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Home > Jeb Bush Is Polling at 73% -- Among the World's Richest Bankers and
CEOs
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Jeb Bush Is Polling at 73% -- Among the World's Richest Bankers and CEOs
By Nomi Prins [1] / TomDispatch [2]
June 23, 2015
[This piece has been adapted and updated by Nomi Prins from her book All the
Presidents' Bankers: The Hidden Alliances That Drive American Power [3],
recently out in paperback (Nation Books).]
It's happening. As expected, dynastic politics is prevailing in campaign
2016. After a tease about as long as Hillary's, Jeb Bush (aka Jeb! [4])
officially announced his presidential bid last week. Ultimately, the two of
them will fight it out for the White House, while the nation's wealthiest
influencers will back their ludicrously expensive gambit.
And here's a hint: don't bet on Jeb not to make it through the Republican
gauntlet of 12 candidates (so far). After all, the really big money's behind
him. Last December, even though out of public office since 2007, he had
captured the support of 73% [5] of the Wall Street Journal's "richest CEOs."
Though some have as yet sidestepped declarations of fealty, count on one
thing: the big guns will fall into line. They know that, given his family
connections, Jeb is their best path to the White House and they're not going
to blow that by propping up some Republican lightweight whose father and
brother weren't president, not when Hillary, with all her connections and
dynastic power, will be the opponent. That said, in the Bush-Clinton battle
to come, no matter who wins, the bankers and billionaires will emerge
victorious.
The issue of political blood and family lines in Washington is not new.
There have been three instances in our history in which presidents have been
bonded by blood. Our second president John Adams and eighth president John
Quincy Adams were father and son. Theodore and Franklin Delano Roosevelt
were cousins. And then, of course, there were our 41st and 43rd presidents,
George H.W. and George W.
If Jeb becomes the 45th president, it will be the first time that three
administrations share the same blood and "dynastic" will have a new meaning
in America.
The Bush Legacy
The Bush political-financial legacy began when President Ronald Reagan chose
Jeb's father, George H.W., as his vice president. Reagan was also the first
president to choose a Wall Street CEO, Donald Regan, as Treasury secretary.
Then-CEO of Merrill Lynch, he happened to be a Bush family friend. And talk
about family tradition: once upon a time (in 1900, to be exact), Jeb's
great-grandfather, George Herbert Walker, founded G.W. Walker & Company. It
was eventually acquired by -- you guessed it! -- Merrill Lynch, which was
consumed by Bank of America at the height of the 2008 financial crisis.
That merger was pressed by, among others, George W. Bush's Treasury
Secretary (and former Goldman Sachs chairman and CEO), Hank Paulson. It
helped John Thain, Paulson's former number two at Goldman Sachs, who was by
then Merrill Lynch's CEO, out of a tight spot. Now chairman and CEO of CIT
Group, Thain is also a prominent member of the Republican Party who
sponsored [6] high-ticket fundraisers for John McCain during his 2008
campaign. Expect him to be there for Jeb. Paulson endorsed Jeb for president
on April 15th. That's how these loops go.
As vice president, George H.W. co-ran a task force with Donald Regan
dedicated to breaking down the constraints of the 1933 Glass-Steagall Act,
so that Wall Street banks could become ever bigger and more complex. Once
president, Bush promoted deregulation, while reconfirming Alan Greenspan,
who did the same, as the chairman of the Federal Reserve. In 1999, after
President Bill Clinton (Hillary!) finished the job that Bush had started by
overseeing the repeal of Glass-Steagall, banks began merging like mad and
engaging in increasingly risky and opaque practices that led to the
financial crisis that came to a head in George W.'s presidency. In other
words, it's a small world at the top.
The meaning of all this: no other GOP candidate has Jeb's kind of legacy
political-financial power. Period. To grasp the interconnections between the
Bush family and Wall Street that will put heft and piles of money behind his
candidacy, however, it's necessary to step back in time and see just how his
family helped lead us to this moment of his.
Bush Wins
By the time George H.W. Bush became president on January 20, 1989, the
economy was limping. Federal debt stood at $2.8 trillion. The savings and
loan crisis had escalated. Still, his deregulatory financial policies
remained in sync with those of the period's most powerful bankers, notably
Citicorp chairman John Reed, Chase (now JPMorgan Chase) Chairman Willard
Butcher, JPMorgan chief Dennis Weatherstone, and Bank of America Chairman
Tom Clausen.
With the economic odds stacked against him, Bush also remained surrounded by
his most loyal, business-friendly companions in Washington, who either had
tight relationships with Wall Street or came directly from there. In a
preordained arrangement with President Reagan, Bush retained Nicholas Brady,
the former chairman of the board of the blue-blood Wall Street investment
bank Dillon, Read & Co., as Treasury secretary.
Their ties, first established on a tennis court, extended to Wall Street and
back again. In 1977, after Bush had left the directorship of the CIA, Brady
even offered him a position at Dillon, Read & Co. Though he didn't accept,
Bush later enlisted Brady to run his 1980 presidential campaign and
suggested him as interim senator for New Jersey in 1982. The press dubbed
Brady Bush's "official confidant."
The new president appointed another of his right-hand men, Richard Breeden
(who had drafted a "Blueprint for Reform" of the banking industry as
directed by a task force co-headed by Bush), as his assistant for issues
analysis and later as head of the Securities and Exchange Commission (SEC).
Then, on February 6, 1989, Bush unveiled his plan to rescue the ailing
savings and loan (S&L) banks. Initial bailout estimates for 223 firms were
put at $40 billion. It only took the Bush administration two weeks to raise
that figure to $157 billion. On the offensive, Brady stressed that this
proposal wasn't a bailout. Instead, it represented "the fulfillment of the
Federal Government's commitment to depositors."
A few months later, under Alan Greenspan's Fed, JPMorgan Securities, the
investment banking subsidiary of JPMorgan Chase, became the first bank
subsidiary since the Great Depression to lead a corporate bond underwriting.
Over the next decade, commercial banks would issue billions of dollars of
corporate debt on behalf of energy and public utility companies as a result
of Greenspan's decision to open that door and Bush's deregulatory stance in
general. A chunk of it would implode in fraud and default after Bush's son
became president in 2001.
The S&L Blowout
The deregulation of the S&L industry between 1980 and 1982 had enabled those
smaller banks, or thrifts -- focused on taking deposits and providing
mortgages -- to compete with commercial banks for depositors and to invest
that money (and money borrowed against it) in more speculative real estate
ventures and junk bond securities. When those bets soured, the industry
tanked. Between 1986 and 1989, 296 thrifts failed. An additional 747 would
shut down between 1989 and 1995.
Among those, Silverado Banking went bankrupt in December 1988, costing
taxpayers $1.3 billion. Neil Bush, George H.W.'s son, was on the board of
directors at the time. He was accused of giving himself a loan from
Silverado, but denied all wrongdoing.
George H.W.'s second son, Jeb Bush, had already been dragged through the
headlines in late 1988 for his real estate relationship with Miguel Recarey
Jr., a Cuban-American mogul who had been indicted on one charge of fraud and
was suspected of racking up to $100 million worth of Medicare-related fraud
charges.
Meanwhile, the president was crafting his bailout plan to stop the S&L
bloodletting. On August 9, 1989, he signed the Financial Institution Reform,
Recovery, and Enforcement Act, which proved a backdoor boon for the big
commercial banks. Having helped stuff the S&Ls with toxic real estate
products, they could now profit by selling the bonds that were constructed
as part of the bailout plan, while the government subsidized the entire
project. Within six years, the Resolution Trust Corporation and the Federal
Savings and Loan Insurance Corporation had sold $519 billion worth of assets
for 1,043 thrifts that had gone belly up. Key Wall Street banks were
involved in distributing those assets and so made money on financial
destruction once again. Washington left the public on the hook for $124
billion in losses.
The Bush administration and the Fed's response to the S&L crisis (as well as
to a concurrent third-world debt crisis) was to subsidize the banking system
with federal and multinational money. In this way, a policy of privatizing
bank profits and socializing their losses and risks became embedded in the
American political system.
The New Banking Game in Town: "Modernization"
The S&L trouble sparked a broader credit crisis and recession. Congress was,
by then, debating the "modernization" of the financial services industry,
which in practice meant breaking down remaining barriers within institutions
that had separated deposits and loans from securities creation and trading
activities. This also meant allowing commercial banks to expand into
nontraditional banking activities, including insurance provision and fund
management.
The Bush administration aided the bankers by advocating the repeal of key
elements of the Glass-Steagall Act. Related bills to dismantle that
Depression-era act won the support of the House and Senate banking
committees in the fall of 1991, though they were defeated in the House in a
full vote. Still, the writing was on the wall. What a Republican president
had started, a Democratic one would soon complete.
In the meantime, the Bush administration was covering all the bases when it
came to the repeal of Glass-Steagall, which would be the nail in the coffin
of decades of banking constraint. As commercial bankers pushed to enter
non-banking businesses, Richard Breeden, Bush's SEC chairman, began
championing the otherside of the Glass-Steagall divide -- fighting, that is,
for the rights of investment banks to own commercial banks. And little
wonder, since such a deregulation of the financial system meant a potential
expansion of Breeden's power: the SEC would be tasked with monitoring the
growing number of businesses that banks could enter.
Meanwhile, Wendy Gramm, head of the Commodity Futures Trading Commission
(CFTC), promoted another goal the bankers wanted: unconstrained derivatives
trading. Gramm had first been appointed chair of the CFTC in 1988 by Reagan
(who called her his "favorite economist") and was then reappointed by Bush.
She was determined to push for unregulated commodity futures and swaps -- in
part in response to lobbying from a Texas-based energy trading company,
Enron, whose name would grow far more familiar to Americans in the years to
come. While awaiting legislative approval, bankers started sending their
trading exemption requests to Gramm and she began granting them.
9/11 Overshadows Enron
In early 2001, in the fading light of the rosy Clinton economy and an
election result validated by the Supreme Court, the second President Bush
entered the White House. A combination of Glass-Steagall repeal and the
deregulation of the energy and telecom sectors under Clinton catalyzed a
slew of mergers that consolidated companies and power in those industries
upon fabricated books. The true state of the economy, however, remained well
hidden, even as it teetered on a flimsy base of fraud, inflated stocks, and
bank-created debt. In those years, the corporate and banking world still
appeared glorious amid so many mergers. But the bankers' efforts to support
those transactions would soon give way to a spate of corporate bankruptcies.
It was the Texas-based energy-turned-trading company Enron that would emerge
as the poster child for financial fraud in the early 2000s. It had used the
unregulated derivatives markets and colluded with bankers to create a slew
of colorfully named offshore entities through which the company piled up
debt, shirked taxes, and hid losses. The true status of Enron's fictitious
books and those of other corporate fraudsters nonetheless remained
unexamined in part because another crisis garnered all the attention. The
9/11 attacks at the World Trade Center, blocks away from where many of
Enron's trading partners were headquartered (including Goldman Sachs, where
I was working that day), provided the banking industry with a reprieve from
probes. The president instead called on bankers to uphold national stability
in the face of terrorism.
On September 16, 2001, George W. famously merged financial and foreign
policy. "The markets open tomorrow," he said. "People go back to work and
we'll show the world." To assist the bankers in this mission, Bush-appointed
SEC chairman Harvey Pitt waived certain regulations, allowing corporate
executives to prop up their share prices as part of a plan to demonstrate
national strength by elevating market levels.
That worked -- for about a minute. On October 16, 2001, Enron posted a $681
million third-quarter loss and announced a $1.2 billion hit to shareholders'
equity. The reason: an imploding pyramid of fraudulent transactions crafted
with banks like Merrill Lynch. The bankers were now potentially on the hook
for billions of dollars, thanks to Enron, a client that had been bulked up
through the years with bipartisan support.
Amid this financial turmoil, Bush was focused on retaliation for 9/11. On
January 10, 2002, he signed a $317.2 billion defense bill. In his State of
the Union address, he spoke of an "Axis of Evil," of fighting both the
terrorists and a strengthening recession, but not of Enron or the dangers of
Wall Street chicanery.
In 2001 and again in 2002, however, corporate bankruptcies would hit new
records, with fraud playing a central role in most ofthem. Telecom giant
WorldCom, for instance, was found to have embellished $11 billion worth of
earnings. It would soon supplant Enron as America's biggest fraud of the
moment.
Bush Takes Action
On July 9th, George W. finally unveiled a plan to "curb" corporate crime in
a speech given in the heart of New York's financial district. Taking the
barest of swipes at his Wall Street friends, he urged bankers to provide
honest information to investors. The signals were now clear: bankers had
nothing to fear from their commander in chief. That Merrill Lynch, for
example, was embroiled in the Enron scandal was something the president
would ignore -- hardly a surprise, since the company's alliances with the
Bush family stretched back decades.
Three weeks later, he would sign the Sarbanes-Oxley Act, purportedly
ensuring that CEOs and CFOs would confirm that the information in their SEC
filings had been presented truthfully. It would prove a toothless and
useless deterrent to fraud.
And then the president acted: on March 19, 2003, he launched the invasion of
Iraq with a shock-and-awe shower of cruise missiles into the Iraqi night
sky. Two days later, by a vote of 215 to 212, the House approved his $2.2
trillion budget, including $726 billion in tax cuts. Shortly thereafter -- a
signal to the banking industry if there ever was one -- he appointed former
Goldman Sachs Chairman Stephen Friedman director of the National Economic
Council, the same role another Goldman Sachs alumnus, former co-Chairman
Robert Rubin, had played for Bill Clinton.
By the end of 2003, grateful bankers were already amassing funds for Bush's
2004 reelection campaign. A bevy of Wall Street Republicans, including
Goldman Sachs Chairman and CEO Henry Paulson, Bear Stearns CEO James Cayne,
and Goldman Sachs executive George Herbert Walker IV (the president's second
cousin), became Bush "Pioneers" by raising at least $100,000 each.
The top seven financial firms officially raised nearly three million dollars
for George W.'s campaign. Merrill Lynch emerged as his second biggest
corporate contributor (after Morgan Stanley), providing more than $586,254.
The firm's enthusiasm wasn't surprising. Donald Regan had been its chairman
and the Bush-founded investment bank G.H. Walker and Company, which employed
members of the family over the decades, had been absorbed into Merrill in
1978. Merrill Lynch CEO Earnest "Stanley" O'Neal received the distinguished
label of "Ranger" for raising more than $200,000 for Bush's reelection
campaign. It was a sign of the times that O'Neal and Cayne hosted Bush's
first New York City reelection fundraiser in July 2003.
Government by Goldman Sachs for Goldman Sachs
The bankers helped tip the scales in Bush's favor. On November 3, 2004, he
won his second term in a tight election. By now, bankers from Goldman Sachs
had saturated Washington. New Jersey Democrat Jon Corzine, a former Goldman
Sachs chairman and CEO, was on the Senate Banking Committee. Joshua Bolten,
a former executive director at the Goldman Sachs office in London, was
director of the Office of Management and Budget. Stephen Friedman, former
Goldman Sachs chairman, was one of George W.'s chief economic advisers as
the director of the National Economic Council. (He would later become
chairman of the New York Federal Reserve Board, only to resign in May 2009
amid conflict of interest charges concerning the pile of Goldman Sachs
shares he held while using his post to aid the company during the financial
crisis.)
Meanwhile, from 2002 to 2007, under George W.'s watch, the biggest U.S.
banks would fashion nearly 80% of the approximately $14 trillion worth of
global mortgage-backed securities (MBS), asset-backed securities,
collateralized debt obligations, and other kinds of packaged assets created
in those years. And subprime loan packages would soon become the
fastest-growing segment of the MBS market. In other words, the financial
products exhibiting the most growth would be the ones containing the most
risk.
George W. would also pick Ben Bernanke to replace Alan Greenspan as chairman
of the Federal Reserve. Bernanke made it immediately clear where his
loyalties lay, stating, "My first priority will be to maintain continuity
with the policies and policy strategies during the Greenspan years."
In 2006, two years after persuading the SEC to adopt rules that enabled many
of the "assets" being created to be undercapitalized and underscrutinized,
the president selected former Goldman Sachs CEO Henry Paulson to be his
third Treasury secretary. Joshua Bolten, who had by then had become White
House Chief of Staff, arranged the pivotal White House meeting between the
two men that sealed the deal. As Bush wrote in his memoir, Decision Points,
"Hank was slow to warm to the idea of joining my cabinet. Josh eventually
persuaded Hank to visit with me in the White House. Hank radiated energy and
confidence. Hank understood the globalization of finance, and his name
commanded respect at home and abroad."
Under Bush, Paulson, and Bernanke, the banking sector would buckle and take
the global economy down with it.
Goldman Trumps AIG
Insurance goliath AIG stood at the epicenter of an increasingly
interconnected financial world deluged with junky subprime assets wrapped up
with derivatives. When rating agencies Fitch, S&P, and Moody's downgraded
the company's credit worthiness on September 15, 2008, they catalyzed $85
billion worth of margin calls. If AIG couldn't find that money, Paulson
warned the president, the firm would not only fail, but "bring down major
financial institutions and international investors with it." According to
Bush's memoir, Paulson convinced him. "There was only one way to keep the
firm alive," he wrote. "The federal government would have to step in."
The main American recipients of AIG's bailout would, in fact, be legacy
Bush-allied firms: Goldman Sachs ($12.9 billion), Merrill Lynch ($6.8
billion), Bank of America ($5.2 billion), and Citigroup ($2.3 billion).
Lehman crashed, but Merrill Lynch and AIG were saved. The bankers with the
strongest alliances to the Bush family (and the White House in general)
needed AIG to survive. And it did. But the bloodletting wasn't over.
On September 18, 2008, George W. would tell Paulson, "Let's figure out the
right thing to do and do it." He would later write, "I had made up my mind:
the U.S. government was going all in."And he meant it. During his last
months in office, the Big Six banks (and marginally other institutions)
would thus be subsidized by an "all-in" program designed by Bernanke,
Paulson, and Geithner -- and later endorsed by President Barack Obama.
The bankers' unruliness had, however, already crippled the real economy.
Over the next few months, Bank of America, Citigroup, and AIG all needed
more assistance. And in that year, the Dow Jones Industrial Average would
lose nearly half its value. At the height of the bailout period, $19.3
trillion [7] in subsidies were made available to keep (mostly) American
bankers going, as well as government-sponsored enterprises like Fannie Mae
and Freddie Mac.
As George W. headed back to Texas, the economy and markets went into free
fall.
The Money Behind Jeb
Jump seven years ahead and, with the next Bush on the rise and the money
once again flowing in, it's still the age of bankers. Jeb already has three
mega super PACs -- Millennials for Jeb, Right to Rise, and Vamos for Jeb
2016 -- under his belt. His Right to Rise Policy Solutions group, which, as
a 501(c)(4) nonprofit, is not even required to disclose the names of its
donors, no less the size of their contributions, is lifting his contribution
tally even higher. None of these groups have to adhere to contribution
limits and the elite donors who contribute to them often prove highly
influential. After all, that's where the money really is. In the 2012
presidential election [8], the top 100 individual contributors to super PACs
and their spouses represented just 1% of all donors, but gave a staggering
67% of the money.
Of those, Republican billionaire Sheldon Adelson and his wife, Miriam,
donated $92.8 million [9] to conservative groups, largely through "outside
donor groups" like super PACs that have no contribution limits. Texas
billionaire banker mogul Harold Simmons and his wife, Annette, gave $26.9
million, and Texas billionaire homebuilder Robert Perry coughed up $23.95
million. Nebraska billionaire (and founder of the global discount brokerage
TD Ameritrade) John Joe Ricketts dished out $13.05 million. Despite some
early posturing around other candidates with fewer legacy ties, these heavy
hitters could all end up behind Bush 45. Dynasties, after all, establish the
sort of connections that lie in wait for the next moment of opportune
mobilization.
"All in for Jeb" isthe mantra on Jeb's official website [10] and in a sense
"all in," especially when it comes to national bankers, has been something
of a mantra for the Bush family for decades. With a nod to his two-term
record as Florida governor, Jeb put it this way: "We will take command of
our future once again in this country. I know we can fix this. Because I've
done it."
Based on Bush family history, by "we" he effectively meant the family's
billionaire and millionaire donors and its cavalcade of friendly bankers.
Topping that list, though as yet undeclared -- give him a minute -- sits
Adelson, who is personally and ideologically close to George W. In April,
the former president was paid a Clintonian speaking fee of $250,00 for a
keynote talk before the Republican Jewish Coalition meeting at Adelson's Las
Vegas resort. While Adelson has expressed concerns about Jeb's lack of
hawkishness on Israel when compared to his brother, that in the end is
unlikely to prove an impediment. Jeb is making sure of that. He recently
told [11] a gathering of wealthy New York donors that, when it came to
Israel, his top adviser is his brother. ("If you want to know who I listen
to for advice, it's him.")
Let's be clear. The Bush family is all in on Jeb and its traditional
banking allies are not likely to be far behind. There is tradition, there
are ties, there is a dynasty to protect. They are not planning to lose this
election or leave the family with a mere two presidents to its name.
The Wall Street crowd began rallying behind Jeb well before his candidacy
was official. Private equity titan Henry Kravis hosted a 25-guest
$100,000-per-head gathering at his Park Avenue abode in February, one of six
events with the same entry fee. In March, Jeb had his first Goldman Sachs
$5,000-per-person event at the Ritz Carlton in New York City, organized by
Dina Powell, Goldman Sachs Foundation head and George W. Bush appointee for
assistant secretary of state. A more exclusive $50,000 per head [12] event
was organized by Goldman Sachs exec, Jim Donovan, a key fundraiser and
adviser for Mitt Romney who is now doing the same for Jeb.
And then there's the list of moneyed financiers with fat wallets still to
get behind Jeb. New York hedge fund billionaire Paul Singer, who donated
[13] more than any other conservative in the 2014 election, has yet to swoop
in. Given the alignment of his foreign financial policy views and the Bush
family's, however, it's just a matter of time.
With the latest total super PAC figures still to be disclosed, we do know
that Jeb's Right to Rise super PAC claims to have raised $17 million from
the tri-state (New York, New Jersey, and Connecticut) area alone so far. Its
head, Mike Murphy, referred to its donors in a call [14] last week as
"killers" he was about to "set loose." He intimated that the July
disclosures would give opponents "heart attacks." Those are fighting words.
Sure, all dynasties end, but don't count on the Bush-Banker alliance going
belly up any time soon. Things happen in this country when mountains of
money begin to pile up. This time around, the Bush patriarchy will call in
every chip. And know this: Wall Street will be going "all in" for this
election, too. Jeb(!) and Hillary(!) will likely split that difference in
the primaries, then duke it out in 2016. Along the way, every pretense of
mixing it up with the little people will be matched by a million-dollar
check to a super PAC. The cash thrown about in this election will be epic.
It's not the fate of two parties but of two dynasties that's at stake.
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Links:
[1] http://www.alternet.org/authors/nomi-prins-0
[2] http://www.tomdispatch.com/
[3] http://www.amazon.com/dp/1568584792/ref=nosim/?tag=tomdispatch-20
[4] http://www.bbc.com/news/world-us-canada-33104412
[5]
http://www.newrepublic.com/article/120454/wsj-ceo-poll-73-want-jeb-bush-repu
blican-presidential-nominee
[6] http://www.opensecrets.org/news/2008/09/bundlers-for-mccain-obama-are/
[7] http://amzn.to/1FtwOSV
[8]
https://www.opensecrets.org/outsidespending/summ.php?cycle=2014&disp=D&a
mp;type=V2012
[9]
https://www.opensecrets.org/outsidespending/summ.php?cycle=2014&disp=D&a
mp;type=V
[10] http://www.jeb2016.com
[11]
http://www.salon.com/2015/05/11/thanks_sheldon_adelson_wealthy_israel_booste
r_gets_jeb_to_run_for_ws_third_term/
[12]
http://www.politico.com/story/2015/03/jeb-bush-goldman-sachs-2016-election-1
15672.html#ixzz3dS32t987
[13] https://www.opensecrets.org/outsidespending/summ.php?disp=D
[14]
http://www.buzzfeed.com/andrewkaczynski/we-crashed-jeb-bushs-super-pacs-dono
r-call-and-heres-what-th#.xdYGgYnaG
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Home > Jeb Bush Is Polling at 73% -- Among the World's Richest Bankers and
CEOs
Jeb Bush Is Polling at 73% -- Among the World's Richest Bankers and CEOs
By Nomi Prins [1] / TomDispatch [2]
June 23, 2015
[This piece has been adapted and updated by Nomi Prins from her book All the
Presidents' Bankers: The Hidden Alliances That Drive American Power [3],
recently out in paperback (Nation Books).]
It's happening. As expected, dynastic politics is prevailing in campaign
2016. After a tease about as long as Hillary's, Jeb Bush (aka Jeb! [4])
officially announced his presidential bid last week. Ultimately, the two of
them will fight it out for the White House, while the nation's wealthiest
influencers will back their ludicrously expensive gambit.
And here's a hint: don't bet on Jeb not to make it through the Republican
gauntlet of 12 candidates (so far). After all, the really big money's behind
him. Last December, even though out of public office since 2007, he had
captured the support of 73% [5] of the Wall Street Journal's "richest CEOs."
Though some have as yet sidestepped declarations of fealty, count on one
thing: the big guns will fall into line. They know that, given his family
connections, Jeb is their best path to the White House and they're not going
to blow that by propping up some Republican lightweight whose father and
brother weren't president, not when Hillary, with all her connections and
dynastic power, will be the opponent. That said, in the Bush-Clinton battle
to come, no matter who wins, the bankers and billionaires will emerge
victorious.
The issue of political blood and family lines in Washington is not new.
There have been three instances in our history in which presidents have been
bonded by blood. Our second president John Adams and eighth president John
Quincy Adams were father and son. Theodore and Franklin Delano Roosevelt
were cousins. And then, of course, there were our 41st and 43rd presidents,
George H.W. and George W.
If Jeb becomes the 45th president, it will be the first time that three
administrations share the same blood and "dynastic" will have a new meaning
in America.
The Bush Legacy
The Bush political-financial legacy began when President Ronald Reagan chose
Jeb's father, George H.W., as his vice president. Reagan was also the first
president to choose a Wall Street CEO, Donald Regan, as Treasury secretary.
Then-CEO of Merrill Lynch, he happened to be a Bush family friend. And talk
about family tradition: once upon a time (in 1900, to be exact), Jeb's
great-grandfather, George Herbert Walker, founded G.W. Walker & Company. It
was eventually acquired by -- you guessed it! -- Merrill Lynch, which was
consumed by Bank of America at the height of the 2008 financial crisis.
That merger was pressed by, among others, George W. Bush's Treasury
Secretary (and former Goldman Sachs chairman and CEO), Hank Paulson. It
helped John Thain, Paulson's former number two at Goldman Sachs, who was by
then Merrill Lynch's CEO, out of a tight spot. Now chairman and CEO of CIT
Group, Thain is also a prominent member of the Republican Party who
sponsored [6] high-ticket fundraisers for John McCain during his 2008
campaign. Expect him to be there for Jeb. Paulson endorsed Jeb for president
on April 15th. That's how these loops go.
As vice president, George H.W. co-ran a task force with Donald Regan
dedicated to breaking down the constraints of the 1933 Glass-Steagall Act,
so that Wall Street banks could become ever bigger and more complex. Once
president, Bush promoted deregulation, while reconfirming Alan Greenspan,
who did the same, as the chairman of the Federal Reserve. In 1999, after
President Bill Clinton (Hillary!) finished the job that Bush had started by
overseeing the repeal of Glass-Steagall, banks began merging like mad and
engaging in increasingly risky and opaque practices that led to the
financial crisis that came to a head in George W.'s presidency. In other
words, it's a small world at the top.
The meaning of all this: no other GOP candidate has Jeb's kind of legacy
political-financial power. Period. To grasp the interconnections between the
Bush family and Wall Street that will put heft and piles of money behind his
candidacy, however, it's necessary to step back in time and see just how his
family helped lead us to this moment of his.
Bush Wins
By the time George H.W. Bush became president on January 20, 1989, the
economy was limping. Federal debt stood at $2.8 trillion. The savings and
loan crisis had escalated. Still, his deregulatory financial policies
remained in sync with those of the period's most powerful bankers, notably
Citicorp chairman John Reed, Chase (now JPMorgan Chase) Chairman Willard
Butcher, JPMorgan chief Dennis Weatherstone, and Bank of America Chairman
Tom Clausen.
With the economic odds stacked against him, Bush also remained surrounded by
his most loyal, business-friendly companions in Washington, who either had
tight relationships with Wall Street or came directly from there. In a
preordained arrangement with President Reagan, Bush retained Nicholas Brady,
the former chairman of the board of the blue-blood Wall Street investment
bank Dillon, Read & Co., as Treasury secretary.
Their ties, first established on a tennis court, extended to Wall Street and
back again. In 1977, after Bush had left the directorship of the CIA, Brady
even offered him a position at Dillon, Read & Co. Though he didn't accept,
Bush later enlisted Brady to run his 1980 presidential campaign and
suggested him as interim senator for New Jersey in 1982. The press dubbed
Brady Bush's "official confidant."
The new president appointed another of his right-hand men, Richard Breeden
(who had drafted a "Blueprint for Reform" of the banking industry as
directed by a task force co-headed by Bush), as his assistant for issues
analysis and later as head of the Securities and Exchange Commission (SEC).
Then, on February 6, 1989, Bush unveiled his plan to rescue the ailing
savings and loan (S&L) banks. Initial bailout estimates for 223 firms were
put at $40 billion. It only took the Bush administration two weeks to raise
that figure to $157 billion. On the offensive, Brady stressed that this
proposal wasn't a bailout. Instead, it represented "the fulfillment of the
Federal Government's commitment to depositors."
A few months later, under Alan Greenspan's Fed, JPMorgan Securities, the
investment banking subsidiary of JPMorgan Chase, became the first bank
subsidiary since the Great Depression to lead a corporate bond underwriting.
Over the next decade, commercial banks would issue billions of dollars of
corporate debt on behalf of energy and public utility companies as a result
of Greenspan's decision to open that door and Bush's deregulatory stance in
general. A chunk of it would implode in fraud and default after Bush's son
became president in 2001.
The S&L Blowout
The deregulation of the S&L industry between 1980 and 1982 had enabled those
smaller banks, or thrifts -- focused on taking deposits and providing
mortgages -- to compete with commercial banks for depositors and to invest
that money (and money borrowed against it) in more speculative real estate
ventures and junk bond securities. When those bets soured, the industry
tanked. Between 1986 and 1989, 296 thrifts failed. An additional 747 would
shut down between 1989 and 1995.
Among those, Silverado Banking went bankrupt in December 1988, costing
taxpayers $1.3 billion. Neil Bush, George H.W.'s son, was on the board of
directors at the time. He was accused of giving himself a loan from
Silverado, but denied all wrongdoing.
George H.W.'s second son, Jeb Bush, had already been dragged through the
headlines in late 1988 for his real estate relationship with Miguel Recarey
Jr., a Cuban-American mogul who had been indicted on one charge of fraud and
was suspected of racking up to $100 million worth of Medicare-related fraud
charges.
Meanwhile, the president was crafting his bailout plan to stop the S&L
bloodletting. On August 9, 1989, he signed the Financial Institution Reform,
Recovery, and Enforcement Act, which proved a backdoor boon for the big
commercial banks. Having helped stuff the S&Ls with toxic real estate
products, they could now profit by selling the bonds that were constructed
as part of the bailout plan, while the government subsidized the entire
project. Within six years, the Resolution Trust Corporation and the Federal
Savings and Loan Insurance Corporation had sold $519 billion worth of assets
for 1,043 thrifts that had gone belly up. Key Wall Street banks were
involved in distributing those assets and so made money on financial
destruction once again. Washington left the public on the hook for $124
billion in losses.
The Bush administration and the Fed's response to the S&L crisis (as well as
to a concurrent third-world debt crisis) was to subsidize the banking system
with federal and multinational money. In this way, a policy of privatizing
bank profits and socializing their losses and risks became embedded in the
American political system.
The New Banking Game in Town: "Modernization"
The S&L trouble sparked a broader credit crisis and recession. Congress was,
by then, debating the "modernization" of the financial services industry,
which in practice meant breaking down remaining barriers within institutions
that had separated deposits and loans from securities creation and trading
activities. This also meant allowing commercial banks to expand into
nontraditional banking activities, including insurance provision and fund
management.
The Bush administration aided the bankers by advocating the repeal of key
elements of the Glass-Steagall Act. Related bills to dismantle that
Depression-era act won the support of the House and Senate banking
committees in the fall of 1991, though they were defeated in the House in a
full vote. Still, the writing was on the wall. What a Republican president
had started, a Democratic one would soon complete.
In the meantime, the Bush administration was covering all the bases when it
came to the repeal of Glass-Steagall, which would be the nail in the coffin
of decades of banking constraint. As commercial bankers pushed to enter
non-banking businesses, Richard Breeden, Bush's SEC chairman, began
championing the otherside of the Glass-Steagall divide -- fighting, that is,
for the rights of investment banks to own commercial banks. And little
wonder, since such a deregulation of the financial system meant a potential
expansion of Breeden's power: the SEC would be tasked with monitoring the
growing number of businesses that banks could enter.
Meanwhile, Wendy Gramm, head of the Commodity Futures Trading Commission
(CFTC), promoted another goal the bankers wanted: unconstrained derivatives
trading. Gramm had first been appointed chair of the CFTC in 1988 by Reagan
(who called her his "favorite economist") and was then reappointed by Bush.
She was determined to push for unregulated commodity futures and swaps -- in
part in response to lobbying from a Texas-based energy trading company,
Enron, whose name would grow far more familiar to Americans in the years to
come. While awaiting legislative approval, bankers started sending their
trading exemption requests to Gramm and she began granting them.
9/11 Overshadows Enron
In early 2001, in the fading light of the rosy Clinton economy and an
election result validated by the Supreme Court, the second President Bush
entered the White House. A combination of Glass-Steagall repeal and the
deregulation of the energy and telecom sectors under Clinton catalyzed a
slew of mergers that consolidated companies and power in those industries
upon fabricated books. The true state of the economy, however, remained well
hidden, even as it teetered on a flimsy base of fraud, inflated stocks, and
bank-created debt. In those years, the corporate and banking world still
appeared glorious amid so many mergers. But the bankers' efforts to support
those transactions would soon give way to a spate of corporate bankruptcies.
It was the Texas-based energy-turned-trading company Enron that would emerge
as the poster child for financial fraud in the early 2000s. It had used the
unregulated derivatives markets and colluded with bankers to create a slew
of colorfully named offshore entities through which the company piled up
debt, shirked taxes, and hid losses. The true status of Enron's fictitious
books and those of other corporate fraudsters nonetheless remained
unexamined in part because another crisis garnered all the attention. The
9/11 attacks at the World Trade Center, blocks away from where many of
Enron's trading partners were headquartered (including Goldman Sachs, where
I was working that day), provided the banking industry with a reprieve from
probes. The president instead called on bankers to uphold national stability
in the face of terrorism.
On September 16, 2001, George W. famously merged financial and foreign
policy. "The markets open tomorrow," he said. "People go back to work and
we'll show the world." To assist the bankers in this mission, Bush-appointed
SEC chairman Harvey Pitt waived certain regulations, allowing corporate
executives to prop up their share prices as part of a plan to demonstrate
national strength by elevating market levels.
That worked -- for about a minute. On October 16, 2001, Enron posted a $681
million third-quarter loss and announced a $1.2 billion hit to shareholders'
equity. The reason: an imploding pyramid of fraudulent transactions crafted
with banks like Merrill Lynch. The bankers were now potentially on the hook
for billions of dollars, thanks to Enron, a client that had been bulked up
through the years with bipartisan support.
Amid this financial turmoil, Bush was focused on retaliation for 9/11. On
January 10, 2002, he signed a $317.2 billion defense bill. In his State of
the Union address, he spoke of an "Axis of Evil," of fighting both the
terrorists and a strengthening recession, but not of Enron or the dangers of
Wall Street chicanery.
In 2001 and again in 2002, however, corporate bankruptcies would hit new
records, with fraud playing a central role in most ofthem. Telecom giant
WorldCom, for instance, was found to have embellished $11 billion worth of
earnings. It would soon supplant Enron as America's biggest fraud of the
moment.
Bush Takes Action
On July 9th, George W. finally unveiled a plan to "curb" corporate crime in
a speech given in the heart of New York's financial district. Taking the
barest of swipes at his Wall Street friends, he urged bankers to provide
honest information to investors. The signals were now clear: bankers had
nothing to fear from their commander in chief. That Merrill Lynch, for
example, was embroiled in the Enron scandal was something the president
would ignore -- hardly a surprise, since the company's alliances with the
Bush family stretched back decades.
Three weeks later, he would sign the Sarbanes-Oxley Act, purportedly
ensuring that CEOs and CFOs would confirm that the information in their SEC
filings had been presented truthfully. It would prove a toothless and
useless deterrent to fraud.
And then the president acted: on March 19, 2003, he launched the invasion of
Iraq with a shock-and-awe shower of cruise missiles into the Iraqi night
sky. Two days later, by a vote of 215 to 212, the House approved his $2.2
trillion budget, including $726 billion in tax cuts. Shortly thereafter -- a
signal to the banking industry if there ever was one -- he appointed former
Goldman Sachs Chairman Stephen Friedman director of the National Economic
Council, the same role another Goldman Sachs alumnus, former co-Chairman
Robert Rubin, had played for Bill Clinton.
By the end of 2003, grateful bankers were already amassing funds for Bush's
2004 reelection campaign. A bevy of Wall Street Republicans, including
Goldman Sachs Chairman and CEO Henry Paulson, Bear Stearns CEO James Cayne,
and Goldman Sachs executive George Herbert Walker IV (the president's second
cousin), became Bush "Pioneers" by raising at least $100,000 each.
The top seven financial firms officially raised nearly three million dollars
for George W.'s campaign. Merrill Lynch emerged as his second biggest
corporate contributor (after Morgan Stanley), providing more than $586,254.
The firm's enthusiasm wasn't surprising. Donald Regan had been its chairman
and the Bush-founded investment bank G.H. Walker and Company, which employed
members of the family over the decades, had been absorbed into Merrill in
1978. Merrill Lynch CEO Earnest "Stanley" O'Neal received the distinguished
label of "Ranger" for raising more than $200,000 for Bush's reelection
campaign. It was a sign of the times that O'Neal and Cayne hosted Bush's
first New York City reelection fundraiser in July 2003.
Government by Goldman Sachs for Goldman Sachs
The bankers helped tip the scales in Bush's favor. On November 3, 2004, he
won his second term in a tight election. By now, bankers from Goldman Sachs
had saturated Washington. New Jersey Democrat Jon Corzine, a former Goldman
Sachs chairman and CEO, was on the Senate Banking Committee. Joshua Bolten,
a former executive director at the Goldman Sachs office in London, was
director of the Office of Management and Budget. Stephen Friedman, former
Goldman Sachs chairman, was one of George W.'s chief economic advisers as
the director of the National Economic Council. (He would later become
chairman of the New York Federal Reserve Board, only to resign in May 2009
amid conflict of interest charges concerning the pile of Goldman Sachs
shares he held while using his post to aid the company during the financial
crisis.)
Meanwhile, from 2002 to 2007, under George W.'s watch, the biggest U.S.
banks would fashion nearly 80% of the approximately $14 trillion worth of
global mortgage-backed securities (MBS), asset-backed securities,
collateralized debt obligations, and other kinds of packaged assets created
in those years. And subprime loan packages would soon become the
fastest-growing segment of the MBS market. In other words, the financial
products exhibiting the most growth would be the ones containing the most
risk.
George W. would also pick Ben Bernanke to replace Alan Greenspan as chairman
of the Federal Reserve. Bernanke made it immediately clear where his
loyalties lay, stating, "My first priority will be to maintain continuity
with the policies and policy strategies during the Greenspan years."
In 2006, two years after persuading the SEC to adopt rules that enabled many
of the "assets" being created to be undercapitalized and underscrutinized,
the president selected former Goldman Sachs CEO Henry Paulson to be his
third Treasury secretary. Joshua Bolten, who had by then had become White
House Chief of Staff, arranged the pivotal White House meeting between the
two men that sealed the deal. As Bush wrote in his memoir, Decision Points,
"Hank was slow to warm to the idea of joining my cabinet. Josh eventually
persuaded Hank to visit with me in the White House. Hank radiated energy and
confidence. Hank understood the globalization of finance, and his name
commanded respect at home and abroad."
Under Bush, Paulson, and Bernanke, the banking sector would buckle and take
the global economy down with it.
Goldman Trumps AIG
Insurance goliath AIG stood at the epicenter of an increasingly
interconnected financial world deluged with junky subprime assets wrapped up
with derivatives. When rating agencies Fitch, S&P, and Moody's downgraded
the company's credit worthiness on September 15, 2008, they catalyzed $85
billion worth of margin calls. If AIG couldn't find that money, Paulson
warned the president, the firm would not only fail, but "bring down major
financial institutions and international investors with it." According to
Bush's memoir, Paulson convinced him. "There was only one way to keep the
firm alive," he wrote. "The federal government would have to step in."
The main American recipients of AIG's bailout would, in fact, be legacy
Bush-allied firms: Goldman Sachs ($12.9 billion), Merrill Lynch ($6.8
billion), Bank of America ($5.2 billion), and Citigroup ($2.3 billion).
Lehman crashed, but Merrill Lynch and AIG were saved. The bankers with the
strongest alliances to the Bush family (and the White House in general)
needed AIG to survive. And it did. But the bloodletting wasn't over.
On September 18, 2008, George W. would tell Paulson, "Let's figure out the
right thing to do and do it." He would later write, "I had made up my mind:
the U.S. government was going all in."And he meant it. During his last
months in office, the Big Six banks (and marginally other institutions)
would thus be subsidized by an "all-in" program designed by Bernanke,
Paulson, and Geithner -- and later endorsed by President Barack Obama.
The bankers' unruliness had, however, already crippled the real economy.
Over the next few months, Bank of America, Citigroup, and AIG all needed
more assistance. And in that year, the Dow Jones Industrial Average would
lose nearly half its value. At the height of the bailout period, $19.3
trillion [7] in subsidies were made available to keep (mostly) American
bankers going, as well as government-sponsored enterprises like Fannie Mae
and Freddie Mac.
As George W. headed back to Texas, the economy and markets went into free
fall.
The Money Behind Jeb
Jump seven years ahead and, with the next Bush on the rise and the money
once again flowing in, it's still the age of bankers. Jeb already has three
mega super PACs -- Millennials for Jeb, Right to Rise, and Vamos for Jeb
2016 -- under his belt. His Right to Rise Policy Solutions group, which, as
a 501(c)(4) nonprofit, is not even required to disclose the names of its
donors, no less the size of their contributions, is lifting his contribution
tally even higher. None of these groups have to adhere to contribution
limits and the elite donors who contribute to them often prove highly
influential. After all, that's where the money really is. In the 2012
presidential election [8], the top 100 individual contributors to super PACs
and their spouses represented just 1% of all donors, but gave a staggering
67% of the money.
Of those, Republican billionaire Sheldon Adelson and his wife, Miriam,
donated $92.8 million [9] to conservative groups, largely through "outside
donor groups" like super PACs that have no contribution limits. Texas
billionaire banker mogul Harold Simmons and his wife, Annette, gave $26.9
million, and Texas billionaire homebuilder Robert Perry coughed up $23.95
million. Nebraska billionaire (and founder of the global discount brokerage
TD Ameritrade) John Joe Ricketts dished out $13.05 million. Despite some
early posturing around other candidates with fewer legacy ties, these heavy
hitters could all end up behind Bush 45. Dynasties, after all, establish the
sort of connections that lie in wait for the next moment of opportune
mobilization.
"All in for Jeb" isthe mantra on Jeb's official website [10] and in a sense
"all in," especially when it comes to national bankers, has been something
of a mantra for the Bush family for decades. With a nod to his two-term
record as Florida governor, Jeb put it this way: "We will take command of
our future once again in this country. I know we can fix this. Because I've
done it."
Based on Bush family history, by "we" he effectively meant the family's
billionaire and millionaire donors and its cavalcade of friendly bankers.
Topping that list, though as yet undeclared -- give him a minute -- sits
Adelson, who is personally and ideologically close to George W. In April,
the former president was paid a Clintonian speaking fee of $250,00 for a
keynote talk before the Republican Jewish Coalition meeting at Adelson's Las
Vegas resort. While Adelson has expressed concerns about Jeb's lack of
hawkishness on Israel when compared to his brother, that in the end is
unlikely to prove an impediment. Jeb is making sure of that. He recently
told [11] a gathering of wealthy New York donors that, when it came to
Israel, his top adviser is his brother. ("If you want to know who I listen
to for advice, it's him.")
Let's be clear. The Bush family is all in on Jeb and its traditional banking
allies are not likely to be far behind. There is tradition, there are ties,
there is a dynasty to protect. They are not planning to lose this election
or leave the family with a mere two presidents to its name.
The Wall Street crowd began rallying behind Jeb well before his candidacy
was official. Private equity titan Henry Kravis hosted a 25-guest
$100,000-per-head gathering at his Park Avenue abode in February, one of six
events with the same entry fee. In March, Jeb had his first Goldman Sachs
$5,000-per-person event at the Ritz Carlton in New York City, organized by
Dina Powell, Goldman Sachs Foundation head and George W. Bush appointee for
assistant secretary of state. A more exclusive $50,000 per head [12] event
was organized by Goldman Sachs exec, Jim Donovan, a key fundraiser and
adviser for Mitt Romney who is now doing the same for Jeb.
And then there's the list of moneyed financiers with fat wallets still to
get behind Jeb. New York hedge fund billionaire Paul Singer, who donated
[13] more than any other conservative in the 2014 election, has yet to swoop
in. Given the alignment of his foreign financial policy views and the Bush
family's, however, it's just a matter of time.
With the latest total super PAC figures still to be disclosed, we do know
that Jeb's Right to Rise super PAC claims to have raised $17 million from
the tri-state (New York, New Jersey, and Connecticut) area alone so far. Its
head, Mike Murphy, referred to its donors in a call [14] last week as
"killers" he was about to "set loose." He intimated that the July
disclosures would give opponents "heart attacks." Those are fighting words.
Sure, all dynasties end, but don't count on the Bush-Banker alliance going
belly up any time soon. Things happen in this country when mountains of
money begin to pile up. This time around, the Bush patriarchy will call in
every chip. And know this: Wall Street will be going "all in" for this
election, too. Jeb(!) and Hillary(!) will likely split that difference in
the primaries, then duke it out in 2016. Along the way, every pretense of
mixing it up with the little people will be matched by a million-dollar
check to a super PAC. The cash thrown about in this election will be epic.
It's not the fate of two parties but of two dynasties that's at stake.
Error! Hyperlink reference not valid.
Error! Hyperlink reference not valid.
Report typos and corrections to 'corrections@xxxxxxxxxxxx'. [15]
Error! Hyperlink reference not valid.[16]
Source URL:
http://www.alternet.org/news-amp-politics/jeb-bush-polling-73-among-worlds-r
ichest-bankers-and-ceos
Links:
[1] http://www.alternet.org/authors/nomi-prins-0
[2] http://www.tomdispatch.com/
[3] http://www.amazon.com/dp/1568584792/ref=nosim/?tag=tomdispatch-20
[4] http://www.bbc.com/news/world-us-canada-33104412
[5]
http://www.newrepublic.com/article/120454/wsj-ceo-poll-73-want-jeb-bush-repu
blican-presidential-nominee
[6] http://www.opensecrets.org/news/2008/09/bundlers-for-mccain-obama-are/
[7] http://amzn.to/1FtwOSV
[8]
https://www.opensecrets.org/outsidespending/summ.php?cycle=2014&disp=D&a
mp;type=V2012
[9]
https://www.opensecrets.org/outsidespending/summ.php?cycle=2014&disp=D&a
mp;type=V
[10] http://www.jeb2016.com
[11]
http://www.salon.com/2015/05/11/thanks_sheldon_adelson_wealthy_israel_booste
r_gets_jeb_to_run_for_ws_third_term/
[12]
http://www.politico.com/story/2015/03/jeb-bush-goldman-sachs-2016-election-1
15672.html#ixzz3dS32t987
[13] https://www.opensecrets.org/outsidespending/summ.php?disp=D
[14]
http://www.buzzfeed.com/andrewkaczynski/we-crashed-jeb-bushs-super-pacs-dono
r-call-and-heres-what-th#.xdYGgYnaG
[15] mailto:corrections@xxxxxxxxxxxx?Subject=Typo on Jeb Bush Is Polling at
73% -- Among the World's Richest Bankers and CEOs
[16] http://www.alternet.org/
[17] http://www.alternet.org/%2Bnew_src%2B
