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Obama picks restructuring expert John Koskinen to head IRS

President Obama on Thursday nominated John Koskinen to head the embattled Internal Revenue Service.

Koskinen oversaw the government’s preparations for the year 2000 and helped lead Freddie Mac out of its financial crisis. If confirmed by the Senate, part of Koskinen’s task will be to restore confidence in the IRS, which is recovering from recent scandals involving inappropriate behavior toward tax-exemption applicants and lavish spending on a conference in Anaheim, Calif.

“John is an expert at turning around institutions in need of reform,” Obama said Thursday. “I am confident that John will do whatever it takes to restore the public’s trust in the agency.”

Koskinen served as non-executive chairman of Freddie Mac from 2008 until 2011 and as chief executive from 2009 until the end of his tenure with the mortgage giant. He was also deputy mayor and city administrator for D.C. from 2000 until 2003, under former mayor Anthony A. Williams.

In the private sector, Koskinen served as president and chief executive for the Palmieri Company, a management consulting firm.

Sen. Orrin G. Hatch (R-Utah), the ranking member of the Senate Finance Committee, suggested he was caught off guard Thursday.

“Given the magnitude of the scandal facing the IRS, I am more than a little mystified that neither the president nor the secretary of Treasury consulted with or told me in advance about this decision to select this nominee,” he said in a statement.

Hatch said Koskinen would be “fairly and thoroughly considered” by the Senate panel, adding that he would press the nominee to address questions about the IRS’s ability to implement parts of the Affordable Care Act.

If confirmed, Koskinen would replace acting IRS Commissioner Daniel Werfel, who the president selected after an inspector general’s report revealed in May that the agency had inappropriately targeted groups for extra scrutiny based on their political ideology. The previous commissioner, Steven Miller, was forced to resign.

The Treasury Department approached Koskinen about leading the IRS before the controversy, but he declined, according to an administration official who spoke on the condition of anonymity in order to discuss the selection process. Treasury Secretary Jack Lew asked Koskinen to reconsider in the wake of the IRS’s problems, the official said.

Lew praised the nomination.

“Because John has a clear understanding of how to make organizations more effective and an unshakeable commitment to public service, he will be an exceptional leader who will . . . restore confidence in the IRS,” Lew said in a statement in which he also commended Werfel’s work.

Koskinen became non-
executive chairman of Freddie Mac in 2009, after the Obama administration placed the corporation under conservatorship in the wake of the subprime mortgage crisis. Soon after Koskinen’s arrival, the firm’s chief executive resigned and its chief financial officer committed suicide, leaving Koskinen to juggle their duties with his own until replacements could be named.

“Many people would have been unable to deal with all that stress, but he did, and the company did well,” said Ed Haldeman, who eventually became chief executive of Freddie Mac, serving until 2012.

During his tenure with D.C., Koskinen was credited with budget innovations that helped the District deal with a $323 million shortfall in 2003, including making better use of federal grants and the collection of Medicaid dollars, according to a Washington Post article that year.

“John Koskinen is the best appointment I have ever made,” Williams said Thursday.

Koskinen has a reputation for nonpartisan leadership.

“We had some very Republican kinds of people on the [Freddie Mac] board, but it was always collegial and cooperative on the board when John was chair,” Haldeman said. “He was very balanced in dealing with people and nonpartisan.”

Josh Hicks covers Maryland politics and government. He previously anchored the Post’s Federal Eye blog, focusing on federal accountability and workforce issues.

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