The day before a crucial Senate vote to confirm the nation’s next Treasury secretary, Obama nominee Jack Lew is facing questions about certain unusual payments he received during his time in the private sector.
Monday afternoon, The New York Times revealed Lew received a $685,000 bonus when he left his position as a New York University executive vice-president in 2006. While the university told the newspaper that “it is not uncommon for large organizations to make payments to senior officials on their departure,” independent experts also interviewed by the Times said the exact opposite.
“It’s pretty unusual to get severance payment upon a voluntary departure,” Daniel Boyer, a senior consultant at Marts & Lundy, which advises universities on governance issues, told the newspaper.
The existence of the bonus, although not its precise numerical value, was known to congressional leaders who have been dealing with the Lew nomination over the past few weeks. Some Republican senators had asked Lew to shed more light on his decision to leave NYU, pointing to the fact Lew went to work for a bank, Citigroup, which had just entered a lucrative agreement to be classified a “preferred lender” by the university.
“I do not recall having any conversations with Citigroup officials regarding Citigroup’s selection or actions as a preferred lender for NYU students. Also I do not believe that I approved the selection of Citigroup as a preferred lender for NYU students,” Lew said in written responses to Sen. Charles Grassley (R-Iowa) earlier this month.
Lew’s golden parachute from NYU is not the only severance deal that those considering his nomination have brought up.
The nominee also received a bonus when he left Citigroup in 2009 to become a deputy secretary at the State Department, under a clause in his employment contract that allowed for a payoff if he left the bank for a “high level position with the United States government or regulatory body.” Congressional leaders have questioned if the wording in Lew’s contract shows Citigroup had a vested interest in having alumni of the bank placed in top government jobs.
During confirmation hearings, Lew addressed his pay at Citigroup by saying he was, “compensated in a manner consistent with other people.”
The Senate Finance Committee confirmed Lew's nomination for Treasury secretary Tuesday morning after some debate. His appointment will now be brought up to the main floor of the Senate.
Russell Wasendorf, former CEO of Peregrine Financial Group
<a href="http://www.huffingtonpost.com/2013/01/31/russell-wasendorf-sentenced_n_2591758.html?utm_hp_ref=business">Russell Wasendorf allegedly stole</a> more than $215 million from customer accounts and falsified bank statements to cover it up. He <a href="http://www.huffingtonpost.com/2013/01/31/russell-wasendorf-sentenced_n_2591758.html?utm_hp_ref=business">has been sentenced to 50 years</a> behind bars, but not before <a href="http://www.huffingtonpost.com/2013/01/31/russell-wasendorf-sentenced_n_2591758.html?utm_hp_ref=business">first trying to commit suicide</a>.
Jon Corzine, former CEO of MF Global
<a href="http://articles.marketwatch.com/2012-11-14/economy/35103811_1_report-details-jon-corzine-customer-funds">Jon Corzine</a>, former CEO of MF Global, allegedly played a key role in the firm's 2011 collapse because of excessive risk-taking. <a href="http://www.huffingtonpost.com/2012/04/25/mf-global-missing-customer-money-accounted-for_n_1452128.html">Customers' money went missing</a>, but <a href="http://money.cnn.com/2012/04/24/news/companies/mf-global/index.htm">government investigators later found the money</a>, and <a href="http://www.huffingtonpost.com/2013/01/31/mf-global-customer-payback-deal-approved-_n_2593398.html?utm_hp_ref=business">a bankruptcy judge</a> recently ruled that customers will get back most of it.
Bernard Madoff, former CEO of Bernard L. Madoff Investment Securities
<a href="http://topics.nytimes.com/top/reference/timestopics/people/m/bernard_l_madoff/index.html">Bernie Madoff</a> was arrested in 2008 for running the largest Ponzi scheme in U.S. history. His clients, which included <a href="http://www.nytimes.com/packages/html/national/200904_CREDITCRISIS/madoff_clients.html">charities</a>, allegedly <a href="http://www.nytimes.com/2008/12/12/business/12scheme.html?ref=bernardlmadoff">lost nearly $50 billion</a> as a result. <a href="http://www.nytimes.com/2009/06/30/business/30madoff.html?ref=bernardlmadoff">Madoff</a> now is behind bars, after being sentenced to 150 years in prison.
Angelo Mozilo, former CEO of Countrywide Financial Corp.
Under Angelo Mozilo, <a href="http://www.reuters.com/article/2010/10/16/sec-mozilo-lending-idUSN1521940020101016">Countrywide</a> played a role in fueling the housing crisis, some <a href="http://www.amazon.com/Reckless-Endangerment-Outsized-Corruption-Financial/dp/1250008794">critics</a> say. It sold risky mortgages to subprime borrowers, becoming the largest mortgage lender in the country. <a href="http://www.reuters.com/article/2011/07/20/bankofamerica-countrywide-ftc-idUSN1E76J1C320110720">Many of those borrowers</a> struggled to make mortgage payments once the housing bubble burst. <a href="http://online.wsj.com/article/SB10001424052702303561504577495332947870736.html?mod=WSJ_hps_LEFTTopStories">Bank of America's purchase of Countrywide</a> has cost the company more than $40 billion in losses, legal fees and settlements, according to the Wall Street Journal.
Scott Thompson, former CEO of Yahoo!
<a href="http://www.huffingtonpost.com/2012/05/13/yahoo-ceo-scott-thompson-step-down_n_1512923.html">Scott Thompson</a>, former CEO of the struggling web giant Yahoo!, resigned in disgrace in May after it was revealed that he had lied about his college major. His resume said he held a college degree in accounting and computer science, but in reality, he only earned an accounting degree.
Kenneth Lay, former CEO of Enron
Under <a href="http://www.time.com/time/specials/packages/article/0,28804,2009445_2009447_2009502,00.html">Ken Lay's</a> watch, Enron fudged its accounting numbers, cost shareholders (including many employees) $11 billion because of its stock price collapse and <a href="http://news.bbc.co.uk/2/hi/business/1688550.stm">filed for bankruptcy</a>. Ken Lay was convicted of fraud and conspiracy, only to die before sentencing.
Jeffrey Skilling, former CEO of Enron
<a href="http://www.biography.com/people/jeffrey-skilling-235386">Jeffrey Skilling</a>, former CEO of Enron, was sentenced to 24 years in prison and fined $45 million for recording Enron's projected future profits as actual profits. He resigned and sold $60 million in Enron shares in 2001 right before the company's stock price collapsed.
Richard Fuld, former CEO of Lehman Brothers
Lehman Brothers fell in 2008 under Dick Fuld's watch. He let the bank pile up on <a href="http://money.cnn.com/2008/09/15/news/companies/lehman_endofwallstreet_tully.fortune/index.htm">leverage</a> and <a href="http://articles.businessinsider.com/2010-03-17/wall_street/30061008_1_lehman-brother-lehman-report-valuations">bad bets</a> on <a href="http://www.bloomberg.com/news/2011-12-07/lehman-enters-final-bankruptcy-phase-as-judge-approves-plan-2-.html">mortgage-backed securities</a>, which forced the bank to declare bankruptcy in 2008, causing a crisis of confidence in the financial system.
Charles Prince, former CEO of Citigroup
<a href="http://online.wsj.com/article/SB10001424052702304198004575171712663412230.html">Chuck Prince</a> resigned in late 2007, as Citigroup teetered toward collapse because of <a href="http://www.nytimes.com/2008/11/23/business/23citi.html?pagewanted=all">its bad bets on the housing market</a>. <a href="http://online.wsj.com/article/SB123573611480193881.html">Citigroup</a> has needed three government bailouts to stay afloat and recently announced <a href="http://www.huffingtonpost.com/2012/12/05/citigroup-job-cuts_n_2243975.html">11,000 job cuts</a>.
Tony Hayward, former CEO of BP
Many criticized <a href="http://www.guardian.co.uk/business/2010/jun/01/bp-response-oil-spill-tony-hayward">Tony Hayward's clumsy response to the Gulf oil spill</a>, which happened under his watch in 2010. <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/08/02/AR2010080204695.html">4.9 million barrels of oil were dumped</a> in the Gulf of Mexico over three months. <a href="http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7912338/BPs-Tony-Hayward-resigns-after-being-demonised-and-vilified-in-the-US.html">Hayward resigned</a> right after the spill ended.
Mark Hurd, former CEO of HP
<a href="http://www.huffingtonpost.com/2010/08/06/hp-ceo-mark-hurd-resigns-_n_673858.html">Mark Hurd</a> was ousted in 2010 after falsifying expense reports to try to hide <a href="http://www.huffingtonpost.com/2010/08/08/mark-hurd-settlement-oust_n_675007.html">his sexual advances on actress Jodie Fisher</a>.