Tuesday, January 29, 2013

Road Block to Jack Lew's Confirmation

President Barack Obama needs 60 votes to get anything done in the Senate. Sen. Bernie Sanders is on record as saying he will not vote to confirm Jack Lew to be the next Treasury Secretary.

“We don't need a treasury secretary who thinks that Wall Street deregulation was not esponsible for the financial crisis. We need a treasury secretary who will work hard to break up too-big-to-fail financial institutions so that Wall Street cannot cause another massive financial crisis.

“We don’t need another treasury secretary who believes in ‘deficit neutral’ corporate tax reform. We need a treasury secretary willing to fight to make sure that large, profitable corporations pay their fair share in taxes to reduce the deficit and create jobs.

“We don't need a treasury secretary who will advise the president that he should negotiate with the Republicans to cut Social Security, Medicare, and Medicaid benefits. We need someone who is going to strengthen these programs.

Another big problem with Jack Lew is he doesn't know shit about economics. Just ask Jack Lew.

SENATOR SANDERS: We are in the midst of a horrendous recession right now; 16 percent of our people are unemployed or underemployed. Clearly the immediate precipitating factor was the collapse on Wall Street. Do you believe that the deregulation of Wall Street pushed by people like Alan Greenspan and Robert Rubin contributed significantly to the disaster we saw on Wall Street several years ago?

MR. LEW: Senator, when we discussed it, as I mentioned to you, I do not consider myself an expert in some of these aspects of the financial industry. My experience in the financial industry has been as a manager, not as an investment adviser.

My sense, as someone who has generally been familiar with these trends, is that the problems in the financial industry preceded deregulation. There was an increasing emphasis on highly abstract leveraged derivative products that got us to the point that in the period of time leading up to the financial crisis risks were taken. They were not fully embraced. They were not well understood.

I do not personally know the extent to which deregulation drove it, but I do not believe that deregulation was the proximate cause. I would defer to others who are more expert about the industry to try and parse it better than that.

America is in trouble if we have another crash. Whatever misgivings I have about Tim Geithner, he at least spent his adult life working on economic policy. Lew is a smart Guy who is not qualified to handle an economy going through an L shaped recovery.

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