Carlyle's Rubenstein Gives $10 Million to White House History Center

Carlyle Group co-founder David Rubenstein gave the largest gift in history to the White House Historical Center.

Rubenstein noted The White House "plays a critical role in the public’s knowledge of and appreciation for this remarkable building and its unique place in history."

My hope is his $10 million donation will be used to scrub the stench of influence peddling from the White House's hallowed walls. Carlyle and peer private equity underwriters (PEUs) have carte blanche access under both Red and Blue Presidents.

Fed Primary Dealer MF Global Bankrupt

Reuters reported on the egg Blue bankster Jon Corzine threw on the New York Federal Reserve Bank with MF Global's bankruptcy.

MF Global Holdings Ltd, just nine months after ascending to the list of primary dealers who transact business directly with the Fed, filed for Chapter 11 bankruptcy on Monday.

The bankruptcy does raise questions, however, about how the Fed picks the primary dealers -- especially since MF Global was one of four firms added to the ranks after new, more stringent requirements were put in effect in 2010.

A spokesman for the New York Fed declined to comment.

Corzine's firm bet on a EU bailout for its significant European government bond holdings.  He counted on a bailout, maybe even relied on credit coverage. Nevertheless, a Fed primary dealer went belly up after passing "stringent requirements."  

MF Global's demise leaves 21 primary dealers to execute Ben Bernanke's Operation Twist.  

Update:  ZeroHedge made Corzine out to be Bernie Madoff, one who stole from his firm's customers. 

Update 11-6-11:  MF Global's clients may be organizing. Also, BlackRock and Evercore found MF Global's commingling of the firm's and client funds, but the Federal Reserve Bank could not. 

Vaporware Credit Derivatives for Greek Debt

Lehman Brothers imploded in September 2008, due in part to kajillions in "off balance sheet" commitments gone bad.  After Lehman's fall, credit derivatives, already in a major run up, exploded in price for investors wanting "financial protection."

Congress and global financial regulators "reformed" credit default swaps, but that's little solace to investors who expected coverage on Greek sovereign debt for an expected 50% loss.  "Standard" CDS products ended up vaporware for buyers, risk-less cash for sellers, according to Tavakoli Structured Finance. 

“Customers” that accepted ISDA documentation when buying credit default protection on Greece are now discovering that ISDA defends the position that a 50% discount on Greek debt is “voluntary” and therefore not a credit event for credit default swap payment purposes according to its documents.

WaPo's Robert Samuelson reported Europe's solution to their debt crisis:  One element is:

Expand the existing rescue fund, called the European Financial Stability Facility (EFSF). It would provide insurance against losses of about 20 percent on purchases of European government bonds. This protection would supposedly reassure investors, who would continue to lend at low interest rates. An estimated $1.4 trillion of bonds might be covered.

So those selling credit coverage don't have to pay, but European citizens need to fill the gap?

Meetings on a rescue package included French President Nicholas Sarkozy, and German Prime Minister Angela Merkel.  Another Sarkozy, half-brother Olivier added his perspective:

Europe’s banking system is much larger than America’s and gets three-fifths of its funds from the “wholesale” market of big deposits, commercial paper and the like, writes Oliver Sarkozy, head of financial services for the private equity firm the Carlyle Group, in the Financial Times. If these big investors fled en masse, Europe’s financial system would collapse.

“The parallels to 2008” — when Lehman Brothers’ failure caused a panic — “are too stark to be ignored,” he says.

The last time everyone fled in masse, the Chinese government walked on their derivatives commitments. The U.S. Treasury funneled billions to American and European banks to keep the system solvent.  Why does Uncle Sam and the EU back fill for credit welshers, whether banksters, shadow bankers or the Chinese?

Someone's committing fraud, by selling products they won't, or don't have to back.  Holding firms accountable is exceedingly difficult, given their proprietors fund and control institutions charged with passing and enforcing laws.  Many are literally the law.  It's the PEU way.

(PEU stands for private equity underwriter, a particularly noxious form of shadow banker)

Bill Clinton's Job Creation PEU

Fortune's Andy Serwer interviewed President Bill Clinton on how to create jobs.  The topic shifted to tax reform, where Clinton offered:

I would also like to see money repatriated now for free, with no taxes. We're the only rich country in the world that still imposes taxes on corporations on money they earn overseas. I think they ought to bring it back for nothing if they put people to work with it. And if they want to spend it on compensation or stock buybacks or dividends, let them pay the long-term capital gains rate.

This is essentially the deal private equity underwriters (PEUs) have for carried interest profits.  The Carlyle Group is a virtual nonprofit organization. 

One company pushing for Bill's recommended tax treatment is Apple, with Vice President Al Gore on the board.  Huck & Finn shill for those with the ability to pay more, but always want a break.  Note:  The Clinton Global Initiative annual meeting is #1 for CEOs. 

Carlyle Group Aiding America's Biggest Enemy

National Defense reported on Debtpocalypse, where Army futurists see another financial meltdown.  Francis A. Finelli shared his crystal ball at the meeting:

Finelli said the United States must either slow down its borrowing or risk a big meltdown. The Federal Reserve is fueling a future crisis by flooding the economy with money. The Fed’s balance sheet more than tripled since 2007 by $2.5 trillion, said Finelli. “Such tremendous increase in the money supply has not been accompanied by economic growth in the United States.” A rather shocking statistic, he said, is that the U.S. economy was actually larger in the fourth quarter of 2007 than it was in the second quarter of 2011.

The money supply problem, combined with potentially rising interest rates and inflation, could leave the United States facing trillion-dollar-a-year interest payments and unable to continue to live on borrowed money, Finelli said. “The United States for the next couple of years probably muddles through,” but the pain will come in the second half of the decade, he forecasted. “That is when Bob Wiedemer projects the money supply will start manifesting itself in higher interest rates and higher inflation.”

The U.S. military’s feared potential peer competitor, China, is expected to overcome future economic shocks more easily than the United States or Europe could, Finelli said. The strength of China will not come from its missiles or submarines, but from its wealth, he said. “China does view financial power as an exercise of power in a way that the United States does not. The United States only exercises financial power through its corporations.”

Finelli omitted how his employer, The Carlyle Group, ramped up borrowing to finance deals the past decade.  He neglected to mention how Carlyle coached Chinese leaders in the exercise of financial power.  When Finelli's boss isn't cracking jokes, Carlyle co-founder David Rubenstein is effusive in his praise of potential "peer enemy" China, the wild Far East.

Note:  The image of China came from a Carlyle Group video.  It seems the Army had probable cause to take Francis Finelli into custody.  Did they cuff and bag Finelli?  Doubtful.  I bet it was more like a standing ovation.

Ironically, the Army may reinvent itself along private equity underwriter (PEU) lines via cutbacks and partnering. 

The Alternative Futures seminar is part of the Army’s “Unified Quest” series of war games, which are conducted annually to examine issues that the Army chief of staff considers critical to current of future force development.

Watch where the 36th Army Chief of Staff General George W. Casey Jr., the 37th General Martin E. Dempsey and 38th General Ray Odierno land after their military service.   Given the revolving door, all three had a hand in picking PEU Francis "Frank" Finelli as a speaker.  Did Carlyle's Booz Allen Hamilton, a huge government/military consulting contractor, have a role in suggesting Francis?

The Army's future offers multiple ways for PEUs to profit, from anti-cyber terrorism to infrastructure enhancements to control of water resources.  Rest assured, Carlyle knows how to pry dollars from Uncle Sam's trillion dollar purse, while minimizing contributions.

Retired General George W. Casey Jr. served as John Negroponte's senior military adviser in Iraq.  Negroponte was behind the recent Concordia Summit focusing on international terrorism.  Concordia stressed public-private partnership solutions to global terror problems like cyber terrorism.  What will Concordia do with China being a financial threat?  I see armies of bankers and shadow bankers marching as to war from the safety of their trading desks, happily paid by Uncle Sam.  It's truly a PEU world and likely a matter of time before Casey is drafted by KKR, Bain, Blackstone or Carlyle.

Good luck to those who have to wait for the next economic recovery, predicted by Army futurists to begin in 2020 and run to 2028.  What kind of machinations will PEUs foist on the globe before 2020 hits?  They plan to be supremely profitable.

It's a PEU world, where everything should be remade in its image, including the military and religion.

Schwarzman's Helicopter to Twain Rescue

WaPo reported how billionaire Stephen Schwarzman saved the Twain Award ceremony:

Former Kennedy Center chairman Stephen Schwarzman — chairman and co-founder of private equity giant The Blackstone Group — has donated millions to the performing arts center.  And now he has donated the use of his personal helicopter.

Movie stars Ben Stiller and Matthew Broderick needed last-minute transportation between New York and Washington to help fete friend Will Ferrell, who won this year’s Mark Twain Award for comedy at the Oct. 23 Kennedy Center celebration.

With top performers in a squeeze, Schwarzman swung into action, offering his helicopter so the show could go on. “There are far too few laughs in Washington these days, so I was happy to help out the Kennedy Center when they asked,” Schwarzman said.

Recall Twain wrote:

What is the chief end of man?--to get rich. In what way?--dishonestly if we can; honestly if we must. Who is God, the one only and true? Money is God. God and Greenbacks and Stock--father, son, and the ghost of same--three persons in one; these are the true and only God, mighty and supreme...     - "The Revised Catechism" 9/27/1871 

Twain nailed private equity underwriters (PEUs) a century before their birth as leveraged buyout firms.

At another recent benefit headliner Schwarzman had a string of jokes on how PEU machinations could save "the church."



He didn't go so far to say "Money is God," but the crowd applauded Schwarzman as if he were one.  The world has become a black comedy.

Carlyle's D'Aniello Playing Hard to Get?

The Carlyle Group may slow down the pace of its independent public offering, according to peHUB. 

Saying markets are “not friendly,” one of The Carlyle Group’s co-founders said that the firm may actually not go through with its planned initial public offering after all.

“We’re in no hurry,” said Daniel D’Aniello, one of Carlyle’s three co-founders, who was speaking Tuesday at the Quebec City Conference in Canada. “We’ve been around for 25 years,” he said, saying the firm “might stay private for another 25 years.”

How will Carlyle's DBD co-founders monetize their holdings if there's no IPO?  It will be harder to shoot up the billionaires list without a Carlyle Group public offering. 

As for peHUB, they might want to use the private equity underwriter (PEU) Carlyle Group logo, instead of the executive recruiter Carlyle Group Ltd. logo.  The Ltd. version filed for bankruptcy in 2009.

Private equity Carlyle had its own spate of bankruptcies, beginning six months before the fall of Lehman Brothers.  Ironically, PEU Carlyle just hired Lehman's former Senior Vice President of Corporate Communications, Randall Whitestone.

At Lehman Brothers Whitesone was the Global Head of Media Relations for the Investment Management and Mortgage Capital divisions, as well as chief editor of the firm’s annual report. 

Just what Carlyle needs, the man who sold the benefits of junk mortgage securitization and wrote Lehman's fictional annual report.  There's no way the firm described in SEC filings should have gone down overnight.

The Fall 2008 financial implosion was a team effort between big banks and shadow bankers like Carlyle.  But why would The Carlyle Group hire Lehman's former mouthpiece?  Whitestone worked for George Herbert Walker, cousin of the Bush boys, one a former U.S. President and the other ex-Florida Governor.

With a bipartisan stable of political heavyweights, Carlyle tilts blue or red as times require.  Whitestone can pick up the phone and access financial and political heavyweights, as well as business reporting firms, former employers.  The DBD's need help polishing their IPO if they stand to enjoy their monetization and eventual retirement.

For an IPO to happen, there must be investor support.  Investment banks would hate to lose underwriting fees.  Might D'Aniello be teasing interest?  Did Randall Whitestone contribute to a Carlyle IPO sales strategy?  If so, he's a cagey guy.  Funny, that's where I envisioned Lehman's executives and Carlyle's ethically challenged, behind bars.  Instead they're free and remaking the world in their PEU image.

Update 10-30-11:  Carlyle is behind Blackstone in more ways than IPO valuation.  Carlyle has only filed its initial S-1.  By this time Blackstone filed two amended S-1s on its way to a total of ten.