Citigroup’s chief economist is being tapped for a job at the short-staffed Treasury Department, which is at the center of the Obama administration’s efforts to battle the financial crisis.
Lewis Alexander will become a counselor to Treasury Secretary Timothy Geithner, according to a government official who spoke on condition of anonymity because a formal announcement has not been made. Alexander will work on domestic finance matters, the official said.
Alexander had worked at the Federal Reserve and also served as the Commerce Department’s chief economist in the 1990s.
Geithner so far has battled the crisis with no key deputies in place. That’s made for a rocky start for the man President Barack Obama put on the front lines of the financial crisis.
Treasury’s handling of a $700 billion financial bailout fund has drawn fierce criticism from Congress and the American public. The government has put up hundreds of billions of taxpayers’ dollars to rescue troubled financial companies, including American International Group, Bank of America and Lewis Alexander’s own Citigroup Inc.
In late February, the government said it will exchange up to $25 billion in emergency bailout money it provided Citigroup for as much as a 36 percent ownership stake in the struggling bank, a move that could put taxpayers at greater risk. The deal represented the third rescue attempt for Citigroup in the past five months. It’s contingent on private investors agreeing to a similar swap.
As a Wall Street insider from a bank that has been one of the largest recipients of government rescue funds, Alexander’s appointment could raise some eyebrows. In December 2007, he was quoted as saying that while he believed the housing market would remain weak well into 2008, it was more likely that the economy would keep growing than head into recession, adding that the housing bubble was “correcting on its own.”
The same Citigroup which is now partially nationalized? The one that made lots of bad business decisions on his watch? He’s now going to work for an institution with even more economic power?
And yet people are pissed over some AIG bonuses?