Jack Lew was confirmed Wednesday for secretary of the Treasury, despite allegations of conflict of interest surrounding sweetheart bonuses he received for leaving positions at New York University and Citibank to take a job as a high government official.
Lew took a position as the executive vice president for operations at New York University following his tenure at the Office of Management and Budget in the Clinton administration. At his post, he was responsible for overseeing the university’s finances and budget. The New York Times revealed Monday that upon his departure from the school in 2006, he received a $685,000 bonus.
While the university told the Times “it is not uncommon for large organizations to make payments to senior officials on their departure,” other experts disagree.
“It’s pretty unusual to get severance payment upon a voluntary departure,” Daniel Boyer, a senior consultant at Marts & Lundy, which advises universities on governance issues, told the newspaper. Severance bonuses are typically paid to employees who leave due to firing, not voluntarily.
“Why would the school shovel still more money to an employee as a parting gift before he heads off to Wall Street?” the Wall Street Journal asks.
Coincidentally, the university subsequently entered into a lucrative preferred lender agreement with Citibank, where Lew then worked.
When asked about this by Senate Republicans during his confirmation hearings, Lew responded, “I do not believe that I approved the selection of Citigroup as a preferred lender for NYU students.”
In a written statement to Iowa Republican Sen. Charles Grassley, he said, “I do not recall having any conversations with Citigroup officials regarding Citigroup’s selection or actions as a preferred lender for NYU students. Also I do not believe that I approved the selection of Citigroup as a preferred lender for NYU students.”
In 2009, Lew left his post at Citibank to work in the Obama administration as deputy secretary of state. Written into his Citibank contract, however, was a provision that he would receive a payout by the bank should he return to public service as a high ranking government position.
His “guaranteed incentive and retention award” would not be paid upon resignation unless he left “as a result of [his] acceptance of a full-time high level position with the United States government or regulatory body.”
“Lew stood to receive $250,001 to $500,000 worth of accelerated restricted Citigroup stock when he left the company, according to a disclosure report he filed in January 2009,” Bloomberg reports.
“What we have seen so far is that Mr. Lew has been very good at getting compensated by taxpayer-supported institutions,” Sen. Grassley said.
It was also revealed that Lew had an off-shore bank account in the Cayman Islands, a scheme President Barack Obama has described as “the biggest tax scam on record.” Lew has said that the account was not in an effort to avoid paying taxes.
When Utah Republican Sen. Orrin Hatch asked about Lew’s severance package with Citigroup in the hearing, the nominee responded, “I’m not familiar with records that were kept, so I don’t have access to things that I don’t know about.”
“I am bending over backwards to show deference to the president’s nomination and I hope that doesn’t go unnoticed,” Hatch said. Despite earlier criticisms of Lew, Hatch ultimately voted in favor of the nominee in committee.
Senate Finance Committee Chairman Max Baucus called attention to Lew’s signature.
“I’m not sure if people will be able to read his loopy signature,” Baucus said. “But his signature will be on Federal Reserve notes. It has been described to be a stretched out slinky … but he has promised to make at least one letter legible.”
Lew was confirmed by the full Senate by a vote of 71 to 26.
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