with criticism after renewed reports that he received over $900,000 in bonuses while working as COO of Citigroup, following the company’s $45 billion in TARP rescue funds, after it saw $27.7 billion in loses, a 90% depletion in value.

Citigroup paid Mr. Lew, 53, at least $1.1 million in salary and bonus in 2009, according to a financial disclosure form filed in January of 2009.  

During his tenure as Chief of Staff, Lew has been seen as a supporter and top negotiator for a “grand bargain” deal between President Obama and House Speaker John Boehner, to avoid “Fiscal cliff” sequester cuts and tax increases.

The next Treasury secretary will play a leading role in working with Congress to raise the government’s $16.4 trillion debt ceiling. The U.S. reached the statutory limit on Dec. 31, and the Treasury Department began using extraordinary measures to finance the government. It will exhaust that avenue as early as mid-February, the Congressional Budget Office says.

Can Lew get confirmed before the next budgetary crisis arrives? An article in Politico suggests his nomination may run into trouble: “Lew has irked powerful Republicans like Senate Minority Leader Mitch McConnell during tense negotiations to raise the debt ceiling as well as the final round of talks to avert the fiscal cliff at the end of 2012,” Politico said.

 But I feel chances are good that Lew will be nominated, the upcoming hostage negotiations over raising the debt ceiling—Republicans say they’ll refuse without deep spending cuts in return—should make Lew’s hasty confirmation all the more likely. Republicans can’t very well threaten to bring down the global economy, while at the same time leaving the country unprepared by refusing to install the president’s next Treasury secretary.

Obama nominating Lew for Treasury Secretary, is like putting the Fox in charge of the Hen House!