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More Democrats Oppose Obama Treasury Nominee Over Tax Inversions

Thursday, 11 December 2014 07:03 AM

 Under pressure from progressive groups to reject Wall Street influence, three more Senate Democrats yesterday turned against the nomination of Antonio Weiss for a senior post at the U.S. Treasury Department.

President Barack Obama’s choice of Weiss, an investment banker at Lazard Ltd., has put him at the center of an ideological fight within the Democratic Party over the finance industry’s clout in Washington.

The attacks are coming from Democrats who say the Obama administration relies too much on Wall Street veterans to fill important regulatory posts. They are criticizing Weiss, in particular, for his role in engineering tax-lowering inversion deals for U.S. companies.

The opposition yesterday from Joe Manchin of West Virginia, Jeanne Shaheen of New Hampshire and Al Franken of Minnesota further complicates the nomination for the administration and Democratic leaders. After defending Weiss’s Democratic bona fides and accepting his campaign contributions, they’ll have to turn to Republicans to get him into office.

“This fits the administration’s pattern of choosing Wall Street insiders to senior policy positions instead of those with strong consumer protection or community bank and credit union experience,” Manchin said on the Senate floor yesterday.

Obama nominated Weiss last month to become undersecretary for domestic finance. If confirmed, he would be responsible for coordinating policies on banking, capital markets and regulation and managing the issuance of the country’s debt.

Six Against

So far, six senators have announced their opposition to Weiss. In addition to Manchin, Shaheen and Franken, Senators Elizabeth Warren of Massachusetts and Richard Durbin of Illinois both said they would oppose Weiss, as did independent Bernie Sanders of Vermont, who caucuses with Democrats.

The White House yesterday defended Weiss.

``Antonio Weiss is a highly qualified nominee,'' said Jennifer Friedman, a White House spokeswoman, in an e-mail. ``His deep expertise in financial markets and economic issues makes him the right person to serve as under secretary of the treasury for domestic finance.''

Weiss and Obama agree ``we need to implement policies that help boost economic growth while supporting our middle class, such as reforming our tax code to close wasteful loopholes,'' Friedman said.

Congress is planning to adjourn for the year within days, meaning that Weiss’s nomination next year will be handled by Republicans, who will take over the Senate and have a 54-46 majority. Obama will have to renominate Weiss once the new Congress convenes.

Republicans haven’t led the Senate under a Democratic president since January 2001, and only 12 Republican senators remain in office from that time. It’s unclear how incoming Majority Leader Mitch McConnell of Kentucky and other Republican leaders will approach the balance between deference to a president’s nominees and opposition to his ideology.

Senate Rules

Also, Republicans haven’t decided whether to reverse a Democratic rule change that requires only a simple majority to confirm most executive-branch nominees. The six “no” votes from the Democratic caucus mean that at least 10 Republicans would be needed to confirm Weiss.

If Republicans revert to the previous rule, 60 votes could be needed for confirmation. That means at least 20 Republicans would have to vote for him.

The Obama administration hasn’t shown any indication it’s considering withdrawing Weiss’s nomination, a Senate Democratic aide said yesterday, requesting anonymity to discuss private conversations.

Four of the top five positions in the office at Treasury, which sets policy on financial and debt-management issues, are either vacant or being filled by temporary replacements who haven’t gone through Senate confirmation for the posts.

Corporate Inversions

Like other Democratic opponents, Shaheen said she is concerned about Weiss’s work on corporate inversions, in which a U.S.-based company moves its legal headquarters to a lower-tax country.

Lazard advised on three of the four most recently announced U.S. inversions. Those include Burger King Worldwide Inc.’s planned adoption of a Canadian tax address through a takeover of Tim Hortons Inc.

Inversions became a high-profile issue for Democrats earlier this year as several companies, including Medtronic Inc. and Mylan Inc., announced plans to take foreign addresses. Mylan’s chief executive officer, Heather Bresch, is Manchin’s daughter.

`Corporate Deserters'

Obama in July said the companies were “corporate deserters” and urged Congress to make it tougher for companies to leave without paying U.S. taxes.

In addition, the Treasury Department in September announced steps to make inversions more difficult, including a ban on “hopscotch” loans that let companies access foreign cash without paying U.S. taxes.

Weiss, the global head of Lazard’s investment banking unit, has worked on international mergers and acquisitions.

Shaheen said in an e-mailed statement, “I’m troubled by Mr. Weiss’s work on corporate inversions that place a tax burden on small businesses and middle-class families, and his lack of domestic regulatory experience.”

“As a result, I’m not convinced that he is the right person for the job,” Shaheen said.

Franken said he was concerned about Weiss’s work on corporate inversions and “his history working on international corporate mergers for a Bermuda-based investment firm.”

Wall Street

“Wall Street’s perspective is already well-represented in the administration,” Franken said.

The Obama administration has stood behind Weiss, an author of a tax policy report published by the Center of American Progress, a Washington policy group aligned with Democrats.

“This is somebody who has very good knowledge of the way that the financial markets work,” White House Press Secretary Joshua Earnest said Dec. 8. “That is critically important when you’re asking somebody to take on a position in the federal government that has such a significant bearing on those markets.”

Progressive groups have been ramping up pressure on Democrats to oppose Weiss.

CREDO Action, a San Francisco-based group that calls itself a social-change organization that funds progressive nonprofits, has been circulating a petition urging senators to oppose Weiss. It has collected more than 120,000 signatures.

The Progressive Change Campaign Committee, which has supported primary challenges to Democrats, urged its members in a Dec. 8 e-mail to press for opposition to Weiss.

Making Money

“Antonio Weiss made millions by helping American companies like Burger King move their headquarters overseas to escape taxes,” the group’s e-mail said. “This cost us money that could be used to create jobs.”

A MoveOn.org member posted a petition on the group’s website asking lawmakers to “take Senator Warren’s lead and reject Weiss’s nomination.” That measure has more than 30,000 signatures.

The nomination would come before the Senate Finance Committee next year. The next chairman, Republican Orrin Hatch of Utah, has said he is inclined to support Weiss.

Another concern Manchin cited about the nomination is reports that Weiss will receive a $20 million payout from Lazard if he leaves. Weiss will pick up unvested income ahead of schedule if confirmed for the job, totaling about $16.2 million in stock and as much as $5 million in deferred pay.

Revolving Door

“This kind of an arrangement and human nature suggests he will be especially sympathetic to Lazard’s lobbying efforts,” Manchin said. “Public service is a noble cause, and a $20 million golden parachute makes it very hard to gain the public trust.”

In a speech Dec. 9, Warren challenged Weiss’s credentials, saying a “well-oiled” revolving door between Wall Street and its regulators favors banks’ interests at the expense of consumers. She criticized Obama for nominating an executive who worked on corporate inversion deals.

Warren said Weiss’s selection would perpetuate close ties between the government and banks. She cited figures showing the amount of time and money Goldman Sachs Group Inc., JPMorgan Chase & Co. and other financial companies spend trying to influence regulators in Washington.

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Under pressure from progressive groups to reject Wall Street influence, three more Senate Democrats yesterday turned against the nomination of Antonio Weiss for a senior post at the U.S. Treasury Department.President Barack Obama's choice of Weiss, an investment banker at...
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Thursday, 11 December 2014 07:03 AM
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