- The Washington Times - Wednesday, January 25, 2012

When President Obama talked about banking industry bonuses during his State of the Union address Tuesday, he didn’t have to look far for an example.

Mr. Obama’s soon-to-be chief of staff, Jacob J. Lew, who attended the speech, received more than $900,000 in bonus cash from a division of Citigroup while the company was getting bailed out by taxpayers, The Washington Times first reported in 2010.

“In 2008, the house of cards collapsed,” Mr. Obama said. “We learned that mortgages had been sold to people who couldn’t afford or understand them. Banks had made huge bets and bonuses with other people’s money.”

Mr. Lew, formerly chief operating officer at Citi Alternative Investments, a division of Citigroup, received a bonus of $944,578 in January 2009. The payment came days before he joined the State Department. It was on top of $1.1 million in other Citigroup compensation he received during 2008 and the first two weeks of January 2009.

While Mr. Lew appeared twice before Senate panels weighing his nominations as deputy secretary at the State Department and, later, as White House budget chief, lawmakers - Democratic and Republican - showed little interest in questioning him about his bonus.

Only Sen. Chuck Grassley, Iowa Republican, asked Mr. Lew in writing about his compensation.

Mr. Lew’s written response, obtained by The Times, stands as perhaps his most detailed explanation on his bonus. In his response, Mr. Lew also addresses the question of whether the public ought to scrutinize bonus payouts to executives at bailed-out firms. A spokesman for Mr. Lew declined to comment Wednesday.

“How is it in the public’s interest for you to receive a $1 million bonus on the eve of a massive $301 billion commitment to rescue Citigroup?” Mr. Grassley asked Mr. Lew.

“My position at Citi was a management position,” Mr. Lew replied. “I was not an investment adviser. My compensation was in line with other management executives at the firm and in similarly complex operations.”

Mr. Grassley also asked if Mr. Lew knew whether he ranked among the top 100 highly paid executives at Citigroup. Mr. Lew said he did not know.

“Shouldn’t bonuses to the top 100 most highly paid executives at bailed-out banks be scrutinized, given the taxpayer subsidies, to see if they were appropriate? If not, why?” Mr. Grassley asked.

“Congress and the administration have take action to limit excessive executive compensation at firms that received exceptional taxpayer assistance, including the creation of the Office of the Special Master and the appointment of Kenneth Feinberg,” Mr. Lew replied, referring to Mr. Feinberg’s appointment by the Treasury Department to oversee executive compensation at bailed-out firms.

“I did not have a personal role in those efforts, however, so I cannot comment on the various policy and legal decisions made by the Treasury Department or by Mr. Feinberg.”

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