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Political commentary from Andrew Malcolm

Category: Wall Street

Who is 'the fabulous Fab,' and why is Congress making him the poster child for greed at Goldman Sachs?

Fabrice Tourre and other Goldman Sachs officials at a Senate investigating committee April 27, 2010 by Jim Young:Reuters

Like all of these showdowns between the money-is-God titans of Wall Street and the holier-than-thou lords of Congress, Tuesday's investigation of Goldman Sachs will likely produce more noise than information. Already, those controversy-stoking guardians of the media are focusing on 55-year-old Chief Executive Lloyd Blankfein, the up-from-Brooklyn Goldman Sachs executive whose first job was selling peanuts and popcorn at Yankee Stadium and whose father was a mail sorter at the local post office. In a predictable script, Blankfein is expected to tell a special committee of Congress that his company did nothing wrong and did not, as the Security and Exchange Commission alleges, bet against the mortgage market. Then members of Congress are expected to grill him, insisting that Goldman Sachs was in fact cheering when Americans lost their homes.

But one of the first witnesses to testify is a relatively junior figure, Fabrice Tourre, an until-now-unknown 31-year-old Frenchman who called himself "the fabulous Fab."

His prepared remarks read like the speech of any aggrieved Frenchman from Napoleon on. "I have been the target of unfounded attacks on my character and motives," he says. "I deny -- categorically -- the SEC’s allegation."

Who is this guy? And why is a Frenchman at the center of a classic American scandal?

For starters, he attended one of France’s best engineering schools, the École Centrale Paris, getting a bachelor's degree in mathematics. He was a natural for Wall Street, where demand for executives with quantitative skills, especially in areas like structured finance, was growing even as test scores for U.S. kids were falling.

But the problem (for him) is that he is also, how do you say in French? ... flamboyant. On a career-building website called Viadeo, Tourre described himself as a “trader/structurer of exotic derivatives.” And in an e-mail to a friend on Jan. 23, 2007, he wrote, “More and more leverage in the system, The whole building is about to collapse anytime now … Only potential survivor, the fabulous Fab[rice Tourre] … standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!”

Hubris is one thing Congress understands well, having had some experience in the area. Even as President Obama pushes for financial regulatory reform and Democrats and Republicans haggle over the details, Fabrice and Blankfein provide convenient foils for voter anger.

After all, it's an election year.

-- Johanna Neuman

Photo: Fabrice Tourre and other Goldman Sachs officials before a Senate investigating committee on Tuesday. Credit: Jim Young / Reuters

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New threat to U.S. national security prompts generals to join First Lady Michelle Obama's fight against fat

First Lady Michelle Obama flexes her muscles as she exercises with schoolchildren at River Terrace School in Washington DC April 21, 2010 by Getty Images

Somehow the Ticket missed this. Distracted by speculation about President Obama's choices for Supreme Court, preoccupied by the sparring between Democrats and Republicans over financial regulatory reform, gagging over the fascism of Arizona's new immigration law, we failed to notice that some of the nation's top generals had issued a new report on national security.

Unlike most such reports that sit gathering dust unread, this one is gripping.

In a report called "Too Fat to Fight," a nonprofit, bipartisan group of 130 retired admirals, generals and other senior officers is warning that 27% of young Americans ages 17 to 24 are....

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Democrats decry Wall Street excesses but take lots of Goldman Sachs money -- a credibility problem?

Wall Street on April 19, 2010 as the Security and Exchange Commission launches civil fraud suit against Goldman Sachs

In 2010, the securities folks on Wall Street gave $32 million to political candidates -- and that was before the Supreme Court removed the ban on corporate campaign contributions in politics. More than 60% went to Democrats. And in 2008, Barack Obama's presidential campaign received almost $15 million from the finance industry. Nearly $1 million of it came from Goldman Sachs employees -- making the company Obama's second-largest source of donations. The only entity that gave more: the University of California.

All this comes from the Federal Elections Center and from the Center for Responsive Politics, whose website opensecrets.org has been working overtime to highlight a nasty truth about the current Democratic campaign against Wall Street excesses.

Politics costs money. So even if you're a Democrat beating up on Wall Street in hopes of corralling votes on Main Street, you are just as likely as a Republican to hold out your hand. As the Wall Street Journal noted this morning, New York Democrat Chuck Schumer is the top Senate recipient for political money from the investment industry -- garnering nearly $1.5 million this cycle. Fighting for his political life, Senate Majority Leader Harry Reid has so far accepted more than $500,000 from the industry.

Of course Republicans are not immune from the, um, perks of knowing those free-spending guys on Wall Street. Alabama's Richard Shelby has accumulated more than $300,000 so far this cycle, and that new darling of the Republican electorate, Massachusetts' Scott Brown, is over the $350,000 mark.

Maybe that's why word is now circulating on Capitol Hill that Democrats and Republicans are close to a deal on the financial regulatory reform bill. After all, with an election looming, it's probably bad politics for Republicans to defend the indefensible, and equally dangerous for Democrats to encourage voters to follow the money.

And the last thing anyone in politics wants to do is prompt the guys on Wall Street to withdraw their wallets.

-- Johanna Neuman

Photo credit: Getty Images

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Greg Craig, dumped by Obama White House in November, resurfaces to side with Goldman Sachs

White House chief of staff Rahm Emanuel, counsel Greg Craig and press secretary Robert Gibbs listening to President Obama May 1, 2009 by AP
Greg Craig resigned from the Obama administration in November, pushed out as White House Counsel after he pressed for a strict deadline for closing Guantanamo Bay.

“Trying to unwind the Bush policies while trying to manage two wars was not easy,” Craig said recently during an appearance at Harvard Law School during which he recounted his run-ins with Chief of Staff Rahm Emanuel on the issue.

Now, with Obama's Security and Exchange Commission going after Wall Street as part of a broader Democratic election-year campaign against corporate America, Craig is working on the other side of the street. As a high-stakes drama unfolds between the Street against the White House, Goldman Sachs has hired Craig to represent the giant bank in Washington in its fight-for-survival defense against the SEC.

“He is clearly an attorney of eminence and has a deep understanding of the legal process and the world of Washington,” one source told Politico. “And those are important worlds for everybody in finance right now.”

Craig knows something about riveting political dramas. During an earlier chapter as White House counsel, he represented President Clinton during the 1999 impeachment proceedings that almost ended a presidency.

“He was in trouble,” Craig said in an interview with PBS' Frontline in 2000. “He knew he was in trouble. ... I felt that the presidency as an institution was in trouble.”

At the peak of the crisis, Craig recalled, he phoned a Democratic senator who told him that his colleagues  “were about two or three days away from a delegation of senior senators from the Democratic Party coming down and talking to the president about resigning.”

Then as now, the drama was spellbinding, and the stakes could not have been higher.

Guess who won.

-- Johanna Neuman

Photo: White House Chief of Staff Rahm Emanuel, left, Counsel Greg Craig, center, and Press Secretary Robert Gibbs listen to President Obama at the White House last year. Credit: Associated Press

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Democrats launch war on Wall Street; Google search for Goldman Sachs & SEC nets Obama.com ad on reform

Securities and Exchange Commission Chair Mary Schapiro during a meeting Sept. 30, 2009 by Getty Images

In some ways, the civil fraud lawsuit lodged against Goldman Sachs on Friday for betting on a housing downturn was a calling card from Mary L. Schapiro, chairwoman of President Obama's Securities and Exchange Commission. Amid rumors of more investigations to come and stunned chatter on Wall Street about how the firm's big-money donations to Democrats did not spare Goldman, the SEC's message was clear: we are on duty and on alert, and we are not going to miss the next Bernie Madoff.

But make no mistake. Democrats believe a war against  market manipulators on Wall Street will help recapture voters turned off by the massive spending program known as healthcare reform. Polls show that targeting the financial industry is more of a winner than tackling immigration reform. So, pushing a major regulatory reform bill  in the Senate that has already passed the House, and issuing talking points to vulnerable candidates, Democrats are planning to ride Wall Street to victory in the 2010 elections.

Saturday, Obama dedicated his weekly radio address to the topic. Monday morning, the White House announced the president will travel to New York on Thursday to deliver remarks at Cooper Union on Wall Street reform. Two years after the greatest financial collapse since the Great Depression, Obama plans to call for swift Senate action on regulatory reform of the financial industry.

"The crisis has already wiped out trillions of dollars in family wealth and cost over 8 million jobs,"  the White House said. "The president will also remind Americans what is at stake if we do not move forward with changing the rules of the road as a part of a strong Wall Street reform package."

Pity the Republicans, who find themselves in the unenviable position of having to defend Wall Street at a time when it's the villain of the day. Their latest pitch is that the effort to tighten banking and market rules would be a costly over-reach by government regulators. That could prove a hard sell on Main Street -- one reason Democrats are wooing some Republicans, like Ohio's George Voinovich, whose state was hard-hit by the housing slump and recession.

As for the Democrats, they are all over it. This morning I tried a Google search for "Goldman Sachs" and "SEC" and the first sponsored link was the official Goldman Sachs website. The second one was an ad from barackobama.com, urging voters to join the fight against Wall Street.

-- Johanna Neuman

Photo: Mary L. Schapiro. Credit: Getty Images

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Jim Bunning's lonely stand against deficit spending to fund unemployment benefits -- does he have a point?

Hall of Fame Pitcher now Kentucky Republican Sen. Jim Bunning throwing out first ball at a 2008 game 

Kentucky Republican Sen. Jim Bunning has been demonized in the media a lot lately.

CNN has been running a crawl that reads, "Thousands hurt by one senator." Ticket has described him as a goat. He has been blamed for the furlough of 2,000 workers at the Transportation Department. From the podium of the Obama White House, Press Secretary Robert Gibbs denounced him. Even Bunning's Republican colleagues have pleaded with him to stop objecting to a stop-gap measure that protects the unemployment benefits for millions of out-of-work Americans afloat.

But Tuesday on the Senate floor, Bunning, a two-term lawmaker who can afford to be difficult because he's not running for reelection, stood his ground. Like a Hall of Fame pitcher staring down the batter, he challenged Senate leaders to use other parliamentary options to get the bill to the floor. And he read into the record a letter from Robert, an unemployed man in Louisville, Ky., who applauded the senator's stand against deficit spending.

"This country is sooner or later going to implode because of the massive amount of debt run up over the past 40 or 50 years," Robert wrote. Asked frequently why he is doing this now, Bunning answers, "Why not now?"

Some of this is political posturing. As one liberal analyst told the San Francisco Chronicle, "I would have more sympathy for [Bunning] and others if they applied the same logic to new tax cuts or to extending expiring tax cuts like the estate tax."

Lots of people think Bunning is a loose cannon -- he is given to strange outbursts that reportedly prompted his colleague from Kentucky, Senate Minority Leader Mitch McConnell to force him to retire. He was the sole senator to vote against President George W. Bush's appointment of Ben Bernanke in 2006. He accused then-Treasury Secretary Henry Paulson of acting like the "minister of finance in China" for taking over Fannie Mae and Freddie Mac. He once accused an opponent of looking like one of Saddam Hussein's sons.

So satirizing him is easy.

Still, across the country, some voices are rising to his defense. "A month ago, Democrats were suggesting the Repubs were phony tightwads for not joining them in support of paygo," wrote blogger Debra Saunders. "It turns out, paygo is the phony. Two weeks after it became law, the Senate passed a $15 billion jobs bill exempt from paygo."

With 17 million Americans out of work, it seems a no-brainer to pass a 30-day Band-Aid protecting their benefits, even if it means busting the deficit. But the question Bunning raises is a good one: "If we can't find $10 billion to pay for something that we all support, we will never pay for anything on the floor of this U.S. Senate."

-- Johanna Neuman

Photo: Bunning, a Hall of Fame Pitcher for the Detroit Tigers and Philadelphia Phillies who pitched a perfect game in 1964, throws out the ceremonial first pitch at a 2008 game. Credit: Doug Pensinger / Getty Images

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Romney 2.0: Mr. Fix-It

Former Massachusetts Gov. Mitt Romney greets newly elected Sen. Scott Brown Get ready for another political book tour. Also another political reinvention.

A Republican governor in mostly Democratic Massachusetts, Mitt Romney has long defied easy description. He ran for president in 2008 by banking hard to his conservative side, convinced by his strategists that there was an opening to the right of maverick moderate Republican John McCain. He worked to raise money and offer advice to long-shot Republican Senate candidate Scott Brown but stayed in the background (until Brown's victorious election night, pictured) lest he stir animosity among voters still smarting over his healthcare reforms.

Now, two weeks before publication of "No Apology: The Case for American Greatness," Romney is pivoting again -- this time pitching himself as a problem solver whose background as a successful financier makes him the ideal candidate to rescue the ailing U.S. economy.

Like former Alaska Gov. Sarah Palin, Romney is planning a book-tour blitz that mirrors his ambitions -- starting on ABC's "The View," stopping at the first-vote-in-the-primary state of Iowa, speaking this weekend at the Conservative Political Action Conference in Washington, D.C., an early temperature-reader on the emotions of the Republican base.

But in a fascinating piece, the Boston Phoenix wonders if "letting Mitt be Mitt" will work. A Mormon whose father, George Romney, was governor of Michigan and a presidential candidate himself in 1968, the younger Romney has had a hard time finding his political bearings.

For one thing, his previous reincarnations — he ran as a liberal Republican in a losing attempt to unseat the late Sen. Ted Kennedy — have already strained his credibility. "Any further change — even to become the real, authentic Romney — will be viewed with suspicion, if not derision," wrote the Phoenix.

But the real problem, said the paper, is "the real Mitt Romney — Harvard MBA, political scion, hard-working businessman, super-wealthy master of Wall Street offerings, devout Mormon — might not be what Republican primary voters actually want."

-- Johanna Neuman

Photo: Associated Press

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Could snow rescue jobs bill?

A snow version of the U.S. Capitol on Feb. 7, 2010 after a blizzard blanketed the city

Today was supposed to be the deadline for Democrats to bring a jobs bill to the Senate floor.

But this weekend's epic snowstorm shuttered Washington, turning the roads into snow banks and shutting down staples of normalcy -- like the Postal Service and the Smithsonian Institution -- that rarely close. With many lawmakers having trouble returning from their home districts, Monday votes have been canceled.

Which is apparently a good thing, according to Politico, because negotiators are apparently having a hard time hammering out a compromise anyway.

Nothing’s agreed to until everything’s agreed to,” said Finance Committee Chairman Max Baucus, who’s leading the negotiations. “We can be very close, and it can collapse because something went haywire.”



The first proposal -- for a $100-billion infusion of TARP-financed funds -- fell into trouble when Republican Scott Brown -- arguing that the first $787 billion had not created one new job -- won election in Massachusetts, robbing Democrats of their 60-vote margin

Now all sorts of ideas are on the table. Democrats are talking about tax credits for small businesses; Republicans led by Alabama's Jeff Sessions are talking about cracking down on immigration, on grounds that illegal workers rob Americans of jobs. And compromise is difficult, with Republicans threatening to filibuster any use of TARP refunds.

But hey, the weather service is predicting another five to 10 inches of snow for Tuesday, so maybe the Dems will get another reprieve.

-- Johanna Neuman

Photo: A U.S. Capitol made out of snow stands near the real thing. Credit: Associated Press

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Obama says go to college, not slots; Vegas irate

Just_fabulous 
How appropriate that it’s Groundhog Day (or Marmot Day in Alaska): In the eponymous movie, Bill Murray’s character keeps repeating the same silly mistakes.

And so it was that on Tuesday, President Obama, speaking in a state whose economic well-being does not solely depend on tourism, used Las Vegas as a symbol of profligate spending – which it is. (For a time, a downtown strip club’s marquee even touted the, ahem, stimulus its dancers could provide.)

Hours later, Obama apologized. It was inevitable.

But Obama (sort of) did the same thing last year and got harangued by Mayor Oscar Goodman (a Bombay Sapphire spokesman) and the governor (Jim Gibbons, known more for his cast of lady friends than his gubernatorial initiatives). Their chest-thumping got national attention, mostly because Nevada’s one-note tourism economy is indeed in shambles.

Perhaps Obama blocked out the brouhaha?

A recap:

Last year, the president was assailing bailout-coddled bankers while in Indiana, when he said, “You can't get corporate jets, you can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer's dime.” The comment may have been innocuous – do taxpayers really want to underwrite a Goldman Sachs bacchanal? – but the furor was such that Obama had to make nice with Vegas when he came to raise money for Senate Majority Leader Harry Reid.

Even after Caesars Palace upgraded Obama to a high-roller suite during his May appearance, the president apparently forgot to find another synonym for decadence. On Tuesday while in New Hampshire, he said, “When times are tough, you tighten your belts. You don’t go buying a boat when you can barely pay your mortgage. You don’t blow a bunch of cash in Vegas when you’re trying to save for college.”

The Nevada congressional delegation quickly...

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White House caves -- could 9/11 terror trials move from Lower Manhattan to a town near you?

Khalid Sheikh Mohammed

Reeling from pushback from all quarters of New York City's pulsing body politic -- community leaders, law enforcement officials and business leaders -- the White House last night asked the Justice Department to reverse course. The order: look for a new spot for those civilian trials of 9/11 mastermind Khalid Shaikh Mohammed and other terrorist suspects.

Republicans had blasted Atty. Gen. Eric Holder's decision as soon as it was announced. Former Mayor Rudy Giuliani complained that a New York trial would only give the terrorists a media-circus platform. If the trials are in Manhattan, he said, "the terrorists win." Conservatives in Washington got busy too, trying to stop funding for the idea.

And law enforcement officials were hardly silent. At an annual police charity event on Jan. 13, Police Commissioner Raymond Kelly made what one source described as an "extremely powerful" speech to a roomful of 150 prominent business leaders about how disruptive and costly the trial would be for lower Manhattan. With costs for the four-year trial estimated at $1 billion, it didn't take more than an abacus to do the math -- business leaders started calling Gracie Mansion.

But the real catalyst for change may have come from a neighborhood advisory board in Lower Manhattan that voted to oppose  the idea. After that happened, Mayor Michael Bloomberg, a deft politician who had first supported the trials, reversed course. "There are places that would be less expensive for the taxpayers and less disruptive for New York City," he told reporters.

Bloomberg's dramatic defection gave spine to other New York politicians, like Democrat Chuck Schumer, who called the White House and urged the administration to “find suitable alternatives." Now, Justice Department officials are said to be looking at "contingency options," such as a federal courthouse in any of the targets for the 9/11 attacks -- New York, Pennsylvania or Virginia.  And Republicans like former Gov. George Pataki, newly emboldened by the White House decision to move the trial to a different venue, are now pushing for Holder to change his mind altogether, and hold the trials at military tribunals.

As for that little community board, members there are marveling over the gears that grease democracy.
 "I'm thrilled the White House is reconsidering," said Julie Menin, a community activist, attorney and political commentator who chairs Community Board 1, calling the new direction  "a step in the right direction."

-- Johanna Neuman

Photo credit: Reuters

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About the Columnist
A veteran foreign and national correspondent, Andrew Malcolm has served on the L.A. Times Editorial Board and was a Pulitzer finalist in 2004. He is the author of 10 nonfiction books and father of four. Read more.
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