OBAMA TAPS FORMER CITIGROUP EXECS FOR POSITIONS…

Posted on February 11, 2009. Filed under: News And Politics... |

 
It may seem that I’m on a negativity tour against Obama, but that’s not the case.  It just seems that way because there are so many missteps occurring in his administration.  He has asked two former high-paid Citigroup executives to join his team:  Jacob Lew and Michael Froman.  These two executives received 7-figure salaries and bonuses last year while at Citigroup.  Jacob Lew was Chief Financial Officer at Citigroup, and look at how that turned out.  Citigroup’s stock market value is $21 billion, down from $300 billion two years ago.  It’s interesting to note that Lew was once part of Clinton’s administration.  He joined the Clinton administration in February of 1993 as "special assistant to the president"  He joined Citigroup’s Alternative Investments in June of 2006 when their stocks were valued at $300 billion.  Two years later, it dropped to $21 billion.  You do the math.
 
That’s not a smart move given the fact that they’re part of the reason we’re in the mess we’re in now.  They received a $45 billion government bailout, yet did not reduce their high salaries and bonuses, and were not held accountable for the mismanagement of Citigroup.  Now these two executives are under Obama’s protective wings.  It seems that corruption pays well.  Wait…it gets better.  It seems that an Obama economic adviser took a Citigroup jet to the Democratic Convention last year.  Interestingly enough, of the hundreds of banks and firms which have received bailout money, Citibank employees have contributed the most to Obama’s inaugural fund — at least $113,000 as of last month.  Among those contributions is $50,000 from Ray McGuire, 

Citigroup’s co-head of global investment banking, and $50,000 from Louis Susman, the recently-retired vice chairman of Citigroup.

In recent weeks, Obama has vowed changes to the much-criticized $700 billion bailout program, demanding that the second installment should focus on helping families at risk of losing their homes and small businesses, and echoing Democratic criticisms of banks giving lavish bonuses to their senior executives.  Yet, as the New York Times recently reported, many of the banks, including Citigroup, need more bailout money and have been fiercely lobbying behind the scenes for a major piece of the $350 billion second installment.  Citigroup senior counselor and former Treasury Secretary Robert Rubin was close to Obama, serving on his economic advisory team, but he recently resigned from the firm after months of criticism of his performance and his admitted failure to foresee the credit crisis.  In addition, Citigroup employees were Obama’s 7th-biggest contributor, giving $586,866 to the candidate during the 2008 election cycle.  As the saying goes…one hand washes the other.
 
Here are the two stories…
 
QueenBee
 

Obama advisers’ Citigroup ties raise questions

Administration taps two former executives for high-level positions

By Eric Lipton
The New York Times
updated 6:45 a.m. ET, Wed., Feb. 11, 2009
 

WASHINGTON – Senior executives at Citigroup’s Alternative Investment division ran up hundreds of millions of dollars in losses last year on their esoteric collection of investments, including real estate funds and private highway construction projects, even as they collected seven-figure salaries and bonuses.

Now the Obama administration has turned to that Citigroup division — twice — for high-level advisers.

Jacob J. Lew, who served until late last year as the chief financial officer of Citigroup Alternative Investments, has been named deputy secretary of state, the department’s No. 2 position.

Michael Froman, another former chief financial officer at the Citigroup division, has joined the White House staff as deputy assistant to the president and deputy national security adviser for international economic affairs.

Both Mr. Lew and Mr. Froman are well respected in Washington for their extensive government experience, which includes work in the Clinton administration on budget matters, in Congress and on international financial affairs.

But their shift to the Obama administration from Citigroup has raised questions about the potential for conflicts of interest, and about whether Mr. Obama’s own staff members benefited from the kinds of Wall Street excesses he has criticized.

“You sort of have to wonder why it is so smart to put them in charge now, if they helped create the mess that we are in,” said Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington. “They wouldn’t strike me as the natural choice.”

‘Incestuous’
Senator Richard C. Shelby, Republican of Alabama, has questioned whether the Obama administration, like the Bush administration, is relying too much on former bank executives in shaping the bailout of the financial sector. Recent appointees include Mark A. Patterson, a former lobbyist at Goldman Sachs, who is now the chief of staff to the Treasury secretary.

“It seems to be an incestuous financial relationship situation here,” Mr. Shelby said at a Senate hearing last week, referring to senior Treasury executives, like Mr. Patterson, who once worked at investment banks. “And that’s very troubling not only to a lot of people on this committee but to the American people.”

Mr. Lew, through a State Department spokesman, declined to comment. Jennifer R. Psaki, a White House spokeswoman, said by e-mail that Mr. Froman’s past government experience in international financial affairs is just what is needed “given the global scope of the economic challenges we are facing.”

Citigroup paid Mr. Lew, 53, at least $1.1 million in salary and bonus last year, according to a financial disclosure form filed last month. The form noted that he might get an additional undisclosed bonus for his work in 2008 before he started his federal job.

As of last fall Citigroup Alternative Investments managed $49 billion worth of capital from individuals and institutions, investing in nontraditional ventures like a program that builds highways, runs airports and oversees other major public projects for governments.

In the first quarter of last year, the Alternative Investment division lost $509 million and for the whole year, it was part of a larger Citigroup division that lost $20 billion, according to Citigroup.

Mr. Lew’s job — overseeing financial matters at the State Department, with a focus on trying to increase the share of financing that goes to the diplomatic corps — will take him relatively far from this world.

Mr. Lew, who served as director of the Office of Management and Budget in the Clinton administration and was a longtime aide to Speaker Thomas P. O’Neill Jr., said at his confirmation hearing last month that he would recuse himself from State Department matters having a “particular impact” on Citigroup.

Mr. Froman, 46, will serve as an economic adviser to the president, working on a team led by Lawrence H. Summers, who is director of the National Economic Council. He had a variety of foreign economic policy roles in the Clinton administration.

One of Mr. Froman’s deputies, David A. Lipton, also came from Citigroup, where he served as a managing director and the head of its global country risk management effort.

The head of President Obama’s National Economic Council flew on Citigroup’s corporate jet from New York to the Democratic National Convention in Denver last year, the White House confirmed Tuesday. 

Larry Summers was not a formal member of the Obama campaign staff at the time, White House spokesman Tommy Vietor said. He said Summers reimbursed Citigroup for the cost of the flight, adding that neither Summers nor the campaign had any obligation to disclose his travel on the corporate jet of a company that later would receive billions in federal bailout money. 

But Summers was a visible adviser in the general election and appeared on the stump as an economic heavyweight who could add credibility to Obama’s economic positions. 

Since joining the administration, Summers has had a voice in dealings with Citigroup, including administration objections to the planned purchase of another jet and the role the Treasury Department will play in attempting to stabilize Citigroup and other banking giants whose stock values have suffered through the economic downturn. 

Treasury Secretary Timothy Geithner recently ordered Citigroup to cancel plans to purchase a $50 million French-made corporate jet — a purchase the Obama administration attacked as wasteful in light of Citigroup’s receipt of $45 billion in bailout funds. 

Vietor said Summers paid for his own hotel accommodations while at the Democratic National Convention. 

"Mr. Summers traveled to the DNC as a private citizen and was responsible for arranging his own travel and lodging, all of which occurred long before Mr. Summers became a government employee," Vietor said in a statement.

Summers flew from Citigroup’s corporate jet hangar in White Plains, N.Y., to Denver and back again after the convention. Summers and former Citigroup Director and Senior Counselor Robert Rubin both have resumes that reach back to the Clinton administration. Summers and Rubin each served as treasury secretary under Clinton. Rubin was Clinton’s first head of the National Economic Council, the position Summers now holds.

 

Obama Economic Adviser Took Citigroup Jet to Democratic Convention

Larry Summers was not a formal member of the Obama campaign staff at the time, but was a visible economic adviser in the general election.

By Major Garrett

FOXNews.com

Tuesday, February 10, 2009

 

The head of President Obama’s National Economic Council flew on Citigroup’ corporate jet from New York to the Democratic National Convention in Denver last year, the White House confirmed Tuesday. Larry Summers was not a formal member of the Obama campaign staff at the time, White House spokesman Tommy Vietor said. He said Summers reimbursed Citigroup for the cost of the flight, adding that neither Summers nor the campaign had any obligation to disclose his travel on the corporate jet of a company that later would receive billions in federal bailout money. 

But Summers was a visible adviser in the general election and appeared on the stump as an economic heavyweight who could add credibility to Obama’s economic positions. 

Since joining the administration, Summers has had a voice in dealings with Citigroup, including administration objections to the planned purchase of another jet and the role the Treasury Department will play in attempting to stabilize Citigroup and other banking giants whose stock values have suffered through the economic downturn. 

Treasury Secretary Timothy Geithner recently ordered Citigroup to cancel plans to purchase a $50 million French-made corporate jet — a purchase the Obama administration attacked as wasteful in light of Citigroup’s receipt of $45 billion in bailout funds. 

Vietor said Summers paid for his own hotel accommodations while at the Democratic National Convention. 

"Mr. Summers traveled to the DNC as a private citizen and was responsible for arranging his own travel and lodging, all of which occurred long before Mr. Summers became a government employee," Vietor said in a statement.

Summers flew from Citigroup’s corporate jet hangar in White Plains, N.Y., to Denver and back again after the convention. Summers and former Citigroup Director and Senior Counselor Robert Rubin both have resumes that reach back to the Clinton administration. Summers and Rubin each served as treasury secretary under Clinton. Rubin was Clinton’s first head of the National Economic Council, the position Summers now holds.

 

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