Courtesy of Pam Martens.
Jacob (Jack) Lew
Jacob (Jack) Lew, currently serving as President Obama’s Chief of Staff, is slated to be nominated by the President this afternoon for one of the most critical posts in the country – Secretary of the U.S. Treasury. The Treasury department played a central role in the 2008 to 2010 bailout of Wall Street and it would play an equally central role should there be another financial collapse.
Having a deep background in understanding the trail of deregulation that led to tens of trillions of dollars in highly leveraged, off balance sheet derivatives trading over the counter beyond the view of regulators should be the number one priority for a Treasury Secretary. Understanding how those derivatives ended up threatening insured deposit banks because of the repeal of the Glass-Steagall Act should be requisite knowledge. Without that understanding, the post will be held by a man who is putty in the hands of Wall Street’s push to maintain the status quo. The status quo, inevitably, will lead directly to the next crash at a time when the U.S. is so deeply in debt it would have few options in providing either bailout funds or economic stimulus.
The importance of the role to be played by the next U.S. Treasury Secretary cannot be overstated. There is no question that Lew is more than qualified on issues of budgets, deficits, and taxes. But pose questions to him about structured investment vehicles, collateralized debt obligations, Libor rate rigging, synthetic derivatives, swaps, mortgage backed securities, and you are likely to see a blank face. And yet, all of these issues create the finely interwoven fabric of a deregulated zombie financial system that could careen toward collapse at any time.
Equally important, Lew lacks the understanding that the deregulation of Wall Street ushered in a predatory trading and lending system that quickly evolved into an institutionalized wealth transfer mechanism, creating the greatest wealth inequality in the U.S. in the last century.
Prior to becoming President Obama’s Chief of Staff, Lew served as Director of the Office of Management and Budget, the same position he held in the Clinton Administration. On September 16, 2010, the Senate Budget Committee held a confirmation hearing on Lew’s nomination to the post of budget director. The exchange between Lew and Senator Bernie Sanders shows a man ill-equipped to negotiate the shark-infested waters of Wall Street.
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