New York (HedgeCo.Net) – Lawrence Summers, who is currently serving as Director of President Obama’s National Economic Council, made millions from his days working as a managing director for hedge fund D.E. Shaw & Co. 

The New York-based hedge fund, which oversees about $36 billion in capital, paid the former Treasury Secretary about $5.2 million over the course of 16 months starting in 2006.  And that’s not including bonuses.  

According to a financial disclosure released by the White House on Friday, Summers also raked in around $2.7 million in speaking fees for appearances at banks like Citigroup and Goldman Sachs.  Lehman Brothers Holdings Inc., who collapsed last year, paid Summers over $67,000 for one appearance this past July.

For an administration that wants to convey their dedication and support of increased regulation and the all-out war on corruption and excessive executive pay in corporate America, many feel the President may be choosing individuals who don’t necessarily share that view, at least not privately. 

Carol Browner, the White House Energy Policy Coordinator, is another member of the administration no stranger to hedge funds.  She still holds an interest in Albright Capital Management LLC, a hedge fund founded by former Secretary of State Madeleine Albright.  Browner said her holdings were worth between $450,000 and $1 million, and said she earned $450,000 last year by working for Albright Group LLC, a related consulting firm.  She is still owed between $350,000 and $750,000 in member distributions.

David Axelrod, former Chief Strategist for the Obama campaign and now the President’s Senior Advisor, was paid a $1.55 million salary when he worked for a public affairs firm.  According to those same disclosures, White House Chief of Staff Rahm Emanuel held about 1,000 shares of American International Group, Inc., although he claims he currently does not hold any shares of the company that was bailed out by taxpayer funded government aid. 

Despite the big pay days, the conflicts of interest that potentially exist may play a bigger role in public dismay.  In addition to his $3.9 million salary at a law firm, Deputy White House National Security Adviser Thomas Donilon represented clients such as Citigroup, Goldman Sachs and hedge fund Apollo Management LLP.  He also worked for Fannie Mae from 1999 to 2005.

“It just may be the reason that money keeps being thrown at banks and companies who have proven they are undeserving, is because the administration, like every single other administration, is stacked full of the same, rich people who would rather dole out money to their own than to the Americans who really need it,” said one blogger who remained anonymous. 

The White House contends there is no current conflict of interest with any cabinet member.  Speaking of Summers, White House spokesman Ben LaBolt said he “has been at the forefront of this administration’s work to shore up our nation’s financial system and to put in place a regulatory framework that will strengthen the financial system.” 

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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Tags: albright group, american international group inc, american-international-group, carol browner, chief strategist, david axelrod, e-shaw, financial disclosure, goldman-sachs, international-group-inc, lehman brothers, lehman-brothers-holdings, lehman-brothers-holdings-inc, madeleine albright, national economic council, public affairs firm, rahm emanuel, state madeleine albright, white house chief of staff

New York (HedgeCo.Net) – President-elect Barack Obama has been granted permission to dole out the second half of the $700 billion in the Troubled Asset Relief Program, after a vote of confidence from the Senate.  They shot down a resolution that would have prevented him from distributing it, after much criticism came from the handling of the first $350 billion by the Bush administration.

"I’m gratified that a majority of the U.S. Senate, both Democrats and Republicans, voted today to give me the authority to implement the rest of the financial rescue plan in a new and responsible way," Obama said in a statement after the vote.  “I know this wasn’t an easy vote because of the frustration so many of us share about how the first half of this plan was implemented.”

While most democrats were on board with the release of the funds, a few voted against it.  A final vote of 52-42 gave Obama his first legislative victory just days before taking office.  John McCain, who supported the enactment of the TARP program, voted against the release of the funds by Obama.

“If the Bush administration was going to continue to dole out this money, I wouldn’t give them three dollars, let alone $350 billion,” said Barbara Boxer, a California Democrat.

Republican Senator Jim Inhofe of Oklahoma expressed his disdain that it is “probably going to be one of the most egregious votes in the history of this institution."

Larry Summers, who Obama has chosen to head the White House National Economic Council, wrote a letter to Congress earlier this week, urging them to let Obama take action.  He focused on the fact that Obama would use a large chunk of the money to help troubled homeowners avoid foreclosures, while keeping public records so that all of the money could be accounted for.  In addition, he expressed their belief that small businesses and community banks should be getting more help.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com

Tags: barack obama, barbara boxer, bush administration, california democrat, chunk, community banks, democrat republican, democrats and republicans, disdain, enactment, john-mccain, larry summers, legislative victory, national economic council, president elect, republican senator, senator jim inhofe, three dollars, u s senate, vote of confidence

New York (HedgeCo.Net) – Financial institutions that have received generous assistance from Congress may be forced to restrict executive compensation and their dividends, if Barack Obama and his new Treasury have their way.

“Those receiving exceptional assistance will be subject to tough but sensible conditions that limit executive compensation until taxpayer money is paid back,” said Larry Summers, who Obama chose to head the White House National Economic Council.  He also said they would ban dividend payments beyond the minimum amounts while putting limits on stock buybacks.

Obama has expressed his disappointment with the current administration and the lax oversight in doling out the first $350 billion of the bailout, along with failing to focus on areas like housing and consumer credit.   Summers tackled the subject in a letter to Congress yesterday that outlined the issues Obama supports in distributing the other half of the $700 billion Troubled Asset Relief Program.

Summers told Congress that the President-elect believes there has been “too little transparency and accountability,” among the financial institutions.  In addition, Obama believes the executives acted irresponsibly and did not provide enough support for small-businesses owners.  Small businesses and community banks are where more of the money needs to be directed, Obama says.

In addition, he wants to provide help to struggling homeowners in order to avoid foreclosure, along with providing enhanced oversight of the relief program which includes public accounting to see how the money is being spent.

The House of Representatives will vote on a proposal this week that include some of the restrictions outlined by Summers.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com

Tags: accredited-investors, bailout, barack obama, businesses owners, community banks, consumer credit, current administration, dividend payments, dividends, executive compensation, financial-institutions, generous assistance, hedgeco, larry summers, lax oversight, national economic council, president elect, stock-buybacks, taxpayer money