It is an unfortunate fact that Barack Obama will not go down in history as another Franklin Roosevelt, though the times and circumstances conspired to give him the opportunity, had he grabbed for it. We forget that he started his presidency with commanding majorities in both houses; but failed to use them to take decisive steps to deal with the current depression.
The single reason for his failure is the fact that, for whatever reason, he is in thrall to Wall Street. Maybe it’s a lack of confidence, maybe he really believes their bullshit, but he’s been on their side in every major decision he’s made. Exhibit 1 has always been little Timmy Geithner, who never met a Wall Street exec he didn’t like, and never met a consumer friendly regulation or regulator that he did. We knew there was something amiss when he breezed through his confirmation hearings even though he had tax problems that would have left a nomination of an Elizabeth Warren DOA.
It may be that reflexive Obama hating may now do us all some good. Chuck Grassley, a relative moderate, is going after Jack Lew, no doubt much to the consternation of Wall Street. Grassley probably figures he can gain some tea party cred by opposing an Obama nomination (or at least making trouble), and in this case he’s doing the right thing.
On Wednesday, Senator Chuck Grassley who sits on the Senate Finance Committee which held the confirmation hearing of Lew, released Lew’s answers to the written followup questions the Senator had submitted, saying Lew had been evasive. One question pertained to a whopping $1.4 million loan given to Lew by New York University.
“My understanding,” said Grassley, “is that according to Forms 990 filed by New York University from 2002 to 2005 you were provided a sizable loan as part of your employment. The amounts reported include $1.4 million in 2002, $748,000 in 2003, $698,000 in 2004, and $673,000 in 2005.”
Grassley asked Lew to “describe the terms of the loan including interest rate, minimum payment requirements, term, and the purpose of the loan…how a reasonable rate of interest was determined… how the loan was repaid and whether any portion of it was forgiven…were any terms of the loan altered at any point? If so, please describe which terms were altered and when. Please provide the promissory note and any other documents related to the loan.”
Lew responded as follows:
“In short, the University provided a mortgage forgiven in equal installments over five years, and an additional shared appreciation mortgage. I do not recall the interest rate or other specific terms. According to my employment agreement, the interest on both loans was equal to the rate earned by the bond portion of NYU’s endowment in the quarter preceding the signing of the mortgage. NYU provided an annual payment equal to the interest paid on the first mortgage described above. NYU reported income related to housing assistance on my Forms W-2, and I paid all taxes that were due.”
It’s difficult to imagine that a future Treasury Secretary of the United States would not recall the interest rate he paid on a staggering $1.4 loan; especially a numbers cruncher like Lew. It’s even more astounding that the President’s nominee for Treasury Secretary does not know mortgages on residential real estate are publicly filed documents, accessible with a few clicks on the internet. If he wanted to be responsive to a Senate committee, he could have been quite easily.
Those internet records show that when Grassley asked Lew “were any terms of the loan altered at any point,” Lew failed to provide a serious, material fact of the transaction; namely, Citigroup took over one of the NYU mortgage loans with a balance of $147,805 on January 15, 2004 while Lew was still with NYU and Citigroup was a preferred lender to NYU students. Citigroup extended an additional $352,195 loan to Lew in that transaction for a total of $500,000 at a rate of 5.5 percent on a 15-year mortgage on a heavily indebted piece of property.
(via Wall Street on Parade)
Read the entire article. The NYU stuff hits rather close to home for me. While they were making Lew’s comfortable life more comfortable the folks running NYU were paying my grad student son a less than living wage to teach classes and depriving him of his union to boot.
More on Lew here.
I’m presently reading an interesting book called Assholes, a theory by Aaron James, a philosophy professor. He defines an asshole as follows:
“Our theory is simply this: a person counts as an asshole when, and only when, he systematically allows himself to enjoy special advantages in interpersonal relations out of an entrenched sense of entitlement that immunizes him against the complaints of other people. (Because assholes are by and large men, we use the masculine pronoun “he” advisedly. We will suggest that women can be assholes as well. For the time being, think of Ann Coulter. We consider the question of gender in detail in chapter 4.) Our theory thus has three main parts. In interpersonal or cooperative relations, the asshole:
“(1) allows himself to enjoy special advantages and does so systematically;
(2) does this out of an entrenched sense of entitlement; and
3) is immunized by his sense of entitlement against the complaints of other people.”
This appears to describe just about everyone on Wall Street (and James argues that Wall Street is basically an asshole greenhouse), and it certainly describes Jack Lew. These guys can’t begin to understand why some of us don’t share their belief that they are entitled to huge sums of money for performing socially useless functions, nor do they understand why we sort of resent the fact that they get to fail up, while we ride the down escalator as we pay for their failures.
In the end, I suspect that the Republican grumping is just for show. They, after all, serve Wall Street too, so while they may bloody Lew a bit, in the end they’ll step aside and let him through.
It is a genuine mystery why Obama feels the need to hand our economic futures over to people like Lew. FDR took effective action to rein in what another Roosevelt called “malefactors of great wealth”. Had FDR’s reforms been left untouched we might not be in the depression we’re in today. Obama will be remembered for having blown his chance at greatness by handing our economy over to the people who blew it up.
Meanwhile, on a slightly related point, let me predict that the assholes in charge here, no doubt led by Lew, will do whatever they can to frustrate enforcement of the financial transaction tax being introduced in Europe, where the breed must have slightly less influence than here. It would be hard to conceive of a more socially useful tax, reason enough for the Geithners and Lews of the world to oppose it.
UPDATE: The Geithner picture sent by a reader. It does seem appropriate. Thanks FS.
