Jacob J. Lew, White House chief of staff, to get Treasury nod
WASHINGTON — President Obama on Thursday will nominate his chief of staff, Jacob J. Lew, a fiscal policy expert with deep Washington roots, as his new Treasury secretary to help lead the administration through budget battles ahead.
Lew, 57, would replace Timothy F. Geithner, who has been planning to leave the administration this month, according to a White House official. The official announcement is expected to come at 10:30 a.m. Pacific time.
“Throughout his career, Jack Lew has proven a successful and effective advocate for middle-class families who can build bipartisan consensus to implement proven economic policies,” the White House said.
Though he was a Citigroup Inc. executive for three years before joining the administration in 2009, Lew has far less experience dealing with Wall Street than Geithner had when he was nominated.
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But Lew knows Washington. His skills honed in many years in the nation’s capital are what Obama needs now for the coming budget fights, including a controversial increase in the debt ceiling, experts said.
“Over the past more than quarter of a century, Jack Lew has been an integral part of some of the most important budgetary, financial and fiscal agreements — bipartisan agreements — in Washington,” said White House Press Secretary Jay Carney, who would not comment on a potential nomination.
Lew’s experience dates to the 1970s when he began working as a House Democratic aide. Lew then spent eight years as a top advisor to former House Speaker Thomas P. “Tip” O’Neill Jr. (D-Mass.).
Lew is steeped in the mechanics of budget-making, having served as White House budget director under Presidents Clinton and Obama. The decision to tap him as Treasury secretary reflects the different economic landscape heading into a second Obama term.
In late 2008, the financial system was in turmoil. Obama turned to Geithner, who had been a key player in responding to the crisis as president of the Federal Reserve Bank of New York.
Now the financial system has healed. But the nation has huge budget deficits and, within weeks, must raise the $16.4 trillion debt limit or face a default.
So someone with a long history dealing with budget and spending issues is needed, said Chris Krueger, a senior policy analyst in Washington at financial services firm Guggenheim Partners.
“Jack Lew would not have been the right choice in 2009, but he’s certainly a reflection of the times,” Krueger said. “Lew is a creature of Washington. He’s not a creature of Wall Street.”
Lew lacks significant experience in financial regulatory issues and relationships in the industry, which would be crucial in another financial crisis, said Brian Gardner, an analyst at investment bank Keefe, Bruyette & Woods.
Lew has been chief of staff since early last year, and Obama has not yet decided on a replacement. As reports of his pending nomination circulated Wednesday, the Internet was abuzz with images of Lew’s unusual signature, which would be stamped on all paper currency if he were to become Treasury secretary.
The signature — a childlike scrawl of small curlicues found on his Office of Management and Budget memos — is at odds with Lew’s low-key personality.
An orthodox Jew, Lew observes the Sabbath, so from sundown Friday to sundown Saturday he doesn’t drive, use electricity or work on his BlackBerry. But he has been available during that time if Obama has needed him and sometimes has walked to work at the White House.
University of Michigan law professor Michael Barr, who worked with Lew in the Clinton administration, described him as “very methodical, very careful.”
Lew is a veteran of partisan battles on Capitol Hill, helping O’Neill craft compromises with former President Reagan in the 1980s on major changes to Social Security and the tax code and playing a key role for Clinton in budget negotiations with congressional Republicans in the late 1990s.
“He negotiated a series of balanced budgets with a heavily Republican Congress under President Clinton,” Barr said. “He understands how tax and budget policy work. He understands the Congress.”
Barr, who was an assistant Treasury secretary under Geithner in 2009-10, said Lew would be “exceptionally good at the job.”
“It certainly makes a lot of sense to have someone come in now who is very steeped in the budget process and fiscal issues and is an effective negotiator with the Congress because so much attention is likely to be focused in that area,” Barr said.
In the partisan gridlock following the Republican takeover of the House in 2010, Lew has had a more difficult task in navigating Congress. His hard-nosed negotiations over raising the debt limit in 2011 angered some Republicans. And although he’s likely to be confirmed if nominated, it won’t be without some Republican criticism, Krueger said.
“It’s no secret that Lew and congressional Republicans don’t have a fantastic relationship,” Krueger said.
The confirmation process is “going to be a forum for the Senate to have a debate on the president’s fiscal and economic and deficit positions,” Krueger said.
Geithner was well-connected on Wall Street from years in the Treasury Department and at the New York Fed. But Lew has private-sector experience that many top Obama administration officials have lacked.
Lew was managing director and chief operating officer at Citi Alternative Investments in 2008-09. And he held the same position at Citi Global Wealth Management from 2006 to 2008.
That experience led to criticism when Lew was elevated in 2010 to White House budget director from his position as a top aide to Secretary of State Hillary Rodham Clinton.
Some liberals were concerned that Citi Alternative Investments, which manages private equity, hedge funds and real estate investments, reportedly profited from the collapse of the subprime housing market.
Lew earned $1.1 million in salary and other compensation from Citigroup in 2009, according to his government financial disclosure.
