Jeb Bush’s Big Lehman Brothers Problem

The right's pundits and Fox News continually to talk breathlessly about Clinton scandals, but they are noticeably quiet when it comes to scandals involving Republicans, especially the Bush family which has had more than its share of questionable business deals - indeed, Neil Bush of failed savings and loan fame has become entirely invisible.  But not to worry, Jeb "Jebbie" Bush has plenty of his own just waiting to get the attention that they deserve.  One involves Jebbie's very lucrative job advising Lehman Brothers, one of the firms that triggered the financial collapse causing the Great Recession.  And not only are the right wing pundits silent, but so is Jebbie.  A piece in The Daily Beast looks at what Jebbie is trying to hide.  Here are excerpts:

[Jeb Bush]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.
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’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. . . . 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.

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. . . . 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.

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.

[F]ormer 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.

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 . . .

[A]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.”

Jeb Bush - Damaged Goods for the GOP?

Yesterday, deranged self-loathing closet case Rick Santorm announced that he will be running for president in 2016.  He's but the latest in a list of clown car candidates that seek to be the GOP standard bearer in 2016.  Given the lunacy of the GOP candidate field, it is perhaps no wonder that some in the so-called GOP establishment would like to have Jeb Bush as the GOP presidential nominee.  At least the man isn't outright insane.  But, as a piece in Salon suggests, Bush may not be the squeaky clean candidate that some think he is.  Here are some article highlights:

Whenever the deep thinkers of the Republican establishment glance at their bulging clown car of presidential hopefuls — with out-there Dr. Ben Carson, exorcist Bobby Jindal, loudmouth Chris Christie and bankruptcy expert Donald Trump jammed against Sens. Rand Paul and Ted Cruz, to name a few — they inevitably start chattering about “Jeb Bush.”

Never mind that his father was a one-term wonder of no great distinction or that his brother is already a serious contender, in the eyes of historians, for worst president of the past 100 years. And never mind that on the issues most controversial among party activists — immigration and Common Core educational standards — he is an accursed “moderate.”

Lacking any especially attractive alternative, powerful Republicans are pushing Bush to run in 2016.

Bush, a politician who has been around for more than 20 years, is so little-known to the American public. Most voters are ignorant about Bush’s record in Florida, where he was an exceptionally right-wing governor. They either don’t know or don’t remember, for example, how he signed a statute enabling him to intervene in the case of Terri Schiavo, a woman in a persistent vegetative state, despite her husband’s wishes. Florida’s highest court later voided that law as unconstitutional — and the conservative majority on the U.S. Supreme Court likewise rejected an appeal.

If Bush runs, extremism and corruption in the Sunshine State during his tenure will provide ample fodder for investigative reporters and primary opponents, as will many episodes in his long business career.

Five months after he left the governor’s mansion in 2007, he joined Lehman Brothers as a “consultant.” No doubt he was well-compensated, as reporters may learn if and when he releases his tax returns someday. The following year, Lehman infamously went bust — and left the state of Florida holding about $1 billion worth of bad mortgage investments.  

There are many equally fascinating chapters in the Jeb dossier, rooted in his declaration three decades ago that he intended to become “very wealthy” as a developer and, yes, a “consultant.” His partners back then included a certain Miguel Recarey, whose International Medical Centers allegedly perpetrated one of history’s biggest Medicare frauds. . . . . . Indicted by the feds, Recarey fled the country — but not before Jeb placed a call on his behalf to his presidential dad’s health and human services secretary, Margaret Heckler. For serving as the flunky of a crook, he received a generous tip of $75,000 from Recarey, a mob associate.

He performed a similar service, with more success, on behalf of the Cuban militant Orlando Bosch, for whom he sought a presidential pardon from his father. The boastful murderer of dozens of innocent people — and a prosecution target of the U.S. Justice Department — Bosch deserved a pardon about as much as the worst jihadi in Gitmo. But his sponsors were the same Cuban-Americans in Miami who had fostered Jeb’s real estate business there, so he ignored the Republican attorney general’s denunciation of Bosch as an “unreformed terrorist.”

If Jeb runs for president, it will be fascinating to see whether the mainstream press, which vetted his brother George W. so inadequately during the 2000 presidential race, performs any better this time. But one way or another, American voters are going to learn much more about front-runner Jeb than they know — or remember — today.

Ouch!

Republican Economic Plan Wreaks Havoc

Barely more than a week ago, the U. S. government stepped in and more or less nationalized Fannie Mae and Freddie Mac. Today, two huge brokerage houses cease to exist and the Dow drops 504 points. Yet despite this economic melt down, John McSenile thinks "the economy is basically sound." What planet does McSenile live on? In this area of the country - which is somewhat insulated from wild economic shifts due to the huge payroll of the U. S. Military signs are everywhere that the economy is sinking. Especially, in any industries relating to construction or residential real estate although the ripple effect extends far beyond those industries. Here are highlights from The Economist concerning the fragile economy:

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EVEN by the standards of the worst financial crisis for at least a generation, the events of Sunday September 14th and the day before were extraordinary. The weekend began with hopes that a deal could be struck, with or without government backing, to save Lehman Brothers, America’s fourth-largest investment bank. Early Monday morning Lehman filed for Chapter 11 bankruptcy protection. It has more than $613 billion of debt.

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Other vulnerable financial giants scrambled to sell themselves or raise enough capital to stave off a similar fate. Merrill Lynch, the third-biggest investment bank, sold itself to Bank of America. . . The situation remains fluid, and investors stampeded towards the relative safety of American Treasury bonds. Stockmarkets tumbled around the world.

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With these developments the crisis is entering a new and extremely dangerous phase. If Lehman's assets are dumped in a liquidation, prices of like assets on other firms' books will also have to be marked down, eroding their capital bases. The government's refusal to help with a bail-out of Lehman will strip many firms of the benefit of being thought too big to fail, raising their borrowing costs.

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Wall Street has company in its misery. Washington Mutual, a big thrift, is fighting for survival under a new boss. Even more worryingly, so is AIG, America’s largest insurer, thanks to a reckless foray into CDSs of mortgage-linked collateralised-debt obligations.

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Even if markets can be stabilised this week, the pain is far from over—and could yet spread. Worldwide credit-related losses by financial institutions now top $500 billion, of which only $350 billion of equity has been replenished. This $150 billion gap, leveraged 14.5 times (the average gearing for the industry), translates to a $2 trillion reduction in liquidity. Hence the severe shortage of credit and predictions of worse to come. . . . . As spectacular as this weekend was, more drama is on the way.

In Frantic Day, Wall Street Banks Teeter

The Chimperator and the GOP created the no rules and no oversight atmosphere that created the current economic melt down which, just a week after the nationalization of Fannie Mae and Freddie Mac, has now claimed two of the largest financial firms on Wall Street: Merrill Lynch and Lehman Brothers. Between the two firms, the fate of some 85,000 jobs are now up in the air. Inasmuch as the McSenile/Palin ticket is in essence offering voters more of the same policies and mindset that created the current economic disaster, why would anyone sane and rational support that ticket? Oops! I forgot, the Christianist base of the GOP is not sane or rational. It is simply mind boggling that anyone with any sense isn't running sceaming away from the GOP ticket. Here are highlights from tomorrow's New York Times looking at the fall of these two former financial giants:

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In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself to Bank of America for roughly $50 billion to avert a deepening financial crisis while another prominent securities firm, Lehman Brothers, hurtled toward liquidation after it failed to find a buyer, people briefed on the deals said.

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The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of tens of billions of dollars in losses because of bad mortgage finance and real estate investments.

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They culminated a weekend of frantic around-the-clock negotiations, as Wall Street bankers huddled in meetings at the behest of Bush administration officials to avoid a downward spiral in the markets stemming from a crisis of confidence. “My goodness. I’ve been in the business 35 years, and these are the most extraordinary events I‘ve ever seen,” said Peter G. Peterson, co-founder of the private equity firm the Blackstone Group, who was head of Lehman in the 1970s and a secretary of commerce in the Nixon administration.

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How things play out could affect the broader economy, which has been weakening steadily as the financial crisis has deepened over the last year, with unemployment increasing as the nation’s growth rate has slowed. What will happen to Merrill’s 60,000 employees or Lehman’s 25,000 employees remains unclear. Worried about the unfolding crisis and its potential impact on New York City’s economy, Mayor Michael R. Bloomberg canceled a trip to California to meet with Gov. Arnold Schwarzenegger. Instead, aides said, Mr. Bloomberg spent much of the weekend working the phones, talking to federal officials and bank executives in an effort to gauge the severity of the crisis.

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Lehman’s filing is unlikely to resemble those of other companies that seek bankruptcy protection. Because of the harsher treatment that federal bankruptcy law applies to financial-services firm, Lehman cannot hope to reorganize and survive. It was not clear whether the government would appoint a trustee to supervise Lehman’s liquidation or how big the financial backstop would be.