Thursday, September 08, 2005

Bush, Brown, and Katrina

If you have not gotten to it yet, stop now and read Paul Campos's staggering piece on Mike Brown's résumé. It will disgust you, but it should not shock you. Anyone who lives in Washington and bumps up against the executive branch is bound to have stories of useless idiot/hacks who get political appointee jobs they have no business doing. Every winning campaign has to reward the grunts. But still. And it's not just Brown. Go down the mid-level appointees and you'll find much, much worse.

But Campos's piece reminded me of another essay, from Chris Caldwell, some years ago:
What kills the President is that every time Harken comes up, Democrats get to retell the story of how he made his money. And this, basically, is the story of the spectacular unfairness with which moneymaking opportunities are lavished on the politically connected. It is the story of a man who has been rewarded for repeated failures by having money shot at him through a fire hose. It is the story of a man who talks with a straight face about having "earned" a fortune of tens of millions of dollars, without having ever done an honest day’s work in his life.

Let’s retell that story as briefly as we can. Bush started an oil company called Arbusto in the late 1970s. He was driving it into the ground when, in 1982, he was rescued by Philip Uzielli, a Princeton crony of his dad’s troubleshooter James Baker. Uzielli invested a million dollars in Arbusto, which was then worth less than $500,000. In return, he got 10 percent interest in the company. No, that’s not a misprint. Mismatches between equity and ownership–always in Dubya’s favor–are a hallmark of our President’s financial rise.

Even after Uzielli’s turbocharging, Arbusto was going under. Before it did, it "merged" with a company called Spectrum 7, which took on Bush as head executive. As that company, too, nose-dived, Harken Energy proved unaccountably eager to "merge" with it. It offered a half-million dollars in stock and $120,000 a year to get the Vice President’s son on the board. It also "loaned" Bush hundreds of thousands of dollars below prime rate.

Weeks after his father was elected president, Bush got involved in the purchase of the Texas Rangers. He would eventually sell his Harken shares to cover the loan that allowed him to help buy the team. He put up under 2 percent of the purchase price ($606,000 out of $46 million), but the deal called for him to be given almost 12 percent of the stock, once the other partners cleared their initial investments. Generous of them! In 1998 Bush sold his stake in the team–pumped up by a $135-million publicly-financed-but-privately-owned stadium, bestowed as a gift from the taxpayers of Arlington, TX–for $15 million.

It's all of a piece.

While we're at it, don't forget to bookmark Rick Moran's incredible and damning Katrina timeline.

Update, 3:44 a.m.: But let's not heap all of the blame on the feds. This terrifying post, if true, suggests that the locals have been even worse than the Bush administration.


Anonymous said...

Good post- only one slight quibble as far as the Texas Rangers go.

I believe Bush was the managing partner of the Rangers- the front owner. Being the managing partner with such a small equity stake is not that unusual- for example Jerry Colangelo swung pretty much the same deal with the Arizona Diamondbacks. I believe Bush's (and also Colangelo) ability to cash out the way he did was to enhance the overall value of the franchise which he did through construction of the stadium that Caldwell mentioned.

I don't see the deal with Bush and the Rangers as that unusual and certainly on par, if not as lucrative, as CEO deals with stock options. Somebody out there might disagree, I would like to hear their point of view

Btw... Colangelo never got the money returned to his investors as he originally promised- instead of getting an enhanced equity stake he was run out of the team on a rail.

Bush and the Rangers doesn't change the overall story of Bush in the oil industry but it shouldn't be all lumped together.

Jonathan if you can get me the type of return the other Rangers partners got on their investments because of Bush's management and political connections then I will give you the same equity stake in my company as Bush got. Let me know


Anonymous said...

DB - my sentiments, exactly.
JVL has such an obvious hard on for Bush, it is a joke.
So, Last is not privileged? He went to some private Quaker school as a kid and then spends a summer after college driving around and playing ball in black neighborhoods around the country? Hey, when I graduated from college I had to get a job so that I could support myself.