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McCain's Barbarians at the Gate

By Jonathan Weisman
For a presidential candidate running against Wall Street greed, Sen. John McCain's selection of titans of finance to discuss the ailing economy with this morning did little to underline his message.

Gathered around McCain's U-shaped table was Stephen Schwarzman, co-founder of the private equity giant, Blackstone Group, Henry Kravis, the takeover artist made famous in "Barbarians At The Gate," and John Thain, who took control of Merrill Lynch as it stumbled into the subprime crisis -- and then steered it into the maw of Bank of America during investment banking's darkest week.

Schwarzman has recently become the poster child in a Washington debate over what many consider to be the mother of all tax dodges, "carried interest." He received a $350.2 million in cash distributions last year, a 12 percent pay cut from 2006. But the clincher is what he paid in taxes.

On much of that income, Schwarzman's tax rate was a secretary-level 15 percent, not the 35 percent income tax rate that regular rich folks pay. That is because private equity traders like Schwarzman structure their fees as capital gains and are taxed accordingly. But the capital gains come from their clients' money, not their own -- meaning that income is effectively compensation for services rendered.

Congressional Democrats have tried to end the carried interest loophole but have run into a wall of opposition, from Republicans and a few very well-placed Democratic colleagues.

Schwarzman's list of controversies is long. He even sold a stake of his company to an entity controlled by the Chinese government -- not a crowd pleaser on the campaign trail. But it is his lifestyle that has long raised eyebrows. A recent Wall Street Journal piece spoke of employees at his 11,000-square-foot Palm Beach residence forced to shun rubber-soled shoes lest the squeak upset his poolside sun worship. His personal chef "often spends $3,000 for a weekend of food for Mr. Schwarzman and his wife, including stone crabs that cost $400, or $40 per claw," the Journal reported.

Kravis helped engineer the leveraged buyout of R.J.R. Nabisco in 1988 with what was then a staggering sum of mostly borrowed money, $31.4 billion. After a few years, the deal unraveled and the company was dismantled.

And then there's Thain, who as chairman and chief executive of Merrill Lynch was actually at the helm of one of the venerable institutions felled by the crisis McCain is trying to help address.

Posted at 1:14 PM ET on Sep 24, 2008  | Category:  John McCain
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Maybe some of you should listen to former President Bill Clinton who says if Democrats want someone to dump on John McCain, he's not the guy.

(From AP)

Some members of his party have been complaining that Clinton has not been enthusiastic enough in his support for Democratic presidential nominee Barack Obama, who defeated Clinton's wife in the primary campaign, and heaping too much praise on McCain.

But Clinton told CNN's "Larry King Live" on Wednesday that he doesn't think "dumping" on McCain or his running mate, Sarah Palin, is a winning strategy. He said undecided voters aren't interested in attacks but solutions for the problems they face.

"I just don't believe that getting up here and hyperventilating about Gov. Palin, or Sen. McCain for that matter, is a productive use of a former president's time and is not a vote-getter," he said, adding that he admires McCain even though he disagrees with several of his positions.

Posted by: JakeD | September 24, 2008 6:37 PM

this is a feeding frenzy! The sharks are circling.

Team Obama! Take a few minutes and add your bops to McCain's count at http://wwww.boppoll.com.

Ten people can add 600 bops per minute. I just added 425 and I am much less stressed.

On to 1,000,000!!!!

Posted by: McCain is toast! | September 24, 2008 3:37 PM

MA:

Here in the U.S., we spell it "judgment". As I said, you can believe him or not. Just like you can believe Barack HUSSEIN Obama is a "Christian".

jr:

Not scary to me.

Posted by: JakeD | September 24, 2008 2:48 PM

I wonder if John McCain bothered to vet Sarah Palin's Pastor.

I seriously wonder if he's seen this video of her being prayed over.

Kind of scary actually.

http://www.huffingtonpost.com/max-blumenthal/the-witch-hunter-anoints_b_128805.html

Posted by: jr | September 24, 2008 2:44 PM

"Whether you believe him or not, Sen. McCain says he regrets being involved in the Keating 5 "

He regrets getting caught. He and wife Cindy had no problem cavorting with Keating, riding around on his private jet and the like.

Keating speaks directly to McCain's "judgement" or lack thereof.

Posted by: MA | September 24, 2008 2:38 PM

ZappoDave:

Whether you believe him or not, Sen. McCain says he regrets being involved in the Keating 5. He thereafter dedicated himself to campaign finance reform, and did, in fact, spend the next years pushing for and finally getting it, with McCain-Feingold passed into law. I would hold that legislation up against Obama's rinky-dink ethics rule that "you have to stand up while eating with a lobbyist" any day of the week.

Posted by: JakeD | September 24, 2008 2:35 PM

McCain knows all about bailing out rich bankers and screwing over middle class and poor people, he's been doing it for years.


*McCain - Founding Member of the Keating Five:

McCain was one of the "Keating Five," congressmen investigated on ethics charges for strenuously helping convicted racketeer Charles Keating after he gave them large campaign contributions and vacation trips.
Charles Keating was convicted of racketeering and fraud in both state and federal court after his Lincoln Savings & Loan collapsed, costing the taxpayers $3.4 billion. His convictions were overturned on technicalities; for example, the federal conviction was overturned because jurors had heard about his state conviction, and his state charges because Judge Lance Ito (yes, that judge) screwed up jury instructions. Neither court cleared him, and he faces new trials in both courts.)

Though he was not convicted of anything, McCain intervened on behalf of Charles Keating after Keating gave McCain at least $112,00 in contributions. In the mid-1980s, McCain made at least 9 trips on Keating's airplanes, and 3 of those were to Keating's luxurious retreat in the Bahamas. McCain's wife and father-in-law also were the largest investors (at $350,000) in a Keating shopping center; the Phoenix New Times called it a "sweetheart deal."

http://www.realchange.org/mccain.htm
.


Here's some more Keating 5 straight-talk, my friends:

http://www.youtube.com/watch?v=jxBCAaulG-k
.

Posted by: ZappoDave | September 24, 2008 2:31 PM

Obama-Junkie:

John SIDNEY McCain does not own 7 house or 13 cars (Cindy does ; )

Posted by: JakeD | September 24, 2008 2:30 PM

As we patiently await the rest of the MSM to conclude the obvious: John McCain is a pathological liar. The list is starting to make Marley's Chain look like a wrist bracelet.

Posted by: maxfli | September 24, 2008 2:29 PM

MA:

I thought that Gov. Sarah LOUISE Palin was busy in NYC? Besides, I could see MITT Romney doing a better job for our new President as Secretary of the Treasury ; )

Posted by: JakeD | September 24, 2008 2:29 PM

this is a feeding frenzy! The sharks are circling.

Team Obama! Take a few minutes and add your bops to McCain's count at http://wwww.boppoll.com.

Ten people can add 600 bops per minute. I just added 425 and I am much less stressed.

On to 1,000,000!!!!

Posted by: McCain is toast! | September 24, 2008 2:25 PM

I'm glad that JakeD reminded us of the 7+ houses and 13 cars that McCain owns. I'm sure McCain felt right at home with his super-rich buddies.

McCain, for the regular guy. NOT!!!!!!!!!!!!

Posted by: Obama-Junkie | September 24, 2008 2:24 PM

Wonder if it is true that the actual candidate that bumps off mutual opponent will win in November regardless of issues and poll numbers?

Will GOP use Guiliani-like mob ties like the ones used by his protege Bernard Kerik, ex-NYPD commissioner who may be jailed up to 140 years to do the dirty work? According to above article, does it appear that Kerik is already getting a sweetheart exchange deal where his charges may be dropped in exchange for his bumping off mutual opponent while real culprits go unsuspected? Or will Gotti, Jr. be offered the same deal as he too is trying to get his conspiracy and murder charges dropped too?

Will Dems use an OJ Simpson-like, black convict with jail time? It is reported that OJ is trying to get his robbery and kidnapping charges in Vegas dropped against him too yesterday so he may be available also.

Given this information, will we have to worry about our personal safety too? For example, will our car be tampered? Are we safe in the middle of the night inside our home as our habits and plans are known in advanced due to bugging devices?

Posted by: Anonymous | September 24, 2008 2:24 PM

Media Exposes Another McCain Lie: Davis Took $15k LAST MONTH from Freddie Mac (Under FBI Investigation)!


The first rule of American Politics, Don't Lie to the Media:

"On Sunday, in an interview with CNBC and the New York Times, Mr. McCain responded to a question about Mr. Davis’s role in the advocacy group by saying that his campaign manager “has had nothing to do with it since, and I’ll be glad to have his record examined by anybody who wants to look at it.”


Rule Two: Don't lie to the Media:

"One of the giant mortgage companies at the heart of the credit crisis paid $15,000 a month to a firm owned by Senator John McCain’s campaign manager from the end of 2005 through last month, according to two people with direct knowledge of the arrangement. The disclosure contradicts a statement Sunday night by Mr. McCain that the campaign manager, Rick Davis, had no involvement with the company for the last several years"


Rule Three: Don't Lie to the Media:

"They said Mr. Davis’s his firm, Davis & Manafort, was kept on the payroll because of Mr. Davis’s close ties to Mr. McCain, the Republican presidential nominee, who was widely expected by 2006 to run again for the White House...."

"Freddie Mac’s roughly $500,000 in payments to Davis & Manafort began immediately after Freddie Mac and Fannie Mae in late 2005 disbanded an advocacy coalition that they had set up and hired Mr. Davis to run, the people familiar with the arrangement said...."


Rule Four: Don't Lie to the media:

"After the Homeownership Alliance was dissolved, Mr. Davis asked to stay on a retainer, the people familiar with the deal said. Hollis McLoughlin, who was chief of staff to Richard F. Syron, Freddie Mac’s chief executive, arranged for a new contract with Davis & Manafort, at the reduced rate of $15,000 a month..."

"No one at Davis & Manafort other than Mr. Davis was involved in efforts on Freddie Mac’s behalf, the people familiar with the arrangement said."

http://www.nytimes.com/2008/09/24/us/politics/w24davis.html?_r=1&hp&oref=slogin


And Oh BTW, Freddie Mac is now under investigation by the FBI...

"Sources say FBI investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG."

http://news.yahoo.com/s/ap/20080924/ap_on_go_ca_st_pe/financial_meltdown_investigation
.

Posted by: McCain = Bush's third term | September 24, 2008 2:16 PM

Republicans have us at war in two countries as a result of Republican lies and deceptions, and we might be in two more wars--Iran and Pakistan--by November. We have alienated the entire Muslim world and most of the rest.

The dollar has lost 60% of its value against the euro, and the once mighty dollar is losing its reserve currency role.

The Republicans' policies have driven up the price of both oil and gold by 400%.

Inflation is in double digits. Employment is falling.

The Republican economy in the 21st century has been unable to create net new jobs for Americans except for low wage domestic services such as waitresses, bartenders, retail clerks and hospital orderlies.

Republican deregulation brought about fraud in mortgage lending and dangerous financial instruments which have collapsed the housing market, leaving a million or more homeowners facing foreclosure. The financial system is in disarray and might collapse from insolvency.

The trade and budget deficits have exploded. The US trade deficit is larger than the combined trade deficits of every deficit country in the world.

The US can no longer finance its wars or its own government and relies on foreign loans to function day to day. To pay for its consumption, the US sells its existing assets--companies, real estate, toll roads, whatever it can offer--to foreigners.

Republicans have run roughshod over the US Constitution, Congress, the courts and civil liberties. Republicans have made it perfectly clear that they believe that our civil liberties make us unsafe--precisely the opposite view of our Founding Fathers. Yet, Republicans regard themselves as the Patriotic Party.

The Republicans have violated the Nuremberg prohibitions against war crimes, and they have violated the Geneva Conventions against torture and abuse of prisoners. Republican disregard for human rights ranks with that of history's great tyrants.

The Republicans have put in place the foundation for a police state, which they have no problem using against fellow citizens!

We must get the Republicans totally out of power, or we will have no country left for any of us!

Posted by: Franky | September 24, 2008 2:07 PM

McCain is also talking with Mitt Romney today, on economic issues.

I noticed Palin was nowhere at the table......one wonders if McCain isn't lamenting not having swallowed his dislike for Romney and selected him as VP.

Posted by: MA | September 24, 2008 2:04 PM

If McCain wins, he plans to have the USA marry China, so we can be rich and then we can just sit back and tell lies for fun (instead of profit).

Posted by: Anonymous | September 24, 2008 2:01 PM

Once again, it's not the message that bothers me most about Republican candidates, it's the hypocrisy. McCain can clamor over Wall Street "greed" and golden parachutes all he wants, but with advisers like Fiorina and Schwarzman, it's disingenuous and hypocritical at best.

Posted by: ManUnitdFan | September 24, 2008 2:00 PM

LOL, Serge Birbrair, of course you are not delving into her personal life. Simply "academic" for you. Regardless, if Gov. Palin "lied" about giving birth to Trig Palin, I would not vote for her. Satisified?

Posted by: JakeD | September 24, 2008 2:00 PM

Posted by: Anonymous | September 24, 2008 1:55 PM

Talking about liars...
WHY Palin's medical records is the biggest secret of the ticket?

I am not on her personal life, I am all for candidate's INTEGRITY! No spin, please.

Posted by: Serge Birbrair | September 24, 2008 1:53 PM

No, Rapheal, that's why he's got experts who actually earned their money the hard way ; )

Posted by: JakeD | September 24, 2008 1:52 PM

McCain is a LIAR!...again.


Another day, another lie revealed. Turns out Rick Davis, McCain's campaign manager, was involved with Freddie Mac. Quite recently.

"One of the giant mortgage companies at the heart of the credit crisis paid $15,000 a month from the end of 2005 through last month to a firm owned by Senator John McCain’s campaign manager, according to two people with direct knowledge of the arrangement."

"The disclosure undercuts a statement by Mr. McCain on Sunday night that the campaign manager, Rick Davis, had had no involvement with the company for the last several years."

http://www.nytimes.com/2008/09/24/us/politics/w24davis.html?pagewanted=2&_r=2&hp
.


The issue is that, indeed, on Sunday McCain said that Davis had "nothing to do with" with Freddie Mac since 2005, and invited reporters to check up on it. Well, it turns out reporters did, and Davis was involved after that point, and even right up to the present -- having Davis's company be receiving payments from Freddie Mac as of last month hardly counts as "no involvement." Worse yet, it seems those payments were made specifically because of Davis's "close ties" to McCain.


There's even a little bit of schadenfreude involved, here, in that it was McCain's flagrant lie on the matter that compelled parties to come forward, just to make sure people knew that "not involved" meant "involved, and still taking their money."


"Mr. Davis took a leave from Davis & Manafort for the presidential campaign, but as a partner and equity-holder continues to benefit from its income. No one at Davis & Manafort other than Mr. Davis was involved in efforts on Freddie Mac’s behalf, the people familiar with the arrangement said." [...]

"On Sunday, in an interview with CNBC and The New York Times, Mr. McCain responded to a question about Mr. Davis’s role in the advocacy group through 2005 by saying that his campaign manager “has had nothing to do with it since, and I’ll be glad to have his record examined by anybody who wants to look at it.”

"Such assertions, along with McCain campaign television ads tying Mr. Obama to former Fannie Mae chiefs, have riled current and former officials of the two companies and provoked them to volunteer rebuttals. The two officials with direct knowledge of Freddie Mac’s post-2005 contract with Mr. Davis spoke on condition of anonymity. Four other outside consultants, three Democrats and a Republican also speaking on condition of anonymity, said the arrangement was widely known among people involved in Freddie Mac’s lobbying efforts."

http://www.nytimes.com/2008/09/24/us/politics/w24davis.html?pagewanted=2&_r=2&hp
.

If the McCain campaign is so ticked off at being called liars, they might try, well... not lying. I know, I know, that's so "pre-Bushian" of me.

http://www.youtube.com/watch?v=uXL9Nc-lSvE
.

Posted by: McCain is a Liar! | September 24, 2008 1:48 PM

"For a presidential candidate running against Wall Street greed, Sen. John McCain's selection of titans of finance to discuss the ailing economy with this morning did little to underline his message."

McCain just doesn't get it. Bringing these guys in isn't the change America needs. These are the guys who created the problem.

Bush/McCain. No More Years.

Posted by: thebob.bob | September 24, 2008 1:42 PM

Obama is going to crush McCain in the debates. watchdebate.com Watch Video Clips of Debates Presidentail and even VP I am counting down the days. THinking about having a debate party.

Posted by: pastor123 | September 24, 2008 1:41 PM

Obama is going to crush McCain in the debates. watchdebate.com Watch Video Clips of Debates Presidentail and even VP I am counting down the days. THinking about having a debate party.

Posted by: pastor123 | September 24, 2008 1:41 PM

Owner of 7 houses himself, Mr. McLame coverting with $400 dollar crab eater Stephen Schwarzman. Yes, America...we trust these guys to help us taxpayers out of the current crisis. That's why McLoser is 9 points down in the polls. But then, McIdiot doesn't seem to get it ever.

Posted by: JakeD | September 24, 2008 1:40 PM

Is the McCain campaign seriously thinking about dumping Palin and putting Romney on the ticket? http://www.veeppeek.com

Posted by: pastor123 | September 24, 2008 1:39 PM

It's about time someone brought up Schwarzman and his hedge fund buddies who are dodging taxes in this time when average people are bailing out the industry. And how tone-deaf is McCain that he chose these 3 people to do photo-ops with. About as tone-deaf as having a fired CEO who got a $44 million golden parachute as his chief financial spokesperson and 19 Fannie/Freddie lobbyists in his campaign, including the busted Rick Davis as his campaign manager.

Does anyone need a reminder that McCain himself is a refugee as part of the Keating 5 from the last banking crisis? And that his son is ably bearing the torch by sitting on the board of a Nevada bank that recently went belly up?

Seriously, are voters supposed to ignore what a disaster McCain is regarding ethics and the economy?

Posted by: Pupster | September 24, 2008 1:38 PM

Gee, Jake D, didn't you know McCain got rich by marrying a welthy woman (who inherited her money, she didn't build the fortune). Does marrying into money mean he has some great insight into how to fix our economic problems?

Posted by: Rapheal | September 24, 2008 1:38 PM

What do Obama's advisors eat on the weekends, and what do they spend?

http://www.politicswithagrin.blogspot.com/

Posted by: Kristen | September 24, 2008 1:35 PM

Sheesh, Does McCain have any advisors who are not dishonest?

Posted by: Anonymous | September 24, 2008 1:31 PM

Ho this is hilarious. As McCain follows Palin around pretending he's a rural moose hunter he's got Phill Gramm economic plans (Milton Friedman I suspect) and cronies stuffed to the gills with money and gold and extra homes in exclusive places. See me reform! See me save the common folks! See Spot Run.

Posted by: Gaias Child | September 24, 2008 1:22 PM

Oh, please. Here we go again! I'm surprised Weisman did not bring up the "McCain owns 7 houses and 13 cars" canard. I mean, seriously, you want POOR people who failed at business advising you?

Posted by: JakeD | September 24, 2008 1:21 PM

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