Sen. Elizabeth Warren is not pleased that President Obama, once again, has called on a longtime Wall Street insider—especially one who has played a prominent role in controversial corporate "inversion" deals that allow U.S. companies to shed their nationality in the wake mergers—to take a powerful post at the Treasury Department.
"The over-representation of Wall Street banks in senior government positions sends a bad message. It tells people that one -- and only one -- point of view will dominate economic policymaking. It tells people that whatever goes wrong in this economy, the Wall Street banks will be protected first. "
—Sen. Elizabeth WarrenWarren's ire was raised by Obama's nomination last week of Antonio Weiss, head of global investment banking for the financial giant Lazard, to become Under Secretary for Domestic Finance in his adminstration and the senator from Massachusetts said almost immediately that she would oppose the nomination. On Wednesday night, however, Warren made her disappointment—and not a little outrage—known in a piece published on the Huffington Post, saying that though she's tried to "give deference" to the president over his choices for the economic team this latest choice goes too far. "Enough is enough," she wrote.
Initiating her critique of Weiss on two major issues, Warren explained what makes his choice by Obama so troubling:
[First,] Weiss has spent most of his career working on international transactions -- from 2001 to 2009 he lived and worked in Paris -- and now he's being asked to run domestic finance at Treasury. Neither his background nor his professional experience makes him qualified to oversee consumer protection and domestic regulatory functions at the Treasury. As someone who has spent my career focused on domestic economic issues, including a stint of my own at the Treasury Department, I know how important these issues are and how much the people in Treasury can shape policies. I also know that there are a lot of people who have spent their careers focused on these issues, and Weiss isn't one of them.
The second issue is corporate inversions. Basically, a bunch of companies have decided that all the regular tax loopholes they get to exploit aren't enough, so they have begun taking advantage of an even bigger loophole that allows them to maintain their operations in America but claim foreign citizenship and cut their U.S. taxes even more. No one is fooled by the bland words "corporate inversion." These companies renounce their American citizenship and turn their backs on this country simply to boost their profits.
One of the biggest and most public corporate inversions last summer was the deal cut by Burger King to slash its tax bill by purchasing the Canadian company Tim Hortons and then "inverting" the American company to Canadian ownership. And Weiss was right there, working on Burger King's tax deal. Weiss' work wasn't unusual for Lazard. That firm has helped put together three of the last four major corporate inversions that have been announced in the U.S. And like those old Hair Club commercials used to say, Lazard isn't just the President of the Corporate Loopholes Club -- it's also a client. Lazard moved its own headquarters from the United States to Bermuda in 2005 to take advantage of a particularly slimy tax loophole that was closed shortly afterwards. Even the Treasury Department under the Bush administration found Lazard's practices objectionable.
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Obama has been criticized throughout his presidency for relying on and appointing to powerful positions many of the same Wall Street and financial services veterans who pushed for the deregulation of the industry that helped spawn the 2008 financial crisis.
Earlier this week, the Independent Community Bankers of America, a trade group that represents local and regional banks, also came out against the nomination of Weiss. In a letter sent to members of the Senate Finance and Banking committees, president of the ICBA Camden Fines told lawmakers his group also had concerns with the nominee's history when it came to corporate mergers and the inversion tax deals. "While Mr. Weiss has impressive credentials as a top Wall Street executive specializing in international mergers and acquisitions," wrote Fines, "Wall Street is already well represented at Treasury, and the narrow focus of Mr. Weiss’s professional experience is a serious concern for ICBA and community banks nationwide."
According to reporting by the Wall Street Journal, Weiss has advised many of the world's largest and most powerful Fortune 500 companies, "including Google Inc., Honeywell International Inc., ITT Corp., Coca-Cola Co. and Kraft Foods Group Inc., on a range of topics such as strategy, financing and capital structure decisions."
As Warren concludes in her missive against Weiss:
The over-representation of Wall Street banks in senior government positions sends a bad message. It tells people that one -- and only one -- point of view will dominate economic policymaking. It tells people that whatever goes wrong in this economy, the Wall Street banks will be protected first. That's yet another advantage that Wall Street just doesn't need.
I have voted against only one of President Obama's nominees: Michael Froman, a Citigroup alumnus who is currently storming the halls of Congress as U.S. Trade Representative pushing trade deals that threaten to undermine financial regulation, workers' rights, and environmental protections. Enough is enough.
It's time for the Obama administration to loosen the hold that Wall Street banks have over economic policy making. Sure, big banks are important, but running this economy for American families is a lot more important.