Tom Daschle PEU

President Obama's nominee for Health & Human Services has a checkered past. Tom Daschle failed to pay more than $128,000 in taxes. The back taxes related to his compensation and benefits working for InterMedia Advisers, a private equity underwriter (PEU). Daschle received over $2.2 million in compensation for chairing InterMedia's advisory board. Nearly $200,000 related to a car and driver provided to Mr. Daschle.

Tom paid over $140,000 in taxes and interest. Did he get the same no penalty treatment as Treasury Chief Tim Geithner?

Tom served briefly on the board of another PEU, the Apollo Group. He resigned mere months after his appointment. Daschle served on InterMedia's board from 2005-2007.

Some members of the Senate Finance Committee share my concern about Tom's stint at Alston & Bird. The New York Times reported:

Mr. Daschle said he had received $2.1 million in “wages and bonuses” from Alston & Bird and more than $390,000 for speeches to groups like America’s Health Insurance Plans. He also said he had received more than $5,000 for giving “policy advice” to UnitedHealth, one of the nation’s largest insurers.

Alston & Bird's Tom Scully registered as a lobbyist, Daschle did not. If Geithner and the Raytheon lobbyist can be approved, Tom's a shoe-in.

Update 5-26-17:  Tom Daschle's role is keeping healthcare for-profit and unusable for many is clear.

Conaway Should Drop His CPA

Representative Mike Conaway (R-TX) is a certified public accountant. He's in a unique position to help his constituents understand delicate financial matters. Yet, he consistently fails to deliver. When Wall Street imploded last September, Mike stayed silent. He voted against the big money boy bailout, before he voted for it.

Conaway's latest accounting malpractice was reported in the Dallas Morning News. He commented on the economic stimulus package.

"On the base of 150 million jobs, we are going to spend $275,000 per job to create or keep 1 million jobs?" said Rep. Mike Conaway, R-Midland. "That is a bad investment."

He didn't break the spending down by capital vs. operating costs. Within operating expenses, wages and benefits comprise only a portion of any project. Mike should be embarrassed by his ridiculous statement. This is the same CPA who took a year to find out the National Republican Congressional Committee had inflatable dolls as auditors. West Texas has a political hack for its representative, continued abysmal leadership.

Carlyle's David Rubenstein: The Buck Stops with 5 Billion

David Rubenstein, co-founder of The Carlyle Group, chairs the World Economic Forum committee redesigning global financial markets. Did he join the list of CEO's, like JP Morgan's Jamie Dimon, in claiming responsibility for the global financial implosion? Nope. Bloomberg reported:

David Rubenstein said he thinks a key issue at this year’s gathering is “who is at fault.” Yet Rubenstein, who was saying at Davos two years ago that the outlook for leveraged buyouts was “very robust,” says responsibility shouldn’t be tied only to him or his industry.

“There are six billion people on the face of the earth, and probably about five billion participated in what went on,” Rubenstein said in an interview. “Everybody participated in some way or shape or form.”

How George W. Bushy of Mr. Rubenstein, blame the workers. Quality begins in the boardroom. That cuts the list down considerably. Top executives designed distorting incentive systems that extrinsically motivated employees to package investment pigs with triple A rated lipstick. Greed systems were designed at the top.

The big money men wanted accounting changes, like mark to market, to keep the leverage engine chugging in an up market. That turned into reverse razor blades when Wall Street imploded last September. Priming the leverage pump occurred in executive suites and board rooms.

Five billion people weren't responsible. They're the financial system's Lindy England. Bush & Cheney ordered harsh interrogation techniques, but she became the face of injustice. David Rubenstein plays a similar game. Which secretary will he trot out as the cause?

Financial Implosion Caused by Lack of "Adult Supervision"

It turns out Wall Street was run by teens with raging hormones. Who knew executive incentive compensation was a fountain of youth elixir? Greed and leverage brought down the world financial system, killing investing for years to come. Causes include the lack of adult supervision. Bloomberg reported:

“We are most assuredly going to see the hand of government play a much greater role in markets,” Morgan Stanley Asia Chairman Stephen Roach said in an interview. “The question that needs to be answered is what impact that will have on allocating capital and how capital is used in the economy. Letting the system go on without adult supervision led us to where we are today.”

Who's leading the effort to reform the global financial system in Davos, Switzerland? Chair of World Economic Forum effort is David Rubenstein, co-founder of The Carlyle Group. What are the odds that private equity comes out on top? Who knew the golden age of private equity involved teenage hormones? Welcome to the Curious Case of Penultimate Profits.

Dirty Max Comes to PEU's Aid

Senator Max Baucus D-Montana included a provision in the stimulus package allowing companies to defer income taxes triggered when they repurchase their own troubled debt at a discount.

What's the big strategy of private equity underwriters (PEU's)? Buying affiliate distressed debt on the cheap. Manor Care, owned by Carlyle Group, is attempting to purchase a portion of its debt for cash. Not only do companies lighten debt loads for pennies on the dollar, Max offered a tax break for doing so, $26 billion worth. No wonder Blackstone's Steve Schwarzman was so enthusiastic about CMBS repurchasing in today's CNBC interview with Maria Bartiromo. Pfftttt!

I shouldn't be surprised. Dirty Max accepts donations from eight for-profit health care companies with no, zero, zippo, nada facilities in his state. Yet, he doesn't accept e-mail from citizens outside Montana. Who knew a corporate check had more rights? Welcome to American corporatocracy!

SchoolNet Gets Additional Carlyle Group Funding

The Carlyle Group invested $13 million in SchoolNet, alongside three other entities. Carlyle invested in the company in 2006. The corporate press release stated:

SchoolNet offers modules for assessment, reporting, curriculum deployment, professional development management, advanced analytics, parent portals, and enterprise dashboards. SchoolNet's products and services are used by many of the nation's largest school districts including Chicago Public Schools and the School District of Philadelphia.

The Carlyle Group uses political connections to increase affiliate business. President Obama's new Secretary of Education Arne Duncan came from Chicago Public Schools. Will Carlyle drag SchoolNet through the Federal Treasury, scooping up stimulus package profits?

It will be their second pass. Affiliate Boston Private Financial Holdings netted $153 million in TARP money. Corporafornication may be alive and well as private equity underwriters (PEU's) enter their finest hour.

Update 5-23-11:  Carlyle will cash in on SchoolNet, given Pearson's $230 million acquisition of the company. Carlyle's interest in schools is both personal and business according to WaPo.

Rubenstein Now Sole Chair of Global Financial System Remake at Davos

World leaders gather this week at Davos, Switzerland for the World Economic Forum's annual soiree. The event theme is reshaping the global financial system. Political leaders are the new rock stars, as they've used public money to rescue the ever imploding financial sector.

The WEF commissioned a study on the crisis, outlining the danger and projecting opportunities. Carlyle Group founder David Rubenstein co-chaired the study group alongside Merrill Lynch CEO John Thain. However, Thain dropped out after last week's career implosion. Rubenstein assumes the chair. What are the odds the new system will favor private equity?