Obama's VP Vetter a PEU

James A. Johnson, the chair (former) of Barack Obama's VP selection committee, did much more than take $7 million in below market loans from subprime lender Countrywide Financial. Johnson participated in egregious pay schemes as the top man at FannieMae, the huge mortgage lender. He lavished outrageous compensation on his CEO peers as a board member of five firms, frequently as chair of the compensation committee.

A corporate governance firm noted of the five companies directed by Johnson, two were involved in backdating stock options, while four paid executives extravagantly. The practice of dating option awards at the stock's lowest price of the quarter is considered cheating at best and in most cases is illegal under SEC regulations. The Bush administration's failure to hold corporate chiefs accountable for widespread illegal and unethical behavior is well known. That's how UnitedHealth Group CEO, William McGuire, ended up with a hand slap. He still took home much of his lavish pay, some $800 million garnered with the aid of compensation Committee Chair James A. Johnson.

The news finally left the political blogs, achieving feature article status in the New York Times. Here's my guess as to why. People are sick of political insiders making outrageous amounts of hay on our tax money. President Bill Clinton helped privatize portions of government, where CEO's and board members could be paid handsomely for their "public service". They include USIS, Fannie Mae, Sallie Mae, & Freddie Mac.

People are tired of CEO's and board members making huge money, while they worry about the next reduction in force or how much their health insurance will soon go up, if they have any at all. James A. Johnson made annually from the following:

Consulting arrangement with Fannie Mae, $375,000. While his protege replacement cooked the books to stabilize income (thus executive compensation), James wormed a long term consulting deal complete with staff and a car. Now that's public service!

His 2007 board fee for UnitedHealth Group totalled $334,413. He owns 383,080 shares of stock, either directly or beneficially. Should James want advice on flipping stock options for huge gains, he might touch base with VP candidate Evan Bayh. Evan's wife, Susan, sits on the board of another giant health insurer, WellPoint. The Bayh family grossed over $1.5 million the last few years from flipping options. Susan shared a chair with Al Hubbard, Bush's economic adviser, and William H.T. Bush, also known as Uncle Bucky to George W. And don't forget Gail Wilensky, Bush I's Medicare/Medicaid Chief. She just made bucket loads of money from The Carlyle Group's purchase of ManorCare and sits next to Jim on the UnitedHealth board.

Board compensation from Gannett Company $119,779. Before James stepped down on 9-27-06, he shared the board table with Donna Shalala, another ex-Clinton staffer. Donna took home $200,000 in pay from Gannett in 2007.

Oh, the alphabet soup of past political names and acronyms, it's so confusing! Pay attention to these names as they likely will consult on health care reform. And yes, they do have a dog in the fight. Or should I say a seat on the privatization train! But there's more to James A. Johnson's financial foundation than healthcare and media.

Temple Inland paid him $349,587 in compensation for his director services in 2007. It spun off Forestar Real Estate Group the end of 2007 and Mr. Johnson landed a spot on that board as well. He already beneficially owns 56,051 shares of the new company. Jame's board retainer is $125,000 a year in cash and stock option grants, plus $5,000 for chairing Forestar's compensation committee.

At Target Corporation Jim chairs the Compensation Committee in addition to serving on the board. For that he received $332,925 last year.

Huge Wall Street investment house Goldman Sachs paid Jim $695,569 in compensation for Board services in 2007.

KB Homes gave Mr. Johnson $85,422 in cash and other nonstock compensation. As the company's stock fell through the floor, his stock option grants had a negative value. With total holdings of 198,000 shares, James took the housing market fall squarely on the chin.

While this covers much of the Democratic VP selection chair's Board compensation, a full record of Mr. Johnson's transactions as an insider can be found on the Edgar website. Recall Jim has a full time job at Perseus, LLC, a private equity underwriter (PEU). It likely makes his $1.8 million in current annual board compensation look like chump change. (I didn't include his FannieMae consulting income or the Gannet fees in that total).

So how did the Barack respond? He offered, "“I am not vetting my V.P. search committee for their mortgages.” No, but your search chair is a serial executive compensation abuser.

The Obama campaign shifted to bait and switch. "Hey guys, rather than focus on my buddy James, look at all these cool VP candidates."

Sorry Barack, I'm not buying "change" that smells alot like the same old PEU. SOD off.

Where's Economic Al?

What happens to ex-Bush economic advisers, like Al Hubbard? Last fall, Al read the housing crisis handwriting and slithered out of public service. He did so with the stain of 7 million more uninsured Americans on his health care resume.

Economic expert Al didn't hide in shame in the shadows as gasoline averaged $4 a gallon in America. He didn't even slink far from the hallowed halls of government. From June 5-8, Mr. Hubbard joined the world's power brokers in Chantilly, Virginia for the annual Bilderberg meeting. Sitting near Al stood a spate of influential blue and red power brokers.

Blue: Tom Daschle, Vernon Jordan, Richard Holbrooke, James Johnson (the man charged with finding Barack Obama's VP), Kathleen Sebelius, and Harold Ford, Jr. It's rumored that Hillary Clinton and Barack himself "dropped by".

Red: Allan Hubbard, Hank Paulson, Ben Bernake, Condi Rice, Robert Zoelilick, Mark Sanford (rumored to be a McCain VP candidate), Henry Kissinger, George Shultz, neocon's Richard Perle and Paul Wolfowitz.

The big money boys were out in full, Henry Kravis of KKR may be the most notable. Lots of CEO's and private equity underwriters (PEU's) attended the international strategic thinking event. Only a few media folks made the invite list, the CEO's of The Washington Post and French TV/radio world service, an editor with The Wall Street Journal, the publisher of an Austrian paper, a Greek journalist, the founder of a Turkish media company, and the head of a Swiss media empire. For "rapporteurs", the invite list showed two names from The Economist magazine.

How many will share the results of the meeting? If history is a guide, none will. An intrepid reporter from the nearby Fairfax Times tried to cover the event. Did he get a chance to interview Allan Hubbard? Might these have been his questions?

"It looks like over 9 million people will lose health insurance under George W. Bush's term in office? Is this personally embarrassing for you as his economic adviser for much of his second term in office?"

"The subprime credit crisis cranked up as you turned tail and yelped from office? How do you feel about the record number of home foreclosures as the faulty, even predatory credit practices occurred mostly on your shift?"

"How do you feel about the comprehensive energy policy passed by Congress and touted by the President in 2005, especially now that gasoline hit $4 a gallon?"

So far, the Fairfax Times only reported on a global dance performance. But, if I close my eyes and think hard, I can picture Al's canned response. Hubbard would respond dismissively to the obviously offensive questions, "Without my hard work and George W. Bush's stellar leadership, things would be a whole lot worse."

As Richard Clarke suggested, it's time to stop inviting people like this to polite society. And it's time for polite society to be much less secretive. I know where America's intelligence capabilities should be aimed. It's not at the local group of grandmothers pursuing peace. It needs to be aimed at our hallowed halls of government and their Faustian bargain with corporate interests, domestic and international.

The government industrial monstrosity has little capacity for self observation. It's addicted to money and power. GIM will act violently, if necessary, to ensure its needs are met. Right now, it's lathered up in greasy oil cash, baking casually in the sun by the Marriott pool. But, I think I hear its stomach rumbling. What will it feed on next? Maybe a Bilderburger? Ask Al, next time you see him...

Carlyle to Manufacture Cash in More Ways than One

The London Telegraph noted The Carlyle Group to be the leading bidder for De La Rue's cash systems business, the largest printer of banknotes in the world. As the leading private equity underwriter, Carlyle already had a reputation for printing cash for its investors given those 25-30% annual returns. They could soon be paid by governments for the honor of printing more. That's your tax money at work. Uncle Sam sure enjoys spending it on Carlyle's wide array of products and services. Each affiliate has its unique imprint.

Carlyle Group Attorneys: Dewey, Cheatham, & Howe

Given the thousands of corporations now under the Carlyle Group's corporate umbrella, one might expect to find a few unusual legal cases. But who'd expect to find their Dunkin' Brands affiliate suing hundreds of franchisees for nitpicky noncompliance or LifeCare Hospitals claiming expired patients in their dead facility post Hurricane Katrina were actually "wards of the federal government"?

After acquiring Dunkin' Brands in March 2006, Carlyle Group attorneys went on a suing spree, bringing cases against 154 of its two thousand franchises. Other large franchises kept their lawyers sheathed as McDonald's sued only five times during the same period and Subway twelve. Dunkin' Franchisee Cindy Gluck wrote of her trials under Carlyle's thumb in a New York Daily News op ed.

Ironically, about the same time the nefarious private equity underwriter (PEU) acquired Dunkin', I noted the complete absence of LifeCare's 24 patient deaths in Fran Townsend's White House Lessons Learned Report. I pondered the odds of such a gaping omission. Who could write a credible investigation and leave out the hospital with the highest number of patient deaths post landfall? Well, the White House shares a Pennsylvania Avenue address with LifeCare's owners, The Carlyle Group. But corporate stooges, Dewey, Cheatham, & Howe, were yet to rear their ugly legal face.

NOLA reported on Carlyle's unique legal defense for those 24 patient deaths in the summer of 2007. They claim LifeCare patients became "wards of the federal government" as soon as FEMA evacuation teams set up in the area. That means care from clinicians and staff, just feet away from agonized patients, had been eclipsed by nonclinical bureaucrats stumbling to find buses or bumbling to pass out water miles away. But FEMA had plenty of hair gel and could give a killer interview. In effect, Carlyle's attorneys claim Michael Brown's coiffure offed their patients.

A fiction writer couldn't make this stuff up. Yet, this is the win at any cost management and greed inspired leadership that has ready insider access to our hallowed halls of government. Carlyle also aims to be the "one stop government shop" for privatization. Does that mean health insurer MultiPlan will soon be involved in a lawsuit with their physicians? Will Vought Aircraft Industries blame someone else for significantly delaying Boeing DreamLiner 787 production? Ooops, they already did that.

With their new infrastructure division, get ready for some of that highly profitable Carlyle water and sewage treatment. Get ready to pay the toll, maybe on a Northern Virginia rail line. But can you really pay the freight? If you don't, Dewey, Cheatham, and Howe could be in your future...

Wheels Wobble on Nuclear Lab Privatization Train

The Associated Press ran a story on fired American nuclear workers and the risk of their gaining employment from other nations, even those unfriendly to the U.S. The last line of the piece stated:

Congress cut $100 million from Lawrence Livermore's budget in the fiscal 2008 budget, and the lab has been hit with an additional $180 million in unexpected costs from its transfer last year to a new management company.

Translation, jobs have been eliminated as a result of privatization. A new management company, Lawrence Livermore National Security, LLC, began operating the lab October 1, 2007. The new management team includes Bechtel National, University of California, BWX Technologies (BWXT), Washington Group International, and Battelle. The team also includes Texas A&M University. So, these six organizations combined to miss that additional $180 million in costs? Or did the polymanagement arrangement contribute to the unexpected costs?

The crew already knew fewer jobs and less benefits were on the way. “George Miller and his team have been preparing for months to assume this tremendous responsibility and provide as smooth a transition as possible for the employees, their families and the community.” Hash is chairman and president of Bechtel Systems and Infrastructure, Inc., Bechtel Corporation’s government services unit. No one says "provide as smooth a transition as possible" unless cuts are in the works.

It looks like they targeted the pension benefit first. Next LLNS set up a separate salary and benefit scale for old vs. new employees. The operating entity went after low cost student labor at Texas A & M. Finally, they eliminated 440 employees.

Now our nation faces concerns as to how highly intelligent professionals will respond to the prospect of not having steady employment. This is the face of privatization, so roundly cheered by Democrats and Republicans. But they did donate to charity, promising to take the money out of their management fee! That should make everyone feel better. Right?

Carlyle Group Raised $3.4 billion for Castles

The Carlyle Group set another record, this time for the largest private equity fund focused on European real estate. The Guardian reported Carlyle hoped to raise 1.5 billion euros but the firm catapulted the target with a 2.2 billion haul. This affords the private equity underwriter (PEU) some 9 billion euros, including debt, for takeovers. That's alot of real estate.

Britain and Spain are enticing targets due to blistering real estate corrections. It seems hot oil isn't the defense it used to be. At least most Europeans burned by the market have access to healthcare. Why that happens to be another strategic investment area for Carlyle as it aims to be a one stop government shop! But that's another story...

Stormy Gas Prices this Summer

Gasoline traders suggest a Gulf Coast hurricane could drive gasoline to $6 a gallon. CNN Money reported:

Like any disruption to supply, when a hurricane takes out drilling platforms and refineries, supply and demand principles lead to a jump in crude oil gasoline prices.

But even before the start to hurricane season, speculative traders have started to send oil and gas prices higher in anticipation of a hit to supplies.

"We're already seeing a hurricane premium on gas of about five to 10 cents per gallon," said Alaron Trading energy analyst Phil Flynn. "Especially since Katrina, we've seen traders build that into prices."

Hmmm, everyone is talking about supply and demand. The Transportation Department recently shared data that U.S. drivers cut back their mileage by 4.3% or 11 billion miles. Prices have soared since then, so did consumers respond by driving even less? It would seem a nearly 5% reduction in demand would help bring down prices, not cause traders to foreshadow $6 a gallon gasoline. That is if supply is relative to years past.

It turns out our friends, the Saudi Monarchy, have cut back their oil pumping, even as they continue promising to add capacity. They could send another 1.5 to 2 million gallons a day our way, but choose not to do so. They could be holding it to calm supply fears should that perfect storm arrive along the Gulf Coast or the Strait of Hormuz. Will it be Hurricane George or Tropical Storm Olmert that sends gas prices through the roof?