Obama nominating restructuring expert to lead IRS amid political controversy

8/1/2013

WASHINGTON — President Barack Obama has chosen a retired corporate and government official with experience managing numerous organizations in crisis to take over an Internal Revenue Service under fire for screening of political groups.

In a statement obtained by The Associated Press, Obama said his nominee for commissioner of the tax agency, John Koskinen, “is an expert at turning around institutions in need of reform.”

“With decades of experience, in both the private and public sectors, John knows how to lead in difficult times, whether that means ensuring new management or implementing new checks and balances,” Obama said in the statement. “Every part of our government must operate with absolute integrity and that is especially true for the IRS. I am confident that John will do whatever it takes to restore the public’s trust in the agency.”

Koskinen came in to overhaul mortgage buyer Freddie Mac after its near collapse in the financial crisis at the end of the George W. Bush administration. The 73-year-old also helped restructure the assets of the largest failed life insurance company in U.S. history, Mutual Benefit Life, and reorganize the Penn Central Transportation Company after it became the largest bankruptcy in U.S. history.

His government experience includes handling preparation for the Year 2000 challenge for President Bill Clinton and helping restore the District of Columbia to financial stability after years of mismanagement as city administrator from 2000-2003.

Koskinen’s nomination to a five-year term must be confirmed by the Senate.

The IRS has been under siege since May when agency officials acknowledged that agents working in a Cincinnati office had improperly targeted tea party groups for extra scrutiny when they applied for tax-exempt status. The IRS has since released documents suggesting that progressive groups may have been targeted, too.

Democrats in Congress have highlighted the possibility that liberal groups were also abused to counter charges by some Republicans that that the targeting was politically motivated.

Congressional investigations have so far shown that IRS supervisors in Washington — including lawyers in the chief counsel’s office — oversaw the processing of tea party applications. But there has been no evidence that anyone outside the IRS directed the targeting or that agents were politically motivated.

Obama ousted acting IRS Commissioner Steven Miller in May when the revelations came to light. The president appointed former White House budget official Danny Werfel as acting commissioner while he searched for a nominee.

An administration official, speaking on a condition of anonymity since the search was private, said the president directed his team to above all find someone with extensive experience taking on organizations in crisis and knowledge of best practices to turn them around. Koskinen’s corporate restructuring experience includes 21 years at the Palmieri Company consulting firm, where his positions included CEO and chairman, president, and vice president.

Larry Hirsch, who served on the Freddie Mac board while Koskinen was chair, credited him with turning around rock-bottom morale at the company as it relied on a government bailout to survive. Koskinen took over as interim chief after its top executive resigned and a month later the chief financial officer committed suicide.

“Obviously after the financial crisis, the company was in internal and external crisis,” said Hirsch, a Republican who now heads the Washington-based Center for European Policy Analysis and is chairman of private equity group Highland Partners. “John walked in and immediately handled what was happening with the company. He had that quiet strength and openness to take a very depressed management team and employee group to give them a confidence they were valued and the company had a future.”

Koskinen also has served as president of the United States Soccer Foundation and was deputy director for management at the Office of Management and Budget under Clinton, who later named him chair of the President’s Council on Year 2000 Conversion. He serves on the boards of AES Corp. and American Capital, Ltd.

Earlier in his career, he worked for Sen. Abraham Ribicoff, D-Conn., Mayor John Lindsey of New York City and the National Advisory Commission on Civil Disorders. He started his career as a lawyer, and has an undergraduate degree from Duke and law degrees from Yale.