The real problem with Jacob Lew

The real problem with the nomination of Jacob Lew for Treasury Secretary is not his signature. It is not so much him, in particular. It is that he is, in William Black’s phrase “Another brick in the Wall Street on the Potomac.”  It isn’t so much that he worked at Citigroup (though that is bad) but that he is intellectually captured by Wall Street.

The problem is that Jacob Lew is just one of the many people in power who believe that the megabanks need to be protected, not broken up.

Tim Geithner never worked on Wall Street (yet, at least). But Tim still seems to believe that the financial health of Bank of America, Citigroup and even HSBC is more important than that of distressed homeowners.

And, there is no indication that Jacob Lew is any different.

As an extreme example of the Wall Street ethic that these people buy into, consider the Plutonomy reports. I believe that one of them was written under Jacob Lew’s watch (I can’t confirm that because Citi has done such a good job suppressing them, I don’t have an actual copy of it).

The report says “the rich are the dominant drivers of demand in many economies around the world (the US, UK, Canada and Australia).” What to do about that? Invest so as to make money off of it.  “Since we think the plutonomy is here, is going to get stronger… It is a good time to switch out of stocks that sell to the masses and back to the plutonomy basket.”

This is the job of the Citigroup Global Wealth Management group. Their job is to help rich people get richer. When they are not telling people how to profit from plutonomy, they are telling people how to profit from climate change or some other emerging development. Right now, they are probably studying the prospects for gun control to decide whether this is a buying opportunity for gun stocks or whether they should short them.

It is disturbing when the former Chief Operating Officer of that group is nominated to be the Chief Operating Officer of the US economy.