Chuck Hagel, a former two-term GOP senator from Nebraska and President Obama's choice for defense secretary, testifies before the Senate Armed Services Committee during his confirmation hearing. ( AP/J. Scott Applewhite)
It is bizarre that Chuck Hagel, a war hero with a long record of sensible views on the deployment of military power, gets blocked as the president's nominee to run the Pentagon, while Jack Lew, steeped in Wall Street greed, sails through as Treasury secretary.
There is, of course, nothing new about a Treasury secretary having profited from high-level Wall Street connections. After all, Robert Rubin and Hank Paulson, two former honchos at Goldman Sachs, headed the Treasury in the Clinton and Bush administrations, respectively. And Timothy Geithner, whom Lew would be replacing, was head of the New York Federal Reserve when it acted to bail out the too-big-to-fail financial hustlers led by AIG and Citigroup. The revolving door between Wall Street and the Treasury is the key cause of the Great Recession.
So, what's the big deal that Lew ran two divisions at Citigroup for three years when homeowners were swindled out of their life savings? What's a $2 million payout to Lew compared with the well over $100 million that Rubin got at that same bank during the years he helped steer it to disaster? In Lew's case there was also the matter of his investing in one of Citigroup's offshore schemes on the Cayman Islands that President Obama had roundly condemned, but the few Republicans who brought it up at the nominee's confirmation hearing this week offered only a mild rebuke for such chicanery.
The big deal, ignored by Democrats on the Senate Finance Committee and underplayed by the Republican critics, is that the Treasury Department, under two presidents during this financial crisis, has bailed out the banksters while doing next to nothing to help the victims of those institutions. Even now, in the third stage of a "quantitative easing" that will leave $4 trillion in taxpayer debt, the Federal Reserve, with the Treasury's blessing, continues to bail out the banks by taking toxic assets off their books while the banks refuse to undertake any serious mortgage readjustments.