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John Kasich’s Lehman Days Create Rorshach Test for Viewing His Career
Jul 9, 2015 | Bloomberg
By Mark Niquette
...Kasich’s Lehman career, which included deals for companies from Google Inc. to Cleveland-based manufacturer ParkOhio, will test the presidential campaign that the two-term Ohio governor plans to start this month. -
Exclusive: Why Doesn't Jeb Want to Talk About Lehman Bros?
Jul 9, 2015 | Fox Business
By Charlie Gasparino
...For about seven years, Bush earned more than $14 million as an adviser to Lehman and, after its 2008 bankruptcy, Barclays, which took over Lehman. As such, he helped pitch business to clients or as he recently put it “I advised their clients on a wide range of global economic issues with a mind towards navigating government policies.” -
House Lawmakers Study Adjustments to Bill for Bank Failures
Jul 10, 2015 | The Wall Street Journal
By Katy Stech
Lawmakers are weighing tweaks to the U.S. bankruptcy code to prepare the federal court system for the next big bank failure by allowing a quick sale without the financial-market freeze that occurred when Lehman Brothers Holdings Inc. filed for chapter 11 in 2008.
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John Kasich’s Lehman Days Create Rorshach Test for Viewing His Career
Jul 9, 2015 | Bloomberg
By Mark Niquette
John Kasich knew “close to zero” about investment banking in 2001 when Lehman Brothers Holdings Inc. hired him after serving 18 years in Congress, and it was Gary Weinstein’s job to teach him.
Weinstein created a presentation with the basics for Kasich to study as he prepared for his general securities representative exam. Kasich worked hard as a managing director, and by the time he left in 2008 after the firm’s bankruptcy that ushered in the recession, he was a veteran of initial public offerings and other deals.
“I remember feeling this was going to be an uphill battle, and this guy doesn’t know anything,” said Weinstein, the former chief administrative officer for investment banking and Kasich’s boss. “He had the right attitude, and he stuck with it and he never gave up.”
Kasich’s Lehman career, which included deals for companies from Google Inc. to Cleveland-based manufacturer ParkOhio, will test the presidential campaign that the two-term Ohio governor plans to start this month.
While his opponents have depicted his stint at the doomed bank as a period during which he cashed in as millions suffered, Kasich makes the case that he gained finance experience that made him a better public official.
“If people want to attack me, I’ll tell them what I did, and I think it’s been great,” Kasich said in an interview Wednesday during a visit to South Carolina.
The question of what Kasich did during the class war pervaded his campaign for governor.
“Thousands of Ohioans lost their life savings as a result of the Lehman Brothers bankruptcy,” former Governor Ted Strickland said during an October 2010 debate. “My opponent walked away with a big $400,000 bonus.”
Kasich was hired at Lehman with the help of William E. “Wilber” James, general partner of RockPort Capital Partners in Boston.
James said he befriended Kasich during a trip to Africa with lawmakers in 1988. When Kasich was considering what to do after leaving Congress in 2000 following a failed presidential run, James introduced him to Richard “Dick” Fuld, a boarding-school friend who was Lehman’s chairman.
“John wasn’t one of these glad-handing guys,” James said. “They hired him for his chutzpah, his intellect, his ability to think about different things.”
Weinstein and other former colleagues describe him as a facilitator, forging relationships and working with Lehman teams in areas including manufacturing, media and technology. While Kasich’s experience, connections and understanding of politics were helpful, he wasn’t just a rainmaker, said Weinstein, now retired in Greenwich, Connecticut.
“It was a little bit more who John was than what he had done,” Weinstein said. “We saw his Washington experience and his name recognition as a slight positive, but it wasn’t what was driving the bus.”
Glenn H. Schiffman, who was global head of Lehman’s media group, said Kasich used contacts in Silicon Valley with venture capitalists such as Mark Kvamme, a former partner at Sequoia Capital in Menlo Park, California, to generate business.
“Did John do the numbers? No,” said Schiffman, now a senior managing director at Guggenheim Partners LLC in New York. Yet, “We would not have done as well without John.”
Kasich said he could often speak to decision-makers as a peer.
Working between his office in Columbus and New York, where he also hosted a weekly television show on Fox, Kasich played a modest role on the Lehman team that worked on Google’s initial public offering in 2004, Weinstein said. Kasich also participated in other deals including debt offerings and acquisitions and offered strategic advice.
After the Sept. 11, 2001 terrorist attacks, Kasich facilitated a working group with government and venture-capital officials to address money-laundering, cybersecurity and other technology issues in the Defense Department, said Ted Schlein, general partner at venture firm Kleiner Perkins Caufield & Byers in Menlo Park, California.
Yet Kasich’s Lehman work almost kept him from becoming governor. When Kasich challenged Strickland, the incumbent Democrat focused his campaign on Kasich’s “Wall Street values” and said Kasich profited from damage that investment banks did to the economy.
Lehman Brothers, once the fourth-largest investment bank, filed for bankruptcy in September 2008 after suffering losses from risky investments in subprime mortgages, leading to the worst recession since the Great Depression.
Kasich won his 2010 race by a mere two percentage points.
With Kasich preparing to run for president in a season of debate over inequality, that criticism is surfacing again.
“There is one question voters ask when they go to the ballot box: will this candidate look out for me?” Democratic National Committee spokesman Jason Pitt said in a release. “We know the answer when it comes to John Kasich.”
Kasich has maintained that, as one of 700 managing directors -- and one based in Columbus -- he wasn’t responsible for decisions that helped bankrupt the company...
For full story:
http://www.bloomberg.com/politics/articles/2015-07-09/john-kasich-s-lehman-days-create-rorshach-test-for-viewing-his-career
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Exclusive: Why Doesn't Jeb Want to Talk About Lehman Bros?
Jul 9, 2015 | Fox Business
By Charlie Gasparino
Jeb Bush apparently doesn’t want people to know that he worked at Lehman Brothers, the now-defunct investment bank whose collapse led to the broader financial meltdown in 2008.
That’s the only conclusion I can come to after receiving a series of occasionally bizarre emails from his press people to what I thought was a fairly simple question about Bush’s work before he became a Republican presidential candidate.
For about seven years, Bush earned more than $14 million as an adviser to Lehman and, after its 2008 bankruptcy, Barclays, which took over Lehman. As such, he helped pitch business to clients or as he recently put it “I advised their clients on a wide range of global economic issues with a mind towards navigating government policies.”
Dig a little deeper and you will find that Bush may be downplaying his role at the firm, particularly when it mattered the most: Those turbulent months in 2008 just before Lehman filed for the largest bankruptcy in U.S. history.
Here’s what we know: In 2008, as Lehman was falling into insolvency because of its bad bet on real estate—among the first of many banks that would do so that year—Bush took part in a firm effort to save the company. Inside Lehman, the process of raising new capital and trying to dispose of all those bad assets on its balance sheet was known as “Project Green.”
Bush’s piece of this firm-wide effort was termed “Project Verde” (Spanish for Green), and it involved convincing the world’s richest man, Mexican billionaire Carlos Slim, to make a potentially life-saving investment into Lehman.
How do I know this? Not from the Bush people or even from all those tax returns he released last week, but from countless anonymous sources on Wall Street and once source who isn’t: Anton Valukas, a Reagan appointed former U.S. Attorney who went on to become the examiner for the Lehman bankruptcy.
As part of his work looking at what caused the largest bankruptcy is the nation’s history, Valukas produced a report that runs nearly 500 pages.
But you don’t have the read the whole thing to see the information involving Jeb Bush and Carlos Slim (just search either name). And it’s there you will find out that in “early July 2008, Lehman requested that Jeb Bush, who was a Lehman adviser, discuss Project Verde with Slim.” The reason, according to Valukas: to enter into a “strategic partnership” with Slim, meaning the Mexican billionaire would provide some assistance to their firm by buying stock or some other arrangement, Valukas said.
Project Verde was ultimately unsuccessful, or as Valukas points out: “On July 5, 2008, Bush reported that the meeting had been unsuccessful because Slim ‘did not express interest in jv (joint venture) or stock purchase.’”
As exhibits to the report, you will find a series of emails from various Lehman executives, including one from Jeb himself describing his efforts.
How detailed were Bush’s discussions with Slim? Slim declined to comment other than to say, through a spokesman, that the two have been “friends for 20 years, but they have never done business together.” Former Lehman chief Richard Fuld described the discussions to the bankruptcy examiner as an informal “‘conversation in the hallway,’” the report said.
But the Valukas reports suggest that the talks were serious enough that they were included in a portion of his bankruptcy report describing “the potential strategic partners” Lehman executives sought out to save the firm during the financial crisis, including the giant insurer American International Group (AIG), investment bank Morgan Stanley (MS) and other foreign and domestic financial institutions.
How does Bush and his people describe the governor’s Lehman work? Well, judge for yourself. When I asked the Bush campaign to comment on the governor’s efforts to raise money from Slim to save Lehman, this was their initial email response: “Lehman didn’t ask Governor Bush to engage and he wouldn’t have. And no, he didn’t ask Carlos Slim to infuse money into Lehman."
When I asked her to clarify this statement, since some details of the Slim discussions had leaked into the media, another Bush spokeswoman, Kristy Campbell, said: “Governor Bush met with Carlos Slim. It was regarding a specific telecom project. It was not regarding (a) general Carlos Slim infusion of cash to save Lehman Brothers.”
Over the weekend, I pressed the Bush people about Slim yet again. It just was hard for me to fathom that Lehman would be wasting either Jeb Bush’s or Carlos Slim’s time on a random telecom investment in the summer of 2008 when the firm was about to go toes up.
That’s when Tim Miller, Jeb 2016’s communications director, got back to me with the following email: “Don’t understand what it is that makes no sense to you/you find so odd. I will say that I found it odd you wrote a piece about how we ‘wouldn’t come clean’ the same day Gov. Bush held a briefing with reporters to talk about his business career and answered questions about the very topic you were writing on.”
Which again didn’t answer my question.
So once again I asked to speak to someone rather than be forced to parse through these email responses. Miller responded that Campbell “is far better informed on this” issue than he is and said she would be contacting me shortly.
Here’s what Campbell said, again via email: “Charlie, as I mentioned, the meeting (with Slim) in Mexico was regarding a specific telecom deal. If you would like to report that he discussed investing in Lehman with Carlos Slim at some point, that’s fine. We haven’t denied that…There is nothing in conflict with what I said in either e-mail.”
Oh really?
Now half of me feels it’s great that Jeb Bush earned his millions at Lehman for something more than an “unsuccessful” bid to raise money for a dying firm since Bush people concede that he pitched business to Slim at least twice.
The other half feels that the Bush people are clearly hiding something given all the back and forth. Keep in mind that the paperwork that accompanied his tax returns—the same tax returns the Bush campaign went to great lengths to show how he paid the maximum tax rate—barely mentioned his work for Barclays as an adviser, and made no mention of his time at Lehman. We still don’t know, exactly, what he did at either firm...
For full story:
http://www.foxbusiness.com/business-leaders/2015/07/09/jeb/
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House Lawmakers Study Adjustments to Bill for Bank Failures
Jul 10, 2015 | The Wall Street Journal
By Katy Stech
Lawmakers are weighing tweaks to the U.S. bankruptcy code to prepare the federal court system for the next big bank failure by allowing a quick sale without the financial-market freeze that occurred when Lehman Brothers Holdings Inc. filed for chapter 11 in 2008.
Several bankruptcy lawyers testified on Thursday before a U.S. House subcommittee on regulatory reform about the recently reintroduced Financial Institution Bankruptcy Act, which would give bankruptcy judges the power to privately transfer a struggling bank’s assets to a new, more stable owner in less than 48 hours.
In chapter 11, the process of selling a company’s assets often takes weeks, which could prove too long when there is a risk of a run on the bank.
For several lawmakers, there was a lingering concern about who will pay for the bank-transfer process.
The wind-down of Lehman Brothers, for example, has cost more than $2 billion in fees to professionals. Experts on big bank failures have said that the U.S. government might be the only body willing to lend to a struggling bank, leading to the problem of bailouts.
“I’m concerned that the lack of funding mechanism could make the bill unworkable,” Rep. Hank Johnson (D., Ga.) said.
Meanwhile, Rep. John Conyers (D., Mich.), one of the bill’s sponsors, asked whether the existence of government money would lead bank officials to act less responsibly.
Bankruptcy lawyer Richard Levin of Jenner & Block LLP said he supports the availability of government money to provide liquidity to the transferred bank assets, saying that financial markets are likely to run more smoothly knowing that such a funding mechanism exists. He also likened the availability of government money to the country’s nuclear arsenal: just because it exists doesn’t mean it will be used, he said.
“We think the availability [of government money] will obviate the need for its use,” Mr. Levin said.
Mr. Levin testified alongside fellow restructuring lawyers Donald Bernstein of Davis, Polk & Wardwell and Stephen Hessler of Kirkland & Ellis. All three agreed that the bill could have helped saved Lehman Brothers from collapse, in addition to the other measures that passed after the financial crisis. Banks are now required to be financially more stable, undergo “stress tests” to see whether they could withstand another crisis and draw up “living wills” that outline how the operations could shut down in an orderly fashion.
For full story:
http://www.wsj.com/articles/house-lawmakers-study-adjustments-to-bill-for-bank-failures-1436474234
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Former Lehman Personnel
U.S. Bankruptcy Code
Full Text of Stories Below
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