Transcript for Treasury Secretary Nominee Jack Lew Haunted by Wall Street Past
-- Barack Obama called them fat cat bankers the president's relationship with Wall Street has been. Less than cozy. But today's are strange twist the president's choice for Treasury Secretary had to... See More
-- Barack Obama called them fat cat bankers the president's relationship with Wall Street has been. Less than cozy. But today's are strange twist the president's choice for Treasury Secretary had to defend his time as -- Wall Street insider. While Republicans -- against bail out bonuses within banks once considered too big to fail the same banks whose investors lost. Millions in the financial meltdown. My co anchor Bill Weir. Has the story. A ghost of the financial crisis came to haunt congress today in a most unlikely form there are risks that we need to be very much on guard against his name is Jacqueline to discuss the guy with one of the most sterling reputations in Washington Mr. President it's an honor to be here -- As a loyal and low key numbers crunching -- he has worked his way up to White House chief of staff. And is the president's choice for Treasury Secretary. Wall Street -- more than 360. Points but a few years ago as the American economy was melting down Jack -- was an executive at -- group. Which former FDIC chair Sheila -- describes as the most toxic of all those troubled banks. -- -- the poster child and and -- at government -- Citigroup needed three government bailouts. Over 460. Billion in taxpayer dollars in loan guarantees just to survive but at the same time. They still manage to pay -- a bonus of nearly one million dollars. Explain why it worries me morally acceptable to take -- million dollars out of a company that was functionally insolvent. Senator -- 2008 -- was an employee. The private sector compensated in a manner consistent with other people who did the kind of work that I did in the industry. Lose -- city included -- post as the chief operating officer of alternative investments and we arrived in 2008 the division was in deep trouble bleeding money. Both investors -- -- -- own financial advisors were in open revolt which can see an internal emails obtained by ABC news. I'm watching a slow motion movie of my life being destroyed -- one with the subject line I'm -- It was written by skip -- on the city's own financial advisors addressed to then CEO Vikram Pandit and it drips with desperation. I am not slept in a month he wrote my wife looks at me begins to cry and -- what are we going to do. I'm crying now just writing this it was like slow water torture of of pain. On a daily basis as clients would call and asking me how could I have done this to them the source of this -- Investment funds called mat and falcon created by Citigroup and sold by hundreds of advises like skip. To thousands -- clients like Chris. Pass the map provides investors with a stable both -- -- return -- the Jersey -- look at a park some of his self made wealth. Somewhere safe is -- steer conceding and crisp -- million dollars worth of matched 51 of the funds built around low risk municipal bonds. Pretty much just as alone the risk skill as you can yet and that's what -- looking for yes OK what was it really wound within a year period -- went zero. Zero in lost -- -- lost everything. Chris his advisor and many others say they didn't know is that these investments were really kind of -- hedge fund. The sort of risky investment they can go bad fast I would have invested it wasn't from it as it all came crashing down in 2008. Emails like this show the level of anger and panic within -- group's ranks. My integrity has always meant more to me than anything else wrote a financial advisor in despair. I trusted you I trusted the fund manager. I trusted city. On one of the angry conference calls an advisor named Jennifer Krauss summed it up. Clients got duped now Jack -- was not Nazis alternative investment wing -- mat and falcon were created and sold. Any insists his duties there were only administrative. I was certainly aware of things that we're going on I was working in of the financial institution I learned a great deal. About the financial products but I wasn't designing them and I wasn't opining on them. But he was there for the implosion in the aftermath -- time -- advisors were begging Citibank to do the right thing and make customers whole. But instead of offered full refunds. City -- 120 cents on the dollar. In exchange for silence they offered me 50000 dollars for me away virus essentially most people took that deal but Chris was too angry. The people that are. Managing these funds are so separated. From the skin in the game that they become so arrogant and disconnected from the actual emotion of while we just lost two billion dollars worth -- customer money. And meant nothing to them he bit the bullet how it's an expensive lawyers and went into arbitration along shock and what did you think your chances -- and that they were zero. But -- saw the emails from inside city all the facts of the case were overwhelming. I didn't know if I was gonna -- my money back. But I was convinced that the panel would rule in my favor. And they did. They did to give me a 100% of my money back. He's not alone so far Citigroup has been forced to pay back at least 85 million dollars has fourteen arbitration panels around the country ruled against them. They've also settled with dozens more but the bank insist they adequately disclose the -- to advisors and investors and admitted no wrongdoing we believe Citi acted appropriately at all times. A spokesperson said in email. We disagree with those arbitration panels that have ruled against city we are in the midst of a horrendous recession right now two years ago. During his confirmation to head the Office of Management and Budget Lewis asked if he thought looser regulations on Wall Street he led to the financial collapse. I don't consider myself an expert and in some of these aspects of the financial industry in my experience in the financial industry has been as a manager not as an investment advisor. But now as Treasury Secretary -- will be tasked with making sure too big to fail. Never happens again. That does reinforces cynicism that you know Wall Street Francis town they -- is the presence mechanized sound he had. He weighed all those factors into the analysis of -- -- -- -- to nominate mr. -- for this very important job. The White House declined our request for an interview with -- and by all indications. The president will get his wish and he will sail through confirmation. I've practiced law port city university of -- to the financial institution I think that if I hadn't had a set of experiences like that I wouldn't be sitting here today. Speaking with confidence that I could undertake the responsibility as secretary of the treasury.
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