Hatch hits Obama on nominee with Cayman Islands account
Washington • Sen. Orrin Hatch says it's hypocritical that President Barack Obama criticized Mitt Romney for his Cayman Islands bank account but has now nominated a man to head the Treasury Department who socked money away in the same spot.
"It's amazing that the president could attack Mitt Romney when [Obama's] then-chief of staff and [now] his Treasury secretary nominee had served as a senior executive at Citigroup that had subsidiaries and a personal investment based in the Caymans," says Hatch, the top Republican on the Senate Finance Committee.
Hatch's concern was raised by fellow Republicans this week when Treasury nominee Jack Lew appeared before the Senate to face rounds of questions about his qualifications to head the Treasury Department.
The Senate could vote later this month on confirming Lew, but Republicans are demanding he answer lots of questions, including about the bonuses he made in the private sector and why he invested offshore.
It was the same charge leveled against Romney during last year's presidential race, when Obama and his campaign painted the Republican candidate as a rich corporate executive who stashed money offshore to avoid taxes. ABC News reported that Romney had as much as $8 million in a Cayman Islands account, and another investment worth between $5 million and $25 million registered in the country.
Lew's investment was about $56,000, but it has given Republicans fodder against the Obama nominee.
Sen. Chuck Grassley, R-Iowa, noted that Obama had said in 2009 that the Cayman Island's Ugland House included some 12,000 businesses and is either the "largest building in the world or the largest tax scam in the world."
"You invested more money there than the average American makes in an entire year," Grassley said to Lew. "Do you believe the president was accurate in referring to the building which housed your investment as, 'The largest tax scam in the world?'"
Lew responded that he reported all the income he earned and paid all his taxes, and he actually lost money on that investment in the Cayman Islands.
"It was an opportunity that looked to me to be a bit riskier than other investments I had made in the past," Lew told the Finance Committee, noting he usually had a conservative approach to investing. "And I thought it was an appropriate risk to take, given the possibility of a higher return."
Lew got rid of the investment when he was confirmed to head the Office of Management and Budget.
"My benefit was really very small in the sense that I took a loss when I sold the investment," Lew testified this week.
Hatch also pressed Lew on how he pulled in nearly $1 million from Citigroup a day before the company got about $7 billion in taxpayer backing. Lew had previously said that his pay was in line with management at similar firms.
"Now that seems a little bit to me like saying, 'Gee, dad, everyone was doing it.'" Hatch said. "Unfortunately that type of reasoning is exactly what I think led to this financial crisis."
Lew said his compensation was for work he completed for the company per his contract and that he "performed quite well on managing the business operations."
"I do believe that it was comparable to compensation for people in positions like mine in the industry," Lew added. "And it's a broader discussion on compensation, but I don't think there's anything that hasn't been fully transparent about both what I did and what I earned."
Hatch hasn't decided if he will vote for Lew.