“Base?” I asked. “C’mon, Homer: without money you don’t have a base. Chances are your campaign’s already starting to run on the vapors. And as far as Winters symbolizing anything, he stands for whichever way the wind is blowing—which hasn’t prevented him from failing upward higher and faster than any man alive.”
He thought about that for a moment. “I guess my boss might be OK with Winters,” he said. “What would you have in mind? Chairman of the Council of Economic Advisors? Secretary of the Treasury? He’s been there, done that.”
I had a ready answer. “You offer him the job he’ll see as just one rung below what he really wants.”
“Which is?”
“Chairman of the Federal Reserve.”
“We can’t get rid of Bernanke. He only got the job last year.”
“Bernanke’s tenure is up in 2014. So you tell Winters that if he joins the team and plays ball he’ll get the Fed job then. You might drop a hint that if he turns you down, Stiglitz and Krugman are next on the short list. He hates those guys, because they’ve got Nobel prizes and he doesn’t.”
“OK,” he said. “Let’s say Winters takes the bait. What about Holloway? I don’t know much about him.”
“Holloway is the New York Fed’s point person with the banks. They love him because he’s all theirs. If the present administration stitches together a bailout, he’ll be a key player.”
“I see. And where do you see him fitting in?”
“High up at Treasury would be a good spot. Maybe the top job. He’s got the skill sets and experience. Someone once described him as a Hall-of-Fame technocrat.”
Orteig nodded. “And Brewer?”
“Maybe the head of the criminal division at Justice,” I suggested. “More behind the scenes than out front. She’s a top securities lawyer with a ton of regulatory experience, and a good sense of the appropriate parameters of reform and prosecution. She’ll make certain nothing gets out of hand, in terms of punishing individual bankers.”
I’ve concluded that Brewer is perhaps the key player on Mankoff’s little list. Winters and Holloway can divert and distract and throw sand in the policy gears, but if things get “down to the lick log,” as one of my oil-patch clients, a huge Oklahoma collector of Plains Indian art, likes to describe a tight business corner, you need an ace stonewaller, someone who knows how to kill a prosecution before it gets off the ground and stifle the jangle of handcuffs. Think of Brewer as an All-Pro deep safety in a prevent defense.
“I see you have Patrick Vollmer on your list,” Orteig observed.
“Strictly window dressing. The man’s a giant in the earth where the media are concerned, and having someone like Vollmer at least notionally on board alongside the likes of Winters and Holloway will help keep the press in line.”
Orteig reflected for a moment, then: “Take a step back. What if I can’t sell this arrangement to my team? You realize that if there’s a crisis, fingers will be pointed to deregulation as the major culprit. Winters and Holloway were key players in pushing that through.”
“If there’s a crisis, Homer, fingers are going to be pointing every which way. The only question you and your people need to face up to is how bad do you want your guy want to be president?”
Orteig fell silent. I said nothing, just watched him debate with himself for a minute.
Finally, he looked up. “So that’s it? We agree to slot these four people as suggested and you’ll find me $75 million?”
I nodded. Then added—of my own volition, just to cinch the deal: “Let’s say $75 million minimum. The people I’m working with seem to know what they’re doing, and that’s their number, but there could be more. It all depends on how things go.”
“So how would it work?”
“You mean how will the money get to the campaign?”
He nodded. “You know there are strict rules about political contributions,” he said. “How exactly would you set it up?”
Now we were in my area of expertise. I laid out roughly, on a no-names basis, the plumbing of an operation like this, a network of cutouts, blind screens, and slice-and-dice shops that will feed the green stuff into Orteig’s designated operating accounts. Was it Mao Zedong who said that revolutionaries must swim like fish in the sea of the population? So it will be with the increments of Mankoff’s money—minnows as it were—that I will toss into the great turbulent streams of money circling the globe.
“The key to moving large sums is to break it down,” I told Orteig. “I’ll break the money into pieces that average $200 to $500 per, which works out to 150,000 names at the max. You’ve already set up political action committees and volunteer organizations in all fifty states, so we’re looking at $1.5 million per state, on average. That’s not a lot of money, although it’s more in Alaska than in Illinois, say, so we’ll vary the inputs to reflect population, voter demographics, and so on. People have learned from Abramoff’s mistakes.”
My reference was to a Washington fixer who went to jail last year for a scheme of political bribery so crude that you’d think a six-year-old would have spotted it. A six-year-old, that is, who hadn’t been paid to look the other way. “Anyway,” I finished up, “$1.5 million per state divided by a $150 average contribution works out to only 10,000 contributors, which leaves me plenty of room to maneuver. I’ll make it look like thousands of little people out there are dropping their grimy tens and twenties in the offering plate.”
He shrugged in a half-convinced way. “I see.” Then a thought seized him and for an instant he seemed to turn pale.
“You’re not talking about laundered money?” he interrupted. “God, that would be the kiss of …”
“Not to worry. I assure you, it will all be perfectly legal, and the money will be absolutely clean. You have my word on that.”
I paused to let him arrive at a conclusion as to the creditworthiness of my pledge. I had the advantage of my upbringing, the way I look and sound. No one thinks that, coming from someone like me, my word won’t be money-good, that I’m one of those fools who still believes in stuff like honor. He thought the matter over for perhaps fifteen seconds, then nodded. “Go on.”
“What we’re talking about has been going on for years. Think about 1960, when Daley fixed Cook County for JFK.” I thought that sounded pretty authoritative—especially since I was one year old when the dead of Chicago rose from their graves and elected Joseph Kennedy’s son to the presidency.
I could see Orteig was doing his own thinking. He wasn’t going to come out and say “yes” out loud, but that’s what he was saying with his expression, with his body language. Still, for form’s sake, he had to dot all the “i’s” and search out all the chinks.
“You’re aware that the candidate has pledged to use public financing if he’s nominated?” he asked me.
“A girl can always change her mind,” I said cheerfully. “He won’t have to make that call until next summer. Let’s see what happens.”
I figured it this way. By summer 2008, we’ll know whether OG will be the Democratic candidate. If he is, and he decides to opt out of public financing, his adherents won’t care. Why should they? By then they’ll be beside themselves with hope and enthusiasm.
“One other thing,” I added. “I know I’ve said it once already, but perhaps it’s best we keep this just between you and me. Who knows how your guy might react? Plus there’s his wife; they say she calls a lot of the shots, and we’re not casting Macbeth.”
Orteig looked uneasy. I could sympathize with his situation, the position I was asking him to put himself in. What I was stipulating would be a kind of betrayal, a secret kept from someone with whom everything up to now had been on the table. Still, Orteig struck me as the sort of operator for whom ends always justify means, and so it proved.
Finally he smiled. “Don’t worry,” he said, “I’ll deal with it.”
I stuck out my hand. “So do we have a deal? I’m assuming you’re one of the three people left in t
he world to whom a handshake means something?”
He studied my face carefully, then took my hand.
“Deal,” he said.
The fix was in.
In the forty minutes or so before we began our final approach into Chicago-Midway, we established a few simple ground rules and protocols. Orteig will give me names and accounts to which to direct the money. If we need to talk, we’ll do so either face-to-face or on secure landlines or drugstore cell phones that can’t be traced. Above all, no e-mails. As Lucia and I have discussed, the form turns normally closemouthed operatives into indiscreet blabbermouths and exhibitionists.
Orteig had one last question as we dropped through a high scrim of clouds over Lake Michigan.
“Suppose, God help us, we don’t get the nomination?”
I shrugged. “Didn’t I make myself clear? If your guy doesn’t make it to post time, so be it. Rub of the green. But if my people thought that between the brand you’re promoting and the financing you’re now going to have behind you, there was any significant chance of that, we wouldn’t be sitting here.”
An hour later, when I’d dropped Orteig off and was back in the air, headed for home, I called Mankoff on a disposable cell phone I’d brought along for the purpose and left my “Mission Accomplished” message.
He called back twenty minutes later. I gave him a report, choosing my words carefully. It was a million-to-one against anyone eavesdropping, but if someone was, I might have been talking about a lecture series we were setting up at some college. He sounded pleased. Well, as pleased as he ever sounds.
“Thanks, boss. We aim to provide good service,” I told him just before we rang off.
As my plane rushed eastward through the slowly darkening sky toward White Plains, I reviewed my conversation with Orteig. All the bases had been covered; of that I was sure. I ran through the questions he hadn’t asked. Possible dog that didn’t bark in the night stuff. I couldn’t think of any. This arrangement was loaded with imponderables. A situation where we liked the odds but didn’t really have control. Acts of God had to be considered: suppose OG gets hit by a bus, develops congestive heart failure? Suppose Winters or Holloway are offered the jobs we have them slotted for, but turn them down? I regarded that as an extreme long shot—Winters still has a number of items left on his Rule-the-World bucket list, not to mention a “Get Even With” roster the size of the Manhattan phone book—and as a sniper’s nest, it’s hard to beat 1600 Pennsylvania Avenue.
As for Holloway, the guy’s been #2 again and again and again. There’s no more narcotic urge in the human spirit than the thirst for stardom of one’s own, especially if one has dwelt in stardom’s proximity, or shadow, for any appreciable time. When the time comes, if it comes, Winters and Holloway will take the bait, count on it.
I have to admit I felt exultant. I supposed this is what a trader’s high feels like, or a gambler when he bancos the top table at Monte Carlo. I had pulled off one of the all-time political fixes.
Our final approach took us over the Hudson. It was a spectacular evening. From the west, the setting sun set the metal-and-glass face of lower Manhattan ablaze. I could pick out the skeleton of STST’s new headquarters, just north of where the Twin Towers had stood. It’s perhaps the greatest monument anywhere to what’s called “crony capitalism”: private profit using the people’s money. The bronze and glass sheathing is already well advanced and gleams brilliantly, almost golden. Something about the building reminds of the slab at the beginning of 2001: A Space Odyssey. No one seeing it like this could miss its message, could miss what it stood for.
I wallowed, briefly, in pride at being even a tiny part of such a huge piece of business, a facilitator for such power. Twenty minutes later we were on the ground. I shook hands with the captain, thanked the flight attendant, and went to find my car service.
And that, Gentle Reader, is how I fixed the 2008 presidential election.
AUGUST 9, 2007
A tipping point may have been reached. Certainly Mankoff thinks it’s a big deal. I happened to be in his office discussing a grant application to his and his wife’s private foundation from the alma mater of a major STST client when Rosenweis burst in without knocking, bearing the news that Paribas, the big French bank, has frozen its subprime bond funds because it can’t figure out a way to value them.
“That’s the party line,” Rosenweis told Mankoff (as is normal with Rosenweis, he acted as if I wasn’t there). “You ask me: it’s a bluff. The Frogs have been hit with a ton of redemptions and don’t want to cough up. Typical!”
It seems that Paribas is afraid of a landslide: it might get 80 for the first lot of bonds it sells to meet redemptions, but once the word gets out, the second batch might bring 70, and so on down the line to where the garbage can’t be given away for nothing. For the time being, anyone with money in a Paribas subprime deal is locked in—as in jail—and since Paribas is a major junction box in these markets, if they’re in trouble, the likelihood is that everyone else will be. This is a major step toward Mankoff’s worst fear: a market freeze-up in which no one will lend to anyone else.
Rosenweis left with strict instructions to sell off what he can without making STST look panicky. I asked Mankoff if the Paribas action represents the first splashes of a Noah-style downpour. All he could say is that he hopes not, and that he’ll accelerate plans for STST to build itself an ark.
It’s no skin off my ass, really. I sold my STST back in February at $210 when Mankoff told me to; the stock’s now selling at $175 and change. In a week I’m off to Nova Scotia for a brief holiday, and nothing but nothing is going to interfere with that. I do get the feeling that events are moving faster than Mankoff has foreseen, certainly faster than he would like. I feel for the guy, I suppose, although Wall Street doesn’t exactly elicit sympathy in its best of times. Whether virtue is its own reward or not, greed is surely its own damnation.
AUGUST 31, 2007
Unlike most people, I like to get summer over with before Labor Day. There’s something invigorating about getting back to the office while everyone else lingers on at the seashore or in the mountains. I can clear my desk and set my agenda for fall without the phone ringing every two minutes.
I got back yesterday from a blissful fortnight in Canada. A New Yorker writer persuaded me and some others to go in on a month’s rental of a nice cottage on the Nova Scotia coast about two hours south of Halifax. There were six of us: my friend and her significant other, her cousin, a cardiologist from Buffalo, a married couple from Wilmington who work at the Winterthur Museum, and myself. The place was definitely low-key. We had iffy but manageable cell reception if you stood on a dune facing southwest, and the nearby village had a coffee place with decent pastries and Wi-Fi. We spent the first two days reassuring each other how great it was to be out of the digital maelstrom.
Lucia just got back from the south of France a few days ago, and we had lunch together. She was waiting for me at San Pietro, sipping a stiff G&T and not looking happy. The first thing out of her mouth was how unspeakable the South of France has become. Never again, she swears.
Then, after ordering a second G&T, she shoved a sheet of paper at me, saying, “Take a look at this. You’ll want to shoot yourself. I know I do.”
It proved to be a list of all the good Wall Street news that has piled up since we last saw each other: 7/30/07: The Big German Bank IKB Cuts Profit Forecast Amid Rout in U.S. Mortgages; 7/31/07: American Home Can’t Fund Mortgages, Shares Plummet; 8/02/07: Accredited May Face Bankruptcy, Merger in Doubt; 8/06/07: American Home Files for Bankruptcy; 8/08/07: Fund of German Westlandischesbank Stops Payouts, Cites Mortgage Market Unease; 8/09/07: BNP Paribas Freezes Funds as Loan Losses Roil Markets; 8/15/07: Countrywide Financial “Risks Bankruptcy”; 8/17/07: Fed Cuts Discount Rate 50 Basis Points to 5.75 Percent; 8/21/07: Sachsen Landesbank has EU3 Billion in Subprime, Source Says; 8/22/07: H&R Block Taps Credit Line, Cites “Unstable” Markets; 8/22/07: Lehman, Accredited, HSBC Sh
ut Offices, Crisis Spreads; 8/23/07: Fed Lends $2 Billion to Banks to Ease Credit Woes; 8/26/07: New Zealand Mortgage Fund Basic Return Files Bankruptcy over “Wolverine” Subprime Defaults.
The last item especially interested me. It had taken Wolverine, that rotting CDO Rosenweis’s minions had laughingly unloaded on a New Zealand hedge fund, less than six months to tank. I started to ask Lucia if that might be a new world record, but decided to hold my tongue. Without my asking, she volunteered that the Kiwis aren’t taking it lying down but are having a tough time finding a jurisdiction in which to sue.
According to Lucia, this list ain’t the half of it. The gossip du jour is that certain big banks—the name one hears most is Barclays—have been collusively manipulating the daily LIBOR fixings. LIBOR stands for “London Interbank Offered Rate” and is the benchmark for practically every interest rate in the world of finance: from what STST pays for $10 billion in overnight money, to what Joe Sixpack pays on his monthly $250 credit card balance. If Lucia’s scuttlebutt is correct, God knows what fresh hell this will bring down on Wall Street’s head!
At STST, Lucia reports, the banking and trading floors resound with lamentation and keening and the rending of bespoke garments. STST stock is now down to around $160 and change. I happen to know that Lucia’s stock options clear at $180, so she’s well underwater. I feel for her.
Still, Lucia believes there’s light at the bottom of the toilet. “Did you see this?” she asked and handed me a clipping from a financial wire service: a transcript of the speech Fed Chairman Bernanke would be giving later to the Kansas City Fed’s annual powwow at Jackson Hole: “It is not the responsibility of the Federal Reserve—nor would it be appropriate—to protect lenders and investors from the consequences of their financial decisions. But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy.”
Fixers Page 10