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Public Statements

Executive Session

Floor Speech

By:
Date:
Location: Washington, DC

BREAK IN TRANSCRIPT

Mr. HATCH. Madam President, I rise today to speak on the nomination of Mr. Jacob Lew to be Secretary of the Treasury. This is an important nomination. With our still-struggling economy and our growing fiscal problems, the next Treasury Secretary is going to have a lot on his plate. That being the case, we have worked on the Finance Committee to vet Mr. Lew, to examine his background credentials, and provide a complete picture of his qualifications for this post.

I wish to offer a few comments about our review process, what we have learned, and the reservations about the nominee that remain with me now that this process is complete.

Let me begin by saying a few words about the process itself. For well over a decade, the Finance Committee has followed a specified procedure when considering executive branch nominations. Sadly, that procedure was not followed in the case of Mr. Lew.

After publicly announcing Mr. Lew's nomination, the White House waited 16 days before submitting any of his paperwork. That was an atypically long delay and, in addition to slowing the vetting process, it ensured Mr. Lew would not be confirmed in time to prevent a vacancy at the Treasury Department. A nomination hearing was scheduled to be held only 12 calendar days after the paperwork was received, even though the nominee had not answered all of the questions submitted to him.

That is simply not the way our process has worked in the past, and the undue haste seriously hampered our ability to thoroughly examine Mr. Lew's background and his qualifications.

Once the hearing was completed, as is customary, members of the Finance Committee submitted written questions for the record. Since that time, anonymous administration sources have decried the very notion that members of the Finance Committee had the audacity to ask hundreds of questions of Mr. Lew as part of their constitutional advice-and-consent responsibilities.

Let me be clear. I will vigorously defend the right of any Member of Congress, regardless of party, to ask questions of nominees until they are satisfied they have obtained all the relevant information, and especially in the case of the Treasury Secretary, which is one of the most important assignments in our government today and always has been. If we go all the way back to the time of Alexander Hamilton, we know what he meant to this country by establishing the financial system of this country as the Secretary of the Treasury.

In the case of Mr. Lew, there were several reasons why he ended up being asked numerous questions. First, the nomination process, as I mentioned, was abbreviated due to the haste of the administration. That meant the questions which through the course of ordinary business could have been resolved through discussion had to be asked in written form.

Second, due to the general unresponsiveness of the administration to requests for information over the last few years, there is a pent-up demand for information and any semblance of responsiveness from the executive branch.

Third, Mr. Lew's responses to many questions have been opaque. He has dissembled often. That being the case, it seemed the only way to get answers to straightforward questions was to continue to ask for clarifications in an attempt to break through the wall of obfuscation Mr. Lew had constructed. I have no doubt he could have answered most of these questions in much less numerical form than he did.

Even after extensive questioning, there remain several serious concerns with Mr. Lew's background, his lack of responsiveness, and the evasive manner in which he answered many questions which were posed to him. Unfortunately, many of these concerns will go unaddressed, as Mr. Lew seems to be following the standard stonewalling strategy used by so many officials in the Obama administration.

For years now administration officials have gone out of their way to be unresponsive to information requests from Congress, and that is simply unacceptable. Far too often, legitimate inquiries submitted to the executive branch go unanswered for months at a time. Requested deadlines are discarded. Indeed, in some instances information requests are ignored entirely. When responses are given, substantive and direct questions are given meaningless political answers. This has gone on far too long and it needs to stop.

Mr. Lew, for his part, has promised me that he would be responsive to inquiries submitted by Members of Congress. While his answers to questions throughout the confirmation process give me reason to doubt his commitment to being responsive, I intend to hold him to that process moving forward. I believe he is an honorable man and I believe he will try to do this.

I wish to take a few minutes to address some additional substantive concerns I have about Mr. Lew, his background, and his qualifications for this post.

Let's consider Mr. Lew's Citigroup years. At Citigroup Mr. Lew was managing director and chief operating officer of two units, Global Wealth Management and Citigroup Alternative Investments. Mr. Lew claimed repeatedly while managing, directing, and operating those Citigroup units he essentially undertook back-room operations such as firing people, moving office space, integrating computer systems, eliminating redundancies, and things of that nature.

Mr. Lew has also repeatedly stated he did not design financial products at Citigroup, make portfolio decisions or, in his words, opine on investments. In fact, when asked about investment products which were marketed and sold by the Citigroup units he oversaw, he could not remember any specific details.

It needs to be noted some of those investments ended up generating enormous losses for investors. For example, funds called MAT, ASTA and Falcon, which were marketed, sold, and managed by the Citigroup units Mr. Lew oversaw ended up being the subject of lawsuits and successful arbitration claims, where success was based on investors convincing arbitrators the funds were misrepresented and mismanaged by Citigroup. The losses to investors from these funds numbered in the billions. In fact, some financial advisers at Citigroup protested internally the misrepresented securities caused enormous damage to Citi's reputation.

One of Mr. Lew's bosses at Citigroup argued on behalf of the investors and against Citi's stock price and bottom line by saying the investors had been wronged and should be made whole. She was subsequently fired.

From all information I have seen, Mr. Lew did not similarly stand up for wronged investors while on Wall Street. Perhaps it is because he did not know what was going on in the firm or at his firm. We don't really know. Despite the fact the funds in question led to probably the largest losses in the history of the units Mr. Lew oversaw, Mr. Lew claims that he cannot recall anything about them. If you ask anyone familiar with the funds and controversies surrounding them, they will say you would need to have been away on a desert island to not have heard about the problems that these funds faced. Yet, once again, Mr. Lew continues to deny having any memory of them.

At the same time Mr. Lew claims while he was at Citigroup he learned a lot about financial markets and the dangers of risk. Indeed, he cited his experience at Citi as a qualification to be Treasury Secretary, even though he appears to have little recollection about any of the actual details of his work at that time, or at least his financial details.

The question remains: How could Mr. Lew operate, manage, direct units and also be in charge of staffing decisions without having any knowledge of the financial products that were marketed, sold, and managed by these very same units? It remains unclear.

Had there been a traditional vetting process, perhaps we could have gotten to the bottom of this mystery. As it is we are only left to speculate, as you can see.

In addition to Mr. Lew's lack of knowledge about some of the high-profile failures of the units he was overseeing, there are legitimate concerns relating to his compensation while at Citigroup.

On January 29, 2009, President Obama made remarks about Wall Street, saying that institutions were ``teetering on collapse and they are asking for taxpayers to help sustain them.''

The President also remarked on Wall Street bonuses at the time, saying:

That is the height of irresponsibility. It is shameful.

About Wall Street executives, he said:

There will be a time for them to get bonuses. ..... Now is not the time.

Elsewhere he referred to Wall Street bonuses as ``obscene.''

In late 2008 and early 2009, American taxpayers provided over $45 billion--that is with a ``B''--in direct assistance to Citigroup and backed hundreds of billions of Citigroup assets. At the same time, in January 2009, Mr. Lew reportedly received over $940,000 in compensation, most of which was a bonus for work performed in 2008 when Citi was on the verge of collapse. The bonus came a day before Citi received yet another infusion of billions of dollars of taxpayer money to prop up the company. That was the day before Citigroup received the infusion of billions of dollars that he got that bonus.

There is, at the very least, a contradiction between the President's rhetoric with regard to Wall Street and his decision to appoint Mr. Lew to be Treasury Secretary. However, rather than acknowledging any such contradiction, Mr. Lew has simply repeatedly told us all that his compensation was in line with what other similarly situated executives received.

As I have said before, that justification seems a bit like saying: Gee, Dad, everyone was doing it. Unfortunately, that type of reasoning is exactly what led to the financial crisis.

In addition, an employment agreement Mr. Lew had with Citigroup had a clause stating that his guaranteed incentive and retention award would not be paid upon his exit from Citigroup. However, there was an exception indicating that he would receive that compensation ``as a result of his acceptance of a full-time high-level position with the United States government or regulatory body.'' It remains unclear how this exception is consistent with President Obama's efforts to, in his own words, ``close the revolving door that carries special interest influence in and out of the government.''

Of course, as has been widely reported during the course of our vetting process, we found that while he was at Citigroup, Mr. Lew actively chose to invest in a hedge fund that served as a venture capital-like fund that invested primarily overseas. The fund Mr. Lew invested in was based in the Cayman Islands at the infamous Ugland House that so many Democrats have viciously decried as a tax haven. In fact, in 2008, while campaigning for President, then-Senator Obama said that the Ugland House was ``either the biggest building in the world or the biggest tax scam in the world.''

Throughout the 2012 campaign, President Obama repeatedly attacked Mitt Romney for having funds invested in the Caymans. If I recall it correctly, Mitt Romney's funds were in a trust he had no control over. In making such investments, Governor Romney was, in the words of the Obama campaign, betting against America. One can only wonder whether while serving as White House Chief of Staff for President Obama, Mr. Lew supported this line of attack.

Once again, Mr. Lew has repeatedly refused to acknowledge any contradiction or hypocrisy between the President's rhetoric and his own actions, defending himself only by saying that this investment was done legally and transparently. I think the same probably could have been said about Governor Romney's investments as well, which were in a blind trust.

The contrast between the President's past vilification of certain financial activities and individuals and Mr. Lew's very participation in those activities is striking. Yet we are now essentially being told that people should do as administration officials say, not as they did.

In addition to concerns about Mr. Lew's record, I have serious disagreements with him when it comes to policy. For example, in response to written questions, Mr. Lew backtracked from the administration's previous positions on the need for entitlement reform. At one time, commonsense reforms, such as raising the Medicare eligibility age, were on the table for the Obama administration. Such ideas have apparently been discarded by the President, and Mr. Lew has made it clear he shares that discarding position.

As a Social Security and Medicare trustee, the Treasury Secretary cannot simply wish away the problems with our entitlement programs. If he is confirmed, and I believe he will be, Mr. Lew will be tasked with addressing these problems. Sadly, it appears he will be just another voice in the Obama administration against taking meaningful action on entitlements and in favor of higher taxes--a repetitive theme at least all of us Republicans are getting very sick of. The use of the word ``balance''--my gosh, what a perversion.

I think I have made my concerns about the Lew nomination very soundly and very clear. That being said, I have always believed that whoever is President, including our current President, whom I like--any President, regardless of party--is owed a certain degree of deference when choosing people to work in his administration. Therefore, though I personally would have chosen a different person for this position, I intend to vote in favor of Mr. Lew's confirmation.

Obviously, my vote in favor of Mr. Lew comes with no small amount of reservation, and I don't fault any of my colleagues for choosing to vote against him. Indeed, I share many of their same concerns. As I mentioned earlier, Mr. Lew has promised to be responsive to Members of Congress and their requests for information. I expect him to be responsive to the Senate Finance Committee and to the Republicans on the Senate Finance Committee as well as the Democrats.

He has also promised to work in a bipartisan manner to address the problems facing our Nation. I believe Mr. Lew can, and hopefully will, do that. My hope is he does not view these promises as merely boxes checked off on the way to confirmation.

If confirmed, Mr. Lew will be the Secretary of the Treasury of the United States and not the Secretary of the ``Obama treasury,'' although indirectly he will be. His first job is to the United States of America, and he might have to argue strenuously against some of the White House positions on financial matters and Treasury matters. He has to work for all the American people and not simply one political party.

If he does those things, I will be willing to work with him all the way, and I have to say I expect him to. I expect him to be the honorable man he has told me he is and that I believe him to be; otherwise, I couldn't vote for him, especially under these circumstances.

However, I have to say, if he fails to live up to the promises he has made, if he becomes just another Obama acolyte using his high-powered position in the administration to attack political opponents, I will personally be sorely disappointed and hurt by it. If that ends up being the case, he will have no greater adversary in the Senate. I don't want to be an adversary. I want to help him turn this country around. I want to be an asset to him up here, and I want him to be an asset to our country down there--and up here when he comes.

Given my many reservations and concerns about Mr. Lew, I hope he and the President take note that I am bending over backward to display deference to the President's choice of Treasury Secretary. This gesture, I hope, will not be in vain.

I can contrast Mr. Lew's positions when he worked in the Clinton administration. Many Republicans felt he was a straight-up guy, and I was one of them. I have suggested to him that we would like to see that type of person manage our Treasury rather than the partisan person we have seen in the last couple years. True, the position he had at the White House was a partisan position, and I make a great allowance for that.

I personally like this man. I personally believe he is a good man. But I also believe sometimes we can get so caught up in politics that we don't do what we know we should do. I am hoping he will. I believe he will. If he does, he is going to have a lot of support from me.

I wish to thank my chairman of the committee. He has always been very honorable and very straightforward. I understand a lot of the pressures he has had throughout this process, having been chairman a number of times myself in the Senate and experienced that stress. I want everybody to know this is an important position, this is an important human being, and I hope he lives up to all he has the capacity to live up to.

I yield the floor.

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