Much to the displeasure of financial regulation supporters, Lew went on to say that he did not think that Wall Street’s problems had much to do with deregulation, saying that in his opinion derivatives and too much leverage had a bigger role in the financial crisis.
“He’s not viewed as hostile to the business community, like most policymakers are,” an anonymous financial industry leader said in an interview last year for the National Journal. “From an industry standpoint, we could do a heck of a lot worse,” the banker said.
Lew’s appointment as Treasury secretary could be a sign that Obama values his experience negotiating with Congress and sends a signal that he will prioritize budget and tax policy negotiations in his second term.
The debt limit talks will be the first in a series of negotiations this year between Republicans and the Obama administration over the budget and spending. Last week’s budget deal temporarily postponed the automatic spending cuts that would have become effective Jan. 1 and extended the government’s ability to borrow money until the end of February unless an agreement is reached before then.
While Obama has said he will not bargain over the debt ceiling, Republicans – such as Senate Minority Leader Mitch McConnell (R-Ky.) – have said they want to link it to spending cuts. In an op-ed published Friday, Senate Minority Whip John Cornyn (R-Texas) said that Republicans should be prepared to force a partial government shutdown to extract concessions from Democrats on entitlement reform and spending cuts.
“It may be necessary to partially shut down the government in order to secure the long-term fiscal well being of our country, rather than plod along the path of Greece, Italy and Spain,” Cornyn wrote. “President Obama needs to take note of this reality and put forward a plan to avoid it immediately.”
If confirmed by the Senate, Lew would have to immediately get to work on three important negotiations resulting from the short-term “fiscal cliff” resolution. He will have to deal with the nation’s debt ceiling, nail down the 2013 budget, and decide whether spending cuts mandated by the 2011 Budget Control Act should be changed.
Despite weeks of speculation about Lew’s nomination, Republicans have not signaled that they plan to mount the same opposition they raised for Obama’s nomination of Chuck Hagel as secretary of Defense and the potential nomination of Susan E. Rice for secretary of State, which fell through.
The appointment also means that Obama will have to make another addition to his cabinet, as he will have to find what would be his fifth White House chief of staff.