mykeystrokes.com

"Do or Do not. There is no try."

“Kasich And Bush: The Lehman Brothers”: Mixing Investment Banking With Politics In A Robber Baron Era

Most of the stuff being written about soon-to-be official GOP presidential candidate John Kasich involves his struggle to qualify for the August 6 Fox News debate, though some observers really seem to think he’s a serious dark horse candidate if he can get his act together and deal with conservative anger at his decision to accept a Medicare expansion as governor of Ohio.

But an old problem for him is beginning to reemerge: his seven years as a managing director at Lehman Brothers, the firm whose meltdown in 2008 touched off the global financial crisis that in turn led to the Great Recession. Bloomberg Politics‘ Mark Niquette has the story:

Kasich’s Lehman career, which included deals for companies from Google Inc. to Cleveland-based manufacturer ParkOhio, will test the presidential campaign that the two-term Ohio governor plans to start this month.

While his opponents have depicted his stint at the doomed bank as a period during which he cashed in as millions suffered, Kasich makes the case that he gained finance experience that made him a better public official.

“If people want to attack me, I’ll tell them what I did, and I think it’s been great,” Kasich said in an interview Wednesday during a visit to South Carolina.

This is why Niquette describes Kasich’s Lehman tenure as representing a “Rorschach Test” for how one view’s Kasich’s career: did it taint him or enhance his long resume? The same could be asked of his service as one of Newt Gingrich’s lieutenants in the Republican Revolution of the 1990s.

As it happens, Kasich is not the only Republican candidate who worked extensively for Lehman Brothers. So did Jeb Bush, who was an “advisor” to the firm and then to its successor, another bank with a less than ideal reputation, Barclay’s. In a Daily Beast column last week, Charles Gasparino suggests that Bush’s refusal to answer questions about what he did for both banks could significantly undermine the claim of total transparency he made when releasing old tax returns.

Not much is known about what Bush actually did for Lehman—the firm that went belly-up in 2008 and sparked the wider financial crisis, and Barclays, the bank that purchased Lehman out of bankruptcy and continues to work out of its midtown Manhattan headquarters. He began working for the former after his term as Florida governor ended in 2007, and continued working for the latter until the end of 2014, when he decided to run for president.

The two banks were his biggest sources of income in recent years: Bush earned more than $14 million working for Lehman and then Barclays, which based on my understanding of simple math accounted for nearly half of the $29 million he made after he left government. Yet in Tuesday’s disclosure, and even in many of his public comments, Bush has downplayed his work for the two banks.

“I also was hired as a senior advisor to Barclays where I advised their clients on a wide range of global economic issues with a mind towards navigating government policies,” he writes in an essay that accompanied the tax returns. It is the only sentence that refers to his time at Barclays. And he doesn’t mention Lehman at all.

Bush has denied any responsibility for one bit of toxic Lehman Brothers fallout: the huge bath taken by Florida state agencies and local governments who invested their assets in a state fund managed by the bank when it folded. Despite the denials, suspicions remain thanks to this big coincidence noted by the Tampa Bay Times:

The storied bank hired former Gov. Jeb Bush as a consultant in June 2007, five months after he left office. As governor, Bush also served as a trustee for the State Board of Administration, which invests public money.

Lehman was the dominant Wall Street broker that sold the SBA $1.4 billion of risky, mortgage-related securities that started tanking in August 2007.

Bush has said he had nothing to do with those sales.

So there’s some smoke but no fire so far, but I doubt the association of two presidential candidates with a bank whose name is a byword for failed promises will entirely go away. Indeed, if Kasich’s campaign survives its early tests I wouldn’t be surprised if one of their many rivals starts referring to them together as the “Lehman Brothers.” No specific allegation will be necessary to make the line damaging. Them’s the breaks when you mix investment banking with politics in a Robber Baron era.

 

By: Ed Kilgore, Contributing Writer, Political Animal Blog, The Washington Monthly, July 9, 2015

July 10, 2015 Posted by | Jeb Bush, John Kasich, Lehman Brothers | , , , , , , | 1 Comment

“Jeb Bush’s Big Lehman Brothers Problem”: Jeb Won’t Tell You What Jeb Did Exactly While Working On Wall Street

Jeb Bush says he released 33 years of tax returns this week because he wants to be the most transparent candidate to run for president in 2016. But if that’s really the case, why is he continuing to obfuscate some of his most lucrative and potentially controversial business dealings he had before announcing his candidacy, like his work as an “adviser” for investment bank Lehman Brothers?

So, if Jeb won’t tell you what Jeb exactly did while working on Wall Street, in the interests of transparency and disclosure, I will try.

Not much is known about what Bush actually did for Lehman—the firm that went belly-up in 2008 and sparked the wider financial crisis, and Barclays, the bank that purchased Lehman out of bankruptcy and continues to work out of its midtown Manhattan headquarters. He began working for the former after his term as Florida governor ended in 2007, and continued working for the latter until the end of 2014, when he decided to run for president.

The two banks were his biggest sources of income in recent years: Bush earned more than $14 million working for Lehman and then Barclays, which based on my understanding of simple math accounted for nearly half of the $29 million he made after he left government. Yet in Tuesday’s disclosure, and even in many of his public comments, Bush has downplayed his work for the two banks.

“I also was hired as a senior advisor to Barclays where I advised their clients on a wide range of global economic issues with a mind towards navigating government policies,” he writes in an essay that accompanied the tax returns. It is the only sentence that refers to his time at Barclays. And he doesn’t mention Lehman at all.

In recent weeks I’ve interviewed numerous Wall Street executives about Jeb Bush, and his role at both firms. What emerges is a portrait of a bank “adviser” who operated more like a high-level investment banker.

A spokeswoman for Bush declined to provide specifics about his work for the banks other than point to various media accounts, including those by this reporter. But Bush, according to people with direct knowledge of his activities, helped the firm look for business from well-heeled clients, including everyone from hedge funds to billionaire investors like Carlos Slim Helu, the Mexican business magnate widely regarded as the world’s richest man.

And, in at least one instance, he appears to have been Lehman’s go-to man for an emergency investment during the 2008 financial crisis.

In his seven years working for both banks, Bush was paid handsomely for this work, but he was also thrust into several awkward situations. A couple of years ago, he met with executives from the Minneapolis-based hedge fund Whitebox Advisors, a major Barclays client. Bush was supposed to be providing high-level insight into economic issues for the big hedge fund, which was one of a handful that correctly predicted the mortgage meltdown that eventually led to Lehman’s collapse.

But according to people who were present, the meeting soon turned uncomfortable when Whitebox’s chief executive, Andrew Redleaf, began to openly browbeat Bush on his brother’s record as president, including his handling of the Iraq War.

A spokeswoman for Redleaf declined to comment but would not deny the account; a spokeswoman for Bush had no comment.

One investment banker who has direct knowledge of Bush’s work for Lehman and Barclays says over the past seven years, the former governor has had “dozens and dozens and dozens” such meetings with clients and prospective clients of Lehman and Barclays. One of those clients included Slim, the Mexican billionaire, which looms as one of the most controversial aspects of Bush’s private business dealings. This is because, if accurate, it shows how closely Bush worked with Lehman officials during the firm’s final days.

According to former Lehman executives and various news reports, Bush met with Slim to ask him to make an investment in the firm in the summer of 2008. The investment never happened, and Lehman, famously, filed for bankruptcy in September of that year.

Bush campaign spokeswoman Kristy Campbell seems to deny at least some of this account. “Governor Bush met with Carlos Slim. It was regarding a specific telecom project,” she said in an email. “It was not regarding [a] general Carlos Slim infusion of cash to save Lehman Brothers.”

She would not deny, however, that this investment could in some way have helped prop up Lehman Brothers. In fact, Campbell also refused to outright deny past media reports, including this one in The New York Times, which cites emails explaining how Bush was involved in something called “Project Verde,” a firm-wide effort to get an investment from Slim and potentially help save Lehman from collapse in 2008.

Indeed, former Lehman executives say senior executives at the firm had discussed using Bush as a direct conduit to policymakers—including those reporting to his brother, who was president during the financial crisis—as Lehman was sinking further into insolvency and regulators balked at including the firm in their broader bailout packages.

Campbell says Bush never intervened with people reporting to his brother. “I do want to be very explicit on one point: Governor Bush was never asked to contact his brother’s administration regarding Lehman, and if he had been asked, would not have done it,” she said in an email.

Don’t expect to find any of what I’m reporting here when Bush releases a more detailed financial disclosure form in a few weeks with federal election officials. Given Lehman’s role in the 2008 financial meltdown, it’s easy to see why the former governor would like people to focus on what he billed the other day as the “broken tax system that’s one of the most convoluted and anti-growth in the world” rather than the work he did that earned him millions and forced him to pay into that broken tax system.

It’s of course hard to argue that Bush shouldn’t earn a living from his contacts in business that he made in government (Bush stated he never lobbied on behalf of a company) or inherited through his family connections. This is especially true when you consider the hyper-sleaze of Hillary Clinton, the likely Democratic nominee, who became a mega millionaire almost overnight by constructing possibly the most conflicted political-business-charity machines in modern political history.

But as an avowed small-government conservative, you would think Bush would know all about corrosive effects of crony capitalism, where executives at the big banks sit at its epicenter, ready to call in favors from politicians who in turn can help make those executives make a lot of money. For that reason, it’s time for Jeb to fess up about all the work he did for Lehman and Barclays. Only then can he brag that he’s acting “in the spirit of transparency.”

 

By: Charles Gasparino, The Daily Beast, July 3, 2015

July 5, 2015 Posted by | Financial Crisis, Jeb Bush, Lehman Brothers | , , , , , , , | 1 Comment

“Jeb Bush Didn’t Build That”: He Made His Money The Bush Way, By Trading On His Family Name

The article of the day is this detailed exploration of Jeb Bush’s complicated history in business by Robert O’Harrow and Tom Hamburger, which explores Bush’s talent for hooking up with people who turned out to be fraudsters and con artists and looks at how he became rich during the times when he wasn’t serving in public office. What does this history tell us about the kind of president Bush would be? We have to be careful about how we answer that question.

Bush likes to tout his experience in business as one of the reasons he’s well-qualified to be president, so the kind of experience he had is certainly worth examining. But as of yet, he hasn’t really shared the insights he gained about the economy that are unavailable to those who have not been so deeply involved in the world of commerce. And while it’s certainly interesting that he found his way to partner with multiple “dubious characters,” as the article describes them, there’s not much reason to believe that he was some kind of shady operator himself. But he did make his money the Bush way: by trading on his family name and the perception that because of who his father was (or later, because of who his brother was), he would have far-reaching influence that could help other people make money. For instance:

For a time, Bush also sat simultaneously on the boards of six corporations, including health industry giant Tenet Healthcare, earning as much as $3 million in fees and grants of stock, according to a Post analysis of financial documents. He also made more than 100 speeches at $50,000 or more per appearance, according to a New York Times report.

In June 2007, Bush signed on as an adviser to Lehman Brothers, the financial services giant. When Lehman was on the verge of collapse during the mortgage-meltdown crisis the next year, Richard S. Fuld Jr., Lehman’s beleaguered chief executive, asked Bush to use his cachet and reach out to Mexican billionaire Carlos Slim Helu, then the second-richest man in the world, the New York Times reported.

That effort failed. When the London-based Barclays bank bought Lehman’s North American operations, Bush moved to that firm as a senior financial consultant. He made $1 million a year, the Times said.

I’d be interested to hear the conservatives who are outraged by Hillary Clinton making millions in speaking fees explain how this kind of thing is completely different. After all, in both cases, people tossed large sums of money at the politician in question not because of his or her skills, but because of his or her identity. Again and again, companies found it in their interest to have Jeb Bush as a partner, consultant or board member, and it wasn’t for his technical expertise in their particular line of work. For instance, I’m pretty sure I know about as much about manufacturing prefabricated building panels for emergency housing as Bush did in 2007, i.e. nothing, but nobody’s offering to pay me $15,000 a month for “advice” on their prefabricated building panel business, as a company called InnoVida did for Bush.

That doesn’t make him a criminal. If a bunch of corporations wanted to put me on their boards, where I’d make millions for doing almost nothing, I might take them up on it, too. It’s only problematic if Bush thinks that experience has really taught him how the economy works.

I’ve long held that there are few more ridiculous characters in politics than the person who comes before the voters and says, “Vote for me, because I’m not a politician, I’m a businessman” (there are a couple of them running against Bush in the GOP primaries). It’s akin to someone saying, “I’m the person who can fix your leaky pipes, because I’m not a plumber, I’m a podiatrist.” Bush isn’t quite like those people, because he’s not offering his business experience as the sum total of his preparation for the presidency. But if he’s going to say that his business experience gives him a valuable perspective on matters economic that will produce different decisions than those other candidates make, let’s hear how.

As of yet, Bush hasn’t released a detailed economic plan. He has said that if he’s elected, he’ll have the economy growing at a consistent rate of 4 percent per year, which would make him far and away the most economically successful president in recent American history. In other words, at the moment his plan is essentially, “Elect me, and it’s puppies and rainbows for everyone.”

It’s possible that when he finally releases the details, Bush’s program will be so creative and transformative that it will blow everyone’s mind — and only a guy who had worked making deals for water pumps in Nigeria and real estate in Florida could have devised it. On the other hand, it might be pretty much what every other Republican advocates: cut taxes, cut regulations, await glorious new dawn of prosperity. I know which one I’m betting on.

 

By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, June 29, 2015

July 3, 2015 Posted by | Economic Policy, GOP Presidential Candidates, Jeb Bush | , , , , , , , , | Leave a comment

“The Battle Of The Plutocrats”: Mitt’s Snit; If Anybody’s Going To Be The Candidate Of The Entitled Rich, It’s Me!

Is there anything more American than the spectacle of two entitled rich guys fighting over who gets to be the presidential candidate of the 1 percent? First former Florida Gov. Jeb Bush announced he’s “exploring” the race, and the next thing you know Mitt Romney says: “Me too!”

It’s true Romney hadn’t ruled out running for president, but he was sounding relentlessly skeptical about a third try – until Bush announced his presidential explorations. By “exploring,” Bush meant corralling the party’s major donors, many of them former Romney backers, who are terrified by the idea of the nominating process being hijacked by eccentric Sen. Rand Paul or a can’t-win Christian right loser like Rick Santorum, Mike Huckabee or the terrifying Ted Cruz.

That’s all it took for Romney to let supporters “leak” the news Friday that he, too, was “exploring” another bid.

Over the weekend the Washington Post ran a long profile of the relationship between the two men, which it said was characterized by “competitiveness and snippiness.” It’s a fun read. Apparently Mitt’s still mad that Bush took his time endorsing him in 2012, waiting until after Florida’s crucial primary (which Romney won anyway), and that he criticized Romney’s campaign moves on immigration.

Also: Romney is worried that Bush’s work for Lehman Brothers and Barclays “makes Bush vulnerable to the same kind of Democratic attacks that he faced in 2012 over his career as Bain Capital co-founder and chief executive.”

That makes Romney the logical alternative how?

The piece makes the rationale for a Romney run sound like a tantrum: “Jeb endorsed me too late, he criticized my campaign, and if one idle plutocrat who hasn’t won public office for more than a decade can become president, it’s going to be me!”

In fact, the real driving force seems to be entitlement. As Bill Kristol put it (and he knows a thing or two about nepotism and entitlement): “A Romney-Bush race would be more personal — about whose turn it is and who is owed it.”

“Whose turn it is and who is owed it.” That reminded me of Ann Romney telling ABC’s Diane Sawyer in 2012:  “It’s Mitt’s time. It’s our turn now.”

Bush and Romney are two sons of wealthy accomplished fathers, two sons of noblesse oblige. One father won the presidency (but alas, only for one term); the other was cruelly denied it. Both ran for governor in states where registered Democrats outnumbered Republicans and won. Both are rightly skeptical of the long term future of a party that only attracts white people, but Romney caved to the right when he ran in 2012; Bush seems to think he can get away without doing that.

At least Bush seems to have a rationale for a run — to articulate a new way of talking about Latinos and gay people that probably doesn’t lead to policy changes, but at least tests whether kinder, gentler rhetoric can help grow the party nationally. What is Romney’s? He’s told friends “he considers poverty the topic du jour.” But poverty was just as high in 2012 and Romney had no answer for it – except to famously disdain “the 47 percent of Americans…who won’t take personal responsibility and care for their lives.”

Although as a Democrat I’d enjoy the spectacle, I find it very unlikely both Bush and Romney will run. The GOP’s donor class can’t control the Tea Party, but they can probably force one of these guys to the sidelines, if he doesn’t go willingly, and I’d guess it’s Romney. He sounded convinced, and convincing, in the documentary “Mitt,” when he told his family, “My time on the stage is over, guys.” No longer clinging to the notion that “it’s our turn now,” Ann Romney agreed. “We’re done,” she said.

Though Romney is now telling friends that the once-reluctant Ann is on board with a third run, she was right back in 2012. They’re done.

 

By: Joan Walsh, Editor at Large, Salon, January 12, 2015

January 14, 2015 Posted by | GOP Presidential Candidates, Jeb Bush, Mitt Romney | , , , , , , | 1 Comment

“Jeb Bush Counts On Short Memories”: Trying To Clean Up His Act Now That He’s All Sleek With Wealth

So not that very long ago, Jeb Bush’s aggressive and controversial business tactics, mostly focused on the politically perilous area of private equity management in conjunction with shadowy foreign partners, especially in China, convinced some observers he sure wasn’t acting like somebody planning a presidential campaign. Now there are signs that what Bush has been engaged in lately is the tail-end of a financial fattening-up period before the long hard winter of a campaign. Here’s how the L.A. Times‘ Joseph Tanfani puts it:

After leaving office in 2007, he set up Jeb Bush and Associates, a management consulting firm. His son, Jeb Bush Jr., serves as managing partner. Bush has said the firm’s clients range from Fortune 500 companies to small tech startups, but Campbell declined to discuss the company’s business or identify its clients.

That same year, Bush also was hired as an advisor to Lehman Brothers, the New York investment bank and financial services firm. When Lehman collapsed in bankruptcy in 2008 amid the global financial crisis, Bush shifted to Barclays, the London-based multinational banking and financial services giant that bought Lehman Brothers’ North American divisions.

He got involved in a venture that provides disaster response services. He and two partners also set up another company, Maghicle Driverless, that is trying to develop self-driving vehicles for passengers and cargo.

“He was grabbing at a lot of things to make money quickly,” said Susan MacManus, a political science professor at the University of South Florida.

Now he appears to be trying to clean up his act now that he’s all sleek with wealth and ready to focus on a restoration of the family dynasty.

[Kristy] Campbell, the Bush spokeswoman, said he will leave Barclays by Dec. 31 to focus on a possible presidential run. She said his work for Lehman Brothers and Barclays was mostly offering clients “his perspective on the impact of economic trends, regulations and policies.”

Yeah, it’s a total coincidence Jeb associated himself with two of the world’s most recent examples of financial malfeasance. But that’s not the sort of thing Team Jeb is most worried about; it’s this:

[O]n Wednesday, Bush resigned from the board of directors of Tenet Healthcare Corp., also effective Dec. 31, according to a corporate filing. The Dallas-based company actively supported the 2010 Affordable Care Act, and has seen its revenue rise from it, an issue that could draw fire in Republican primaries.

Bush earned cash and stock awards worth nearly $300,000 from Tenet in 2013, according to corporate filings. He also sold Tenet stock worth $1.1 million that year, the records show.

Can’t be associating with Obamacare lovers, can he?

Jeb appears to hope his whole pattern of financial system bottom-feeding and door-opening for shadowy global interests will be forgotten once the campaign is underway. In that respect as in others, he is the appropriate representative of a Republican Establishment that views lack of wealth as the most unforgivable character flaw.

 

By: Ed Kilgore, Contributing Writer, Political Animal, The Washington Monthly, December 26, 2014

December 27, 2014 Posted by | GOP Presidential Candidates, Jeb Bush | , , , , , , , , | Leave a comment

%d bloggers like this: