Showing posts sorted by relevance for query arthur levitt. Sort by date Show all posts
Showing posts sorted by relevance for query arthur levitt. Sort by date Show all posts

Tuesday, June 2, 2009

Goldman Sachs Hires New Adviser Arthur Levitt


The Goldman Sachs family grew with the hiring of Arthur Levitt, former SEC Commissioner and Senior Adviser to The Carlyle Group. Arthur will advise Goldman on public policy issues. Levitt heads a domestic working group on financial regulatory reform. Levitt also serves as adviser to Promontory Financial Group and Global Electronic Trading Co.

I wondered how Mr. Levitt might navigate potential conflicts of interest as Carlyle and Goldman pursue similar strategies, private equity (new funds and trading PE investments in a secondary market), investments in public infrastructure, targeting distressed assets, keeping innovative financial instruments like derivatives/hedging, and buying bankrupt banks.

Goldman surely wants to keep their huge energy futures business, which turns oil into an investment vehicle such that supply and demand have no affect on prices. Goldman Sachs wants to keep its franchise in derivatives, of which credit default swaps are but a portion. Arthur Levitt has the connections. Will Arthur disclose his conflicts of interest before he testifies before Congressional committees? I doubt it.

Note: Arthur Levitt served on the board of M&T Bankcorp and just stepped down from the board of RiskMetrics Group. Arthur has 20,000 shares of RiskMetrics and options to purchase 160,417 shares. He set up a trust for his M&T shares, which includes options that vest in between 2010-2014 and expire in 2019. In 2003 Levitt sat on the board of Neuberger Berman, when it was acquired by Lehman Brothers.

Wednesday, October 31, 2007

Carlyle's Arthur Pontificates from the Roundtable


Former SEC Chair and Carlyle Group advisor Arthur Levitt, Jr. had much to say on the state of pension funds at a recent meeting. The New York Times lauded his father's saving the New York state pension fund when nearly bankrupt New York City wanted to get their hands on that money. Arthur's father saved the day. The son tried riding a similar horse on behalf of The Carlyle Group, but clearly got bucked from my viewpoint.

The SEC works to make security trading open and free of conflicts. The abuses of Arthur's days in office led to Enron and WorldCom. Yet the Bush administration works diligently to jettison those reforms, as Arthur lectured the pension world on transparency and accountability.

After Mr. Levitt's retirement, a non-public investment vehicle boomed, his current employer in the form of private equity. These firms have no public obligations. Recall Blackwater CEO Eric Prince's recent comments before a Congressional Committee when asked about profits from $1 billion in federal contracts.

"We're a private company, and there's a key word there -- private," Prince answered.

That's who Arthur Levitt works for, a private, private equity firm. But the ex-SEC Chief eloquently called for reform. He said New York’s pension woes were just the latest in a series of scandals at public funds all over the country. The New York fund is under an inquiry focusing on whether associates of New York State’s most recent former comptroller, Alan G. Hevesi, improperly benefited from his sole direction of the $156 billion fund, the nation’s second largest.

Let me hazard a guess? Was Mr. Hevesi paid based on performance? Incentive pay in bonuses and stock options provided the impetus for Enron's Ken Lay and WorldCom's Bernie Ebbers to fabricate revenues and profits. In their twelve year history stock options caused some 30% of executives at publicly traded companies to backdate those same options to maximize their compensation, most in violation of company policy. That's cheating under the SEC rules Mr. Levitt once enforced.

This is what gets my goat. Arthur Levitt speaks from a parallel system with less monitoring than public pension funds. The Carlyle Group wants access to those billions in pension investments. It would use the money to buy companies that do significant government business, then use their stellar connections of ex-government insiders to get milk greater profits from the federal tit.

Health care-26 companies including MultiPlan, LifeCare, ManorCare
Military & Aeropsace-21 companies including USIS, QineticQ, United Defense
Tech & Business Services-96 companies including Authentec, FRS Global and Wall Street Institute
Telecom & Media-33 companies including Nielsen Media
Energy & Power-34 companies including Kinder Morgan & Titan Specialties
Automotive & Transportation-16 companies including Hertz & Allison Transmissions

There's more as Carlyle started an infrastructure division ready to meet government's every need for transportation, water, even sewage.

Mr. Levitt noted in his talk, “We can’t begin to improve the fiscal standing of public pension funds until we can accurately assess their financial health.” The door swings both ways, Arthur. How can the public expect improvement of government services if contractors can't or won't accurately report their financial and operating positions?

Saturday, January 23, 2010

Is Goldman Sachs Playing RiskMetrics?


The Wall Street Journal reported RiskMetrics is up for bid. The company hired Evercore Partners to handle the sale. Possible bidders include KKR, The Carlyle Group, MSCI, Bloomberg, McGraw-Hill and Thomson Reuters.

One name winds it way through this possible transaction, Arthur Levitt. Mr. Levitt owns 20,702 shares of RiskMetrics with options to purchase 160,417 shares. The company's 2009 Proxy Statement show Levitt controlling over 180,000 shares. He retired from the RiskMetrics board in 2009, choosing not to stand for reelection.

Levitt serves as Senior Adviser for The Carlyle Group, sits on the board of Bloomberg, and advises Goldman Sachs. The first two are potential bidders for RiskMetrics. Goldman could play the stock in the interim. With Mr. Levitt's deep knowledge of RiskMetrics, his advice could be timely.

Should RiskMetrics go for a 30% premium to its recent stock price of $17, Levitt will gross $4 million. Sweet! It might be Arthur Levitt's turn to cash in. I can see why the big money boys want deal flow to continue. Surely Democrat Arthur Levitt will let some of that trickle down.

Sunday, March 1, 2009

Shadow Banker Arthur Levitt Offers Half Moone Advice


Arthur Levitt, former SEC Chairman and Carlyle Group Senior Adviser, spoke at the Economics Club of Hampton Roads. He gave an hour long address at the Half Moone Cruise and Celebration Center. Highlights from the Virginia Pilot include:


1. Levitt blamed an array of players for the meltdown of financial markets, including politicians, regulators, lazy investors and those on Wall Street. Wall Street "used to be a place to build wealth for others," he said. "More recently, it became a place to take wealth from others."

2. Levitt was recently chosen to co-chair a panel that will recommend ways to improve regulation of U.S. financial markets. The Investors' Working Group, assembled by the Council of Institutional Investors and the CFA Institute Centre for Financial Market Integrity, is scheduled to issue its initial report by late spring. Solutions include stronger enforcement of existing laws rather than a lot of new rules. Another is better training for the SEC's enforcement personnel.

Funny, what about America's shadow banking system, private equity and hedge funds? What about vaporware financial products like credit coverage bets and securitizing anything that generates a fee? Wall Street badly wants to restart securitization.

Will the Carlyle Group's distressed asset fund be able to buy credit default swaps on affiliates nearing bankruptcy? That way they win, even while losing. Did they buy any CDS's on Hawaiian Telecom or Edscha as they approached bankruptcy? Are they playing such a hand with imploding affiliates, IMO Carwash and Freescale Semiconductor?

Arthur Levitt joined L.Paul Bremer in receiving an award foundered in irony. Levitt received the club's Economic Impact Award for his contributions to economic and financial policy. Now, his and boss David Rubenstein's job is to remake the global financial system, keeping private equity underwriter's preferred position. I smell a PEU.

Wednesday, June 3, 2009

PEU's: The New Financial Oligarchs


Private equity underwriter's (PEU's) with trillions on the sidelines are the solution to America's ills. The FDIC looks to PEU's to save the imploding banking sector. President Obama proposed a Transportation Infrastructure Bank to help PEU's do public-private infrastructure projects.

Treasury looks to partner with PEU's to buy up toxic assets gunking up balance sheets. That plan could disappear with enough whole bank sales. Rather than buy the junk, buy the bank and let purchase accounting do the work (not already done by fair value accounting changes).

How can the government make bad banks attractive investments? Wipe out existing shareholders, offer billions in subsidy and require a paltry investment from each PEU partner, one that can easily be refunded back to the investor in short order.

How can the PEU boys avoid their prior sins, bidding wars and gross over leveraging? With Uncle Sam the fiscal backstop, the leverage worry is gone. But how to prevent over paying for distressed assets? Oligarchs in the past divied up markets, by product or territory. Surely, there are plenty of distressed banks in the South for the big money boys to get a bank or two. The question is how to structure a profitable distribution.

One man advises a bank consulting firm, Promontory Financial Group, serves as Senior Adviser to The Carlyle Group and advises Goldman Sachs. He is Arthur Levitt. Carlyle and Goldman competed for BankUnited, an FDIC shuttered Florida bank. That's a sweet spot to be in, if one were an oligarch.

The Carlyle Group has BankUnited, which will now focus on commercial loans. How many Carlyle affiliates switched accounts to BankUnited? Carlyle is in talks with the FDIC over Silverton Bank, a bank of banks. How long before that becomes a bank for PEU's?

Someday, Uncle Sam will stop serving as the banker for the economy. PEU's with captive banks will in a better position to refinance debts. A five year hold enables PEU's to get through the staggering amounts of debt that need refinancing between 2010 and 2014. Arthur Levitt's associate at Carlyle, David Marchick, told a Senate Banking Subcommittee that fact in his recent testimony. Oh, and the credit markets are still broken. That's why PEU's need banks. Uncle Sam distributes them on the cheap.

Arthur Levitt chairs a domestic working group on financial regulatory reform. It looks like the PEU boys will avoid regulatory scrutiny. Mr. Levitt has a clear history in this regard. History repeats itself. Uncle Sam sponsors greed with a tad less leverage using public dollars. It's also known as corporafornication.

Tuesday, December 16, 2008

Arthur Levitt's SEC


Ex-Securities and Exchange Commission Chair Arthur Levitt defended his agency relative to the $50 billion Bernie Madoff Ponzi scheme. NYT Dealbook reported:


“At this point, I don’t see any evidence that the S.E.C. dropped the ball,” Mr Levitt, now an adviser to Carlyle Group, told the newspaper. Mr. Levitt was known for his investor-friendly administration at the regulator.

Harry Markopolos shared his concerns with the SEC in 1999. What did Arthur's SEC do? Anything? What about the SIPC? Who reviewed Madoff's auditors, sworn to uphold the public trust?

Did the SEC drop the ball elsewhere? They failed with backdated stock options. It took a college professor to find the widespread illegal scheme maximizing CEO compensation. Cheating occurred in 30% of stock options studied. The SEC slapped a few hands for robbing shareholders. Most executives got off Scott free. Ask Apple's Steven Jobs.

Mr. Levitt is a Senior Adviser of The Carlyle Group. I have some Harry Markopolos like questions regarding one of their affiliates, LifeCare Hospitals.

LifeCare lost 24 patients in Hurricane Katrina, the largest death toll in any Gulf Coast hospital. Carlyle purchased the company two weeks before landfall. Yet, LifeCare's two dozen deaths warranted not one mention in the White House Lessons Learned report. Why not?

Frances Townsend, White House Homeland Security adviser, jumped on a plane to Saudi Arabia while New Orleans sat in toxic gumbo. When she returned, Fran crafted the investigative report. What else did she leave out?

LifeCare rented a floor in Memorial Medical Center. Memorial lost 10 patients. MMC was owned by for-profit Tenet Health. While HCA chartered medical helicopters to evacuate patients from dead hospitals, Tenet and LifeCare let staff and patients swelter in a stinking death house. None of that was mentioned.

There are odd coincidences. George W. Bush served on the board of Carlyle affiliate, CaterAir in the 1990's. Carlyle's corporate office is just down Pennsylvania Avenue from the White House, 1001 vs. 1600. A year after the White House released their "ro"-less bust of an investigative report, Tenet Health appointed Jeb Bush to their Board of Directors, at significant annual compensation.


"At this point I don't see any evidence where LifeCare or Tenet dropped the ball."

If it's not in the report, it's very hard to see.

Thursday, January 1, 2009

Public Radio Gives Arthur Levitt Free Pass


Driving back from a Virginia Christmas with family, I heard a public radio interview with ex-SEC chair Arthur Levitt. Mr. Levitt now works for The Carlyle Group, a huge private equity underwriter (PEU). Themes included the fall financial implosion and Bernie Madoff's $50 billion Ponzi scheme.

If contrite Arthur sported a Pinocchio nose, it must've been an elephant's trunk by the time his interview ended. First, he talked about secrecy and greed. Secrecy applied to unregulated financial products like credit derivatives. America's shadow banking system suffers from a lack of transparency, including hedge funds who didn't perform due diligence regarding Bernie Madoff.

What Arthur didn't mention is his firm's greed and secrecy. The Carlyle Group expects a 30% annual return on investments and has fought efforts to improve private equity firm reporting. It's partly owned by a foreign sovereign wealth fund, even more secretive in their financial dealings.

What did the public radio reporter miss? Arthur's PEU got $153 million in TARP funding for affiliate Boston Private Financial Holdings. BPFH says it already had a strong capital position, implying it didn't need the money. The investment firm targets the high net worth marketplace. Currently, The Carlyle Group has $40 billion in cash.

Here's a possible public radio question for Arthur: Why should taxpayers invest money in BPFH when Carlyle is flush with cash? Why does the high net worth marketplace need access to loans subsidized by taxpayers? I'd like answers.

Arthur said more that stewed me. He spoke of the 1999 letter asking the SEC to investigate Bernie Madoff. I requested an investigation in early 2006. It lingers deep in a stack of unreplied letters in numerous bureaucratic arms of our federal government.

Why did the White House Lessons Learned report on Hurricane Katrina fail to mention the hospital with the highest death toll? Memorial Hospital lost 34 patients. Not mentioned were 24 deaths from LifeCare Hospitals' unit within Memorial or the 10 patients lost by Memorial's parent, Tenet Health.

The Carlyle Group purchased LifeCare just weeks before landfall. The PEU with the Pennsylvania Avenue address and deep list of insider political connections got a free pass in Frances Townsend's "robust" investigative report. A year after his brother failed to mention Tenet Health's Hospital of Death, Jeb Bush was appointed to the Tenet Board of Directors.

No questions, no answers, no responses. I'm beginning to detect a pattern.

Friday, May 8, 2009

Congress to Probe Financial Crisis, Considers Chair


Bloomberg reported three people are on Congress' short list to head a probe into America's financial implosion. The story stated:

Lawmakers have cited a groundswell of voter anger at providing a $700 billion rescue package for the same industry that caused the credit crunch in demanding an inquiry. The investigation is likely to identify names of those judged responsible, with public hearings on Capitol Hill, and may shape an overhaul of financial regulation, the people said.
Candidates include Sandra Day O'Connor, Paul Volcker, and Arthur Levitt. Volcker and Levitt already chair efforts to reform world financial systems. Volcker lead the Group of Thirty study, while Levitt co-chairs a U.S. financial industry overhaul effort.

If Levitt nabs the appointment, that's good news for The Carlyle Group. Arthur is a Senior Adviser for Carlyle. He favors regulating hedge funds and credit rating agencies, but not private equity underwriters (PEU's). The free pass for PEU's and sovereign wealth funds is clearly in play. Arthur's appointment as Chair of a Congressional study would reinforce this effort. It would also show Congress' Corporacratic nature.

Saturday, July 24, 2010

Arthur Levitt Call Robert Wenzel

Carlyle Group Senior Advisor Arthur Levitt sees no relationship between the SEC suit against Goldman Sachs and financial regulatory reform. Robert Wenzel of EconomicPolicyJournal sees otherwise. Maybe they can chat at the next Economic Club of Washington meeting. Better yet, have ECW President and Carlyle Group co-founder David Rubenstein moderate the discussion.
 
Note: Levitt is a paid advisor for Goldman Sachs.
 
Update 5-1-22:  I am saddened to report the death of Robert Wenzel.  His family said Robert passed away peacefully in his sleep on May 25th, 2021.  I am grateful to have learned from him and wish his family peace.  May their memories of Robert be of solace. 

Tuesday, October 14, 2008

Carlyle Group's Arthur Levitt to Testify on Credit Meltdown


The Senate Banking Committee announced a hearing to examine the turmoil in the credit markets. The hearing will take place on Thursday, October 16th. Witnesses include Arthur Levitt, Senior Advisor for the Carlyle Group, among other financial experts.

Will ex-SEC chair Levitt mention greed or leverage as causes? Carlyle prides itself on both. They cite their historic 20-25% annual returns for investors. They leveraged Carlyle Capital Corporation 39 parts borrowing to 1 part equity. It imploded this past Spring.

Ex-IRS Chief Charles Rossotti also works for Carlyle. His prior testimony in front of the Senate Finance Committee recommended a 25% corporate income tax and 8.25% capital gains rate. John McCain's campaign promises mirror that request nicely, only John lowers capital gains taxes to 7.5%.

Will the private equity boys indict their selfish management practices? When America optimizes part of the system, it suboptimizes the whole. Private equity's greed is insatiable. Like all extrinsic motivators, it cannot be fulfilled. But they will use their insider political influence to get their way....

Saturday, April 24, 2010

Levitt's "Decade of Transparency" Won't Apply to The Carlyle Group


Former SEC Chair Arthur Levitt spoke to Bloomberg on looming financial regulations. Levitt envisions "a decade of transparency." Only that transparency doesn't apply to private equity underwriters (PEU's).

Levitt should know that, as Senior Advisor for The Carlyle Group, a politically connected PEU with a Pennsylvania Avenue address. The Dodd bill doesn't define private equity, which has been around under various names since the 1970's. The Senate's robust regulations call for a study of private equity "self regulation." President Obama omitted many shadow bankers in his early call for reform. They remain conspicuously absent.

As for credit derivatives, naked credit defaults swaps aren't going away. They could be traded on an exchange, a house that may or may not allow the bet. Like Vegas, it comes with bouncers. However, nonstandard derivatives can still be traded in the same manner as their Wild West days i.e. non-transparently.

Funny, Levitt's decade of transparency has lots of darkness, where the shadow boys hide.

Thursday, April 2, 2009

Levitt's Accurate Projection



What disturbs me most about the FASB action is they appear to be bowing to outrageous threats from members of Congress who are beholden to corporate supporters."-Arthur Levitt
Mr Levitt is now senior adviser for The Carlyle Group, a huge politically connected private equity underwriter (PEU). He's skilled at seeing the stick in other's eyes, while ignoring the log in his own. The Carlyle Group and its thousands of corporate entities buy politicians. From George W. Bush to Rahm Emanuel to Evan Bayh, the PEU knows who will watch its back.

1. Carlyle's LifeCare Hospitals lost 24 patients in Hurricane Katrina. This warranted not one mention in Frances Townsend's Lessons Learned report. Who leaves out the hospital with the highest patient death toll from an "investigative report"? The Bush White House did.

2. As Carlyle sold a chunk of the PEU to a Middle East sovereign wealth fund, Evan Bayh had their back. Bayh cited the good role of Middle Eastern SWF's in his WSJ piece.

3. The federal government remained hush-hush over Carlyle's sale of Standard Aero and Landmark Aviation to Dubai Aerospace. The quiet sale occurred between the Dubai Ports outrage and the NASDAQ/Bourse brouhaha.

4. Numerous Carlyle subs live on the fat wallet of Uncle Sam. Affiliate ARINC got a no bid contract to buy Russian helicopters for Iraq. Despite paying 200% of market price, no helicopters have been delivered.
These are but a tiny sample of Carlyle's corporate support of the D.C. sewer. As long as politicians step up and deliver, Arthur can be conciliatory:

"It’s terribly important that an environment of consensus replace the polarization of recent weeks. It’s essential to the business community that they be very much part of this process.”
Let's see Arthur, is that the purchased politicians and their corporate sponsors? What might they deliver? More corporafornication.

Saturday, March 29, 2008

Bush Team Proposes Financial UnPatriot Act


After 9-11 the Justice Department pushed the Patriot Act to prevent future catastrophes from happening again. It allowed the government new methods to determine if individual citizens posed a risk to our nation's safety.

After the Bear Stearns bailout on Wall Street, the Treasury Department offers the UnPatriot Act which does nothing to prevent future market meltdowns from speculative to illegal corporate behavior. However, it does allow the Feds to come to the rescue should our Wall Street icons once again paint investment pigs as high priced hookers.

While the government can scrutinize a suspected terrorists' information, it remains hands off with investment banks and other financial institutions, including hedge funds and private equity underwriters (PEU's). The NYT piece on this new non-regulatory reform closed with ex-SEC chair Arthur Levitt's saying "his first impression of the plan was positive. Even though the S.E.C.’s powers might be reduced, Mr. Levitt said, the plan would create a broader agency to regulate business conduct in all financial services."

So the government would have slightly broader breadth, but less depth than what allowed the current crisis? And who is your employer Mr. Levitt? Why it's the Carlyle Group and Arthur's just one of the PEU boys! It's all beginning to make sense...

Monday, July 13, 2009

Michael Huffington Sues Carlyle Group for Imploded CCC


Michael Huffington, a wealthy investor, is suing David Rubenstein and the Carlyle Group for misrepresentations and deceptions in the marketing of Carlyle Capital Corporation (CCC), the Channel Islands investment vehicle that imploded in March 2008. Forbes reported:

Carlyle "offered to sell shares of stock in the fund by knowingly or negligently representing that, among other things, the fund was 'conservative,' 'low risk' and that the 'downside [was] very limited,'" according to the suit.

Huffington lost the full value of his $20 million investment in CCC when the fund blew up.

Huffington alleges the losses were a "direct result of the extremely risky 32:1 leverage ratio." Carlyle Capital was hit with margin calls when its assets lost value, and in March 2008 Rubenstein personally called Huffington to tell him the fund was in default on its debt and that Carlyle Capital's lenders were selling the collateral.

But that was during dark days. CCC used about $670 million of equity to amass a $22 billion portfolio of mortgage debt. For every dollar of equity, the pool borrowed $32. Mr. Huffington supplied nearly 3% of the initial equity. Arthur Levitt, Carlyle Group Senior Adviser, attributed the failure to "excessive leverage."

In May 2008, Rubenstein went to Boston to personally apologize for the losses and explain how they happened, according to the lawsuit. Rubenstein, however, said that his Carlyle partners would not let him cover Huffington's losses. Instead, Rubenstein said Huffington would have the opportunity to invest with Carlyle in the future without paying fees. They shook hands on it. "I guarantee you that you will get your money back," the suit quotes Rubenstein telling Huffington the next day over the phone.

Fortunately, the Obama administration brought back the light, counting on private equity to save banks, build infrastructure, reform healthcare, and improve education. Yes, they'll make it back in droves. The Government Industrial Monstrosity assures it.

Arthur Levitt and David Rubenstein led efforts to reform the world's financial system. Might private equity underwriters (PEU's) come out on top? They're shopping for distressed banks. Think what the PEU boys can do with captive lending institutions. Next time you pull up to a PEU owned bank, recall it took CCC a year to lose Mr. Huffington's $20 million.

Monday, April 7, 2014

PEU Fees: Most Are Inflated

Bloomberg reported:

A majority of private-equity firms inflate fees and expenses charged to companies in which they hold stakes, according to an internal review by the U.S. Securities and Exchange Commission, raising the prospect of a wave of sanctions by the agency. 

More than half of about 400 private-equity firms that SEC staff have examined have charged unjustified fees and expenses without notifying investors, according to a person with knowledge of the SEC’s findings who asked not to be named because the results aren’t public. While some of the problems appear to have resulted from error, some may have been deliberate, the person said. 
More than half of PEU's erred or cheated in calculating fees.  That beats corporate executives who backdated roughly one third of executive stock options in their decade long cheating of stockholders, enabled in part by SEC Chair Arthur Levitt under President Bill Clinton.

PEU victims are heavy hitters, the independently wealthy, sovereign wealth funds, private foundations and public pension plans. 

PEU's love to market their outstanding returns before fees and expenses.   Uncle Sam carved out a free range for the PEU boys to operate the last thirty years.  The Carlyle Group hired ex-SEC Chair Arthur Levitt in part to keep this uncharted territory.

This leak is a shot across the bow of the PEU boys.  Note the "go forward" language in the piece:

The SEC’s action against Clean Energy Capital is probably just the first of several enforcement cases that will draw the boundaries of what’s allowed.

Look for the PEU lobbying group, which I've nicknamed PECKER, to respond vociferously.  They have an image to maintain, complete with illusions.

Both political parties, Red and Blue, love PEU.  Watch for details, on both charges and new rules.  I expect it there to be populist rhetoric and with corpora-fornicating implementation.  PEU profits equal political donations from their numerous buckets of money. 

Update 5-5-22:  The PEU "public pension savior" narrative may burst if one New York Assemblyman gets his wish for PEUs to reveal their contracts and fee arrangements with New York's public pension funds.  

Tuesday, March 17, 2009

Geithner to KeyNote WSJ Future of Finance, PEU's Galore


The big money boys want to stay in charge of a revised global financial system. The Wall Street Journal offers the latest in hegemony, the Future of Finance Initiative. Treasury Chief Geithner will give the keynote address.

It may sound like music to David Rubenstein and company. The Carlyle Group co-founder joins his private equity underwriter (PEU) peers. He snuck in Carlyle Senior Adviser Arthur Levitt. Levitt is identified as an ex-SEC chairman on the guest roster. Funny, both Rubenstein & Levitt chair other efforts to revise the global financial system. I bet they keep PEU's out of the regulatory limelight.

Monday, June 28, 2010

Levitt's Take on Financial Reform


Carlyle Group Senior Advisor Arthur Levitt spoke out on financial reform. His comments included:

On reports that this is the biggest financial reform since the Great Depression ...

“I think that’s ridiculous. Whatever changes were made were made at the margins.”


On who will pay for the reforms ...


“The business community in America is very good at adjusting to regulatory changes. I think that investors and consumers and businesses will absorb some [costs], and the firms that aren’t skillful at adapting to change will absorb more.”

Reform conclusions: it's not major, with most costs passed onto consumers. Arthur should thank Congress for watching The Carlyle Group's back. Private equity underwriters (PEU's) got a free pass. What about Europe?

Friday, November 1, 2013

PEU Whistler


Carlyle Group Managing Director and the Director of Global Communications Christopher Ullman whistled the Titanic theme song to the President of the Bank of China making all well in the PEU world.  Before becoming a private equity underwriter (PEU) Ullman had a smattering of political experiences:

He interned in the office of then-Rep. Chuck Schumer, D-N.Y., working alongside a young Anthony Weiner, who would go on to win seven terms in Congress.  About a year after his graduation in 1986, Ullman returned to Washington and began climbing the ladder in communications: He worked for a small public-relations firm; for a citizens’ advocacy group; for former Rep. John Kasich, R-Ohio; for former Securities and Exchange Commission Chairman Arthur Levitt; and for the White House under President George W. Bush, as spokesman for Office of Management and Budget Director Mitch Daniels.
His twelve years with Carlyle saw assets under management grow from $15 billion to over $180 billion.  Ullman can thank Schumer, Levitt and George W. Bush for their assistance in fertilizing the PEU soil. The Carlyle Group is a virtual nonprofit for federal taxes, much like your local nonprofit community hospital.  That's enough to make any PEU whistle.

Update 12-7-13:  Whistler is set to get an award from United Steelworkers Local 10-1.  

Wednesday, April 8, 2009

Stop, Hey! What's that Smell?


There is something happening here. What it is, is increasingly clear. I predicted the PEU boys would avoid regulation in global financial reform efforts. Economic Policy Journal editor Robert Wenzel met with a D.C. insider who shares this belief. Hedge funds will come under scrutiny but private equiy will remain free from review.

I find this easy to believe, given the Carlyle Group's key chair positions in financial reform efforts. Carlyle co-founder David Rubenstein headed an international study group, while Senior Adviser Arthur Levitt oversaw a domestic reform group.

Recall that Carlyle Capital Corporation's failure preceded Bear Stearns. The Carlyle Group lost SemGroup to hedging or forward looking contracts. Hawaiian Telecom and Edscha are in bankruptcy. Blue Wave Partners imploded.

Something deserves watching. Has or will Carlyle buy credit protection on debt of affiliates approaching bankruptcy? They have insider knowledge, as well as other funds specializing in distressed debt.

Carlyle can stack the deck to win either way. If bond holders willingly cram down, that benefits the Carlyle affiliate. Congress gave the PEU boys a $25 billion tax break for buying back debt on the cheap. If debt holders don't cave, bankruptcy and Carlyle's credit coverage comes due.

Everybody look what's going down. What a field day for the greedy.

Saturday, March 28, 2009

FASB Throws Dirt in Grave of Investing


Publicly traded companies produce financial statements. Accountants want those to accurately reflect the state of the company.

When assets grew, everyone liked "mark to market" accounting. The leverage boys borrowed more on an ever increasing asset base. However that leverage knife cuts deep when the underlying asset goes down.

FASB modified mark to market accounting under pressure from Congress. They threatened to write professional standards for the accounting profession. I'd like to know what CPA Mike Conaway thought about it. His West Texas Republican peer threatened, "Don't make us tell you what to do. Just do it. Just get it done." Randy wasn't alone. Rep. Gary L. Ackerman, D-N.Y. added, "If you don't act, we will."

Guess who raised the flag of concern? Arthur Levitt, Senior Adviser for The Carlyle Group and ex-SEC Commissioner. He's concerned about politics impacting professional standards. I'll put it more bluntly. America goes down a dangerous path when ignorant or tainted politicians write professional standards.

FASB should've fixed the off balance sheet problem, the one imploding companies overnight with investors clueless as to why. Credit and other derivative accounting is completely misleading. Forward looking contracts need addressing.

As a result of FASB's action and inaction, the public has little confidence in many balance sheets. Wall Street greed and leverage killed investing. Congress held a gun to FASB's head, as the accounting board threw dirt into the burial plot.