Executive Sessionby Senator Chuck Grassley
Posted on 2013-02-27
GRASSLEY. Mr. President, I rise to speak on the nomination of
Jack Lew to be the Secretary of the Treasury. Am I in order to do that?
The PRESIDING OFFICER. The Senator may proceed.
Mr. GRASSLEY. Mr. President, the problem we face with Mr. Lew's nomination is that the Senate does not have answers to very basic and factual questions about Mr. Lew. How can we make an informed decision on his nomination if we don't have answers to basic questions? Let me provide several examples, starting with New York University. He worked for this tax-exempt university and he was given a subsidized $1.4 million mortgage. Mr. Lew claims he cannot remember the interest rate he paid on his $1.4 million mortgage the tax-exempt New York University gave him.
Does that pass the laugh test? I asked Mr. Lew to provide details on the mortgage to Congress. He refused repeatedly to provide full details and documentation of this taxpayer-subsidized mortgage. The explanations he did provide were needlessly complex, making it almost impossible to understand the structure of his loan.
What is he hiding? Why can't Congress get a straight answer out of this nominee to be our next Secretary of Treasury? When Mr. Lew was executive vice president of New York University, the school received kickbacks on student loans from Citigroup. Then Mr. Lew went to work for that same Citigroup. When I asked Mr. Lew if he had any conversations with Citigroup about these kickbacks while he was at New York University, he once again ``could not recall.'' I asked for any documents related to his involvement in the kickbacks and he refused to search for them.
Did those conversations occur? We don't know.
On Monday, the New York Times uncovered a $685,000 payment that New York University gave Jack Lew on his way out the door. The New York Times called the payment ``unusual.'' It is a shame Mr. Lew failed to provide these details as part of his confirmation process, leaving us to rely on the press to dig out the details.
He told the committee he received ``severance pay'' from New York University but did not disclose the amount. The dictionary defines severance pay as: ``A sum of money, usually based on length of employment, for which an employee is eligible upon termination.'' Was Mr. Lew terminated? If so, why was he terminated? If not, was the severance package truly a parting gift from the university? I don't know the answers to those questions because Mr. Lew was not forthcoming with the answers.
When it comes to questions about investments in the Cayman Islands, things get even less transparent. Mr. Lew claimed he did not know Ugland House was a notorious tax haven. He claims he did not know he had his money in the Cayman Islands. He claims he was not aware of any Citigroup Cayman Islands account.
Again, this does not pass the laugh test. President Obama and Chairman Baucus have highlighted Ugland House as a problem over a long period of years. When Mr. Lew was at Citigroup for years he signed documents which disclosed the fact that he was investing money in the Cayman Islands.
This is his distinctive signature, right here; the Ugland House description here, and the Grand Cayman name here. It is very obvious this signature doesn't belong to anybody else. It has been highlighted, and there have been a lot of newspaper articles about it. How are we going to have that signature on the dollar bill if he gets to be Secretary of Treasury? So everybody knows to whom that belongs. Yet with all this information, he is telling the committee he doesn't know anything about the Cayman Islands or where his money was going.
We have so many more questions for Mr. Lew.
This is what the Wall Street Journal said last week in reference to Mr. Lew's past: Investor in Cayman Islands tax haven? Check. Recipient of a bonus and corporate jet rides underwritten by taxpayers at a bailed-out bank? Check. Executive at a university that accepted student-loan kickbacks toward a favored bank? Check. Excessive compensation with minimal disclosure? Check.
Mr. Lew's eagerness and skill in obtaining bonuses, severance payments, housing allowances, and other perks raise very serious questions about whether he appreciates who pays the bills. How will he approach the burden on taxpayers to pay the government's bills? Will he act as cavalierly toward the taxpayers as Treasury Secretary as he did at Citigroup and New York University? But despite all these questions, we are right now, this very day, rushing ahead to a vote on this nomination. Clearly, these questions don't matter to Mr. Lew's supporters because they are confident they have the votes. Unfortunately, they even have some assistance from my side of the aisle. But transparency and sunlight are essential for Congress and for the American people because with transparency and sunlight comes accountability.
Those supporting Mr. Lew today better not expect any real answers out of him in the future if he will not answer these questions before confirmation. Whether we serve on the Finance Committee or on any other committee, we must do our constitutional job of oversight. We pass laws and we appropriate money and so we have a responsibility as Senators to make sure the laws are faithfully executed, which means we have to get answers from Cabinet people or people generally in the executive branch of government. If there are questions about the seriousness of faithfully executing the laws, faithfully spending the money we appropriate, we must ask questions. Do you think we will get answers from Mr. Lew after he becomes Secretary of the Treasury if he will not answer questions before his confirmation? The larger problem, though, may be that when Mr. Lew actually does try to answer a question, he confirms our concerns. For example, when Mr. Lew was caught with the Cayman Islands bank account, he said: Well, I didn't make any money. Apparently, there is now a brandnew standard. It is OK to invest in ``the largest tax scam in the world''--and those are the President's words about the Cayman Islands and Ugland House, the largest tax scam in the world--so long as you don't make any money. That is the new standard.
When Mr. Lew was asked about New York University's investment in Cayman Island investments, again he could not recall them. Mr. Lew received over $1.2 million in his final year at New York University. He was hired specifically to run the business side of New York University. Yet despite all this, he claims he had no specific knowledge of where NYU's money was being invested.
When I asked Mr. Lew if he could explain morally his decision to take almost $1 million from an insolvent company supported by taxpayers, he could not answer. He said this to me: ``I will leave it to others to judge.'' Mr. Lew refused to explain why he thought the bonus was justified. Since Mr. Lew could not answer that question, today I answer it for my colleagues, as they consider a ``yes'' or ``no'' vote on this nomination.
It is important we hold members of this administration equal to the standards they set for everyone else. When it comes to oversight, I don't think anybody is going to question this Senator is an equal opportunity overseer, because I raise these same questions about oversight whether we have a Republican administration or a Democratic administration. I believe it is important to hold members of this administration equal to the standard they set for everyone else.
Let's look at that standard. In the past, the President has railed against [[Page S912]] the ``fat cats'' on Wall Street. Today, the President nominates a man who took a bonus from a bailed-out, financially insolvent bank. The President has constantly complained about the high cost of college tuition. While Mr. Lew was at NYU, the university increased tuition nearly 40 percent while he was getting paid more than the New York University president.
In the not-so-distant past, the President has called the Ugland House ``the biggest tax scam in the world.'' Today, he nominates a man who invested there. In fact, the President has repeatedly railed against the Cayman Islands and Cayman Islands investments.
Mr. Lew is a serial Cayman Islands investor. On his watch, Citigroup invested money there, New York University invested money there, and he invested his own money there.
I believe it is essential to hold everyone to the same standards they set for others. For these reasons, I vote NO on this nomination.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.