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Fla. Senate candidate Jeff Greene's ties to John Paulson

jeffgreene.JPG

Photo credit: AP Photo/The Palm Beach Post, Lannis Waters

I was surprised to learn over the weekend that Jeff Greene -- who made a killing betting against the housing market -- has a double-digit lead over Rep. Kendrick Meek in the Florida Senate Democratic primary race, according to the latest polling.

Not being a political reporter, I can't tell if this is Meek running a lackluster campaign (although Philip Rucker makes it sound that way) or Greene running an effective one. Spending $6 million of his own money can't hurt.

But it's remarkable how well Greene, who's running as a "Democratic outsider" and "proven jobs creator," has been able to distance himself from his old friend, hedge fund manager John Paulson, the man who helped Goldman Sachs pick lousy mortgage bonds to bundle into securities so he could bet against them.

Greene's success is a case of Wall Street and politics not intersecting -- or at least not enough to catch the attention of voters.

Greene made money off the real estate collapse by figuring out how to buy credit default swaps as an individual investor. But he didn't gin up the strategy on his own. As chronicled in Gregory Zuckerman's book 'The Greatest Trade Ever,' he essentially ripped off the idea from Paulson.

In 2006 Paulson approached Greene to be an investor in a new fund based on Paulson's hunch that housing prices were due for a major correction. Greene didn't commit, instead thinking of how he could use Paulson's strategy for himself.

When Paulson found out, he was furious.

From the book:

Greene sent Paulson an e-mail saying he now was interested in investing in his new fund. He mentioned that he'd done some of the trades by himself and had some questions.
Paulson fired an e-mail back.
"What trades?"
"The ones we discussed."
"I can't believe you did the trades; you went behind my back," Paulson wrote. Greene, caught off-guard, could tell Paulson was fuming.
"Should I unwind it, J.P.?"
"Yes, unwind it."

Greene didn't unwind. He ended up making $500 million off one trade, according to Zuckerman. Of course you won't find any of this in Greene's bio.

By Jia Lynn Yang  |  August 2, 2010; 12:30 PM ET
Categories:  Midterm elections  
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Comments

Greene's former employees say he's a pathetically abusive boss. He hires Ukrainian strippers for a party on his 145-foot yacht. And now we see that his business partners can't trust him.

This jerk is the antithesis of what the Dems stand for. I hope Crist kills him in the general election.

Posted by: Garak | August 2, 2010 6:01 PM | Report abuse

PS: Maybe Paulson can contribute a few million to Meeks.

Posted by: Garak | August 2, 2010 6:02 PM | Report abuse

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