Jack Lew had major role at Citigroup when it nearly imploded

By:  Jia Lynn Yang

Treasury secretary nominee Jack Lew has spent most of his career in government, but during the financial crisis, he was embedded inside one of the country’s biggest banks as it nearly imploded.

From 2006 to 2008, he worked at Citigroup in two major roles, a notable line in his résumégiven that as Treasury secretary, he would be charged with implementing new rules regulating Wall Street.

But Lew did not have just any position at the bank.

In early 2008, he became a top executive in the Citigroup unit that housed many of the bank’s riskiest operations, including its hedge funds and private equity investments. Massive losses in that unit helped drive Citigroup into the arms of the federal government, which bailed out the bank with $45 billion in taxpayer money that year.

The group had been under pressure to compete with similar units at other big Wall Street firms and, some analysts say, took on too many risks as it played catch-up.

“The mismanagement of risk was comprehensive at that organization,” said Simon Johnson, an economist at the Massachusetts Institute of Technology.

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