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Committee Recommends Senate Confirm Lew as Treasury Secretary

The Senate Finance Committee on Tuesday voted 19 to 5 to recommend that the full Senate confirm Jacob Lew as the next Treasury Secretary.

The vote paves the way for Lew, the current White House chief of staff, to possibly be confirmed by the Senate by the end of this week. Lew would succeed Timothy Geithner, who stepped down from the post in January after having served through President Obama’s first term.

Lew, 57, is expected to be heavily involved in the upcoming budget negotiations including the automatic, across-the-board budget cuts set to go into effect on Friday unless Congress takes action to avoid the sequester.

Sen. Chuck Grassley, R-Iowa., Sen. Mike Enzi, R- Wyo., Sen. John Cornyn, R-Texas, Sen. Michael Crapo, R-Idaho, and Sen. Pat Roberts, R-Kan., and all voted against Lew’s confirmation.

Sen. Orrin Hatch, R-Utah., ranking minority member on the committee, voted in favor of Lew’s nomination but said he still has “serious reservations that have not been assuaged through the committee’s consideration of this appointment.”

Hatch said that he is concerned that Lew “has been less than forthcoming” about his time at Citigroup and New York University. Lew received a $685,000 severance payment when he left his position at NYU in 2006 to work for Citigroup, The New York Times recently reported.

“Ultimately, I hope we end up with the Jack Lew of the Clinton Administration, not just another acolyte of the Obama White House,” Hatch said ahead of Lew’s confirmation vote.  “I hope we get a Treasury secretary willing to work with the other side of the aisle, to put our nation first in order to confront the challenges facing us today.”

Grassley expressed similar concerns about Lew and said that the administration has made no intention of providing documents that would shed light on his involvement with Citigroup and NYU.

“What we have seen so far is that Mr. Lew was very good at getting paid by taxpayer-supported institutions,” Grassley said during the hearing. “Citigroup received a taxpayer-funded bailout and gave Mr. Lew a piece of it on his way out the door.”  Meanwhile, in written questions and answers between committee members and the nominee that were released Tuesday, Hatch took Lew to task for saying President Obama supports a two to one ratio of spending cuts to revenue increases. That ratio appears “to vary over time and circumstances,” Hatch said.

Lew wrote in response that the administration “supports a gradual and balanced approach to deficit reduction, replacing the sequester with deficit reduction that is supportive of our near-term recovery and long-term fiscal sustainability.”

“Sequestration is a blunt and indiscriminate approach to spending cuts that was never intended to be put into practice,” Lew wrote. “It would have severe impacts across the government and impair its ability to provide the services the American people count on.”

Lew also told Hatch that he supports reforms for money market funds.

If confirmed as Treasury Secretary, Lew will become chair of the Financial Stability Oversight Council, which has proposed the Securities and Exchange Commission consider requiring these funds to have floating net asset values, as well as adopt other reforms. Industry groups are contesting the FSOC’s authority to make such recommendations.

When Hatch asked Lew which of the FSOC’s proposed reforms he favors, Lew wrote that he did not want to prejudge the outcome of the FSOC’s work.  But Lew added, “The financial crisis demonstrated that MMFs are susceptible to runs and can be a source of financial instability with serious implications for broader financial markets and the economy. While MMFs are more resilient today, more reform is needed to protect investors and improve the stability of the industry.”

Hatch also chided the administration for having a vague definition of infrastructure, particularly in its proposal for an infrastructure bank. He asked Lew to more specifically define the term, which Hatch said could mean anything from “laying redundant fiber cables in areas not in need of them to turtle tunnels surrounding road or bike path construction.”

Lew responded: “Infrastructure comprises the facilities needed for the functioning of a community or society, and in practice supports the productive function of our economy in a competitive global environment.”

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