Forbes: Jeb Bush involvement with Lehman raises questions in Florida investment fund debacle

[seafan]

Where Was Jeb?



By Megha Bahree
Forbes

11.30.07

A government money market debacle unfolding in Florida is raising questions about former governor and presidential brother Jeb Bush's possible involvement in the mess.
Florida froze withdrawals from a state investment fund earlier this week when local governments withdrew billions of dollars out of concern for the fund's financial stability.

In the past few days, municipalities have withdrawn roughly $9 billion, nearly a third of the $28 billion fund (which is similar to a money market fund) controlled by the Florida's State Board of Administration (SBA). The run on the fund was triggered by worries that a percentage of the portfolio contained debt that had defaulted.

A majority of this paper was sold to SBA by Lehman Brothers (nyse: LEH - news - people ). Bush, as the state's top elected official, served on a three-member board that oversaw the SBA until he retired as governor in January. In August, Bush was hired as a consultant to the bank. Lehman spokesperson Kerrie Cohen, speaking on behalf of Bush, said they had no comment and would not say when the bank had sold Florida the paper. SBA did not return calls.

While SBA wouldn't confirm, Bloomberg reported the amount of debt in default is around $900 million.

Edward Siedle, a former Securities and Exchange Commission attorney who investigates money management wrongdoing and has worked on behalf of several Florida public pension funds, thinks this is just the tip of the iceberg. He expects problems with defaulting debt to crop up in public funds across the country, especially in states with disclosure laws weaker than Florida's.

.....

$8B pulled from state investment pool (Florida), November 29, 2007

Jeb Bush joins board at Lehman,August 23, 2007

[sam sarrha]

1. didnt he invest pension funds in that privatized school corp that never made any profit in 7 years

[seafan]

2. See this link:

Jeb!'s state pension funds invest in company that privatizes school management


(This and much more information is contained in the first of the two links at the end of the OP.)

[aquart]

3. Heh. I ain't got no questions. I KNOW Jeb's a crook.

Would it be too damn much to ask for an indictment?

[Bitwit1234]

4. What's with the bush brothers and failed business

seems like once they are connected with a business and take their WHATEVER out the business goes down the tubes. Remember Neils failed Savings and Loans, and bush failed Savings and Loans and Oil Company...Something's up for sure I wouldn't invest a plug nickel with any of them.

[Octafish]

5. Sounds like Smirko and UTIMCO

Florida connects to Texas corruption through the Family Bush.



As Governor, Monkey manipulated the University of Texas investment portfolio. Joy. Like the shenanigans in Florida, the money connects to Carlyle and the rest of the BFEE.

Those fellahs who play ball get ahead. Heh heh heh.

Bushwater

SUMMARY. With Bush, Money That Comes Around Goes Around. In 1990 Lee and Robert Bass, Bush's sixth highest career patrons, agreed to finance Harken Energy's drilling in Bahrain when Bush was a Harken director and his father was President. That same year Bush sold 212,000 shares of Harken stock to someone/something named "Lee," but not on the open market, which would have further depressed the worth of the stock, which was in the red. Bush use of the money enabled him to purchase a small share of the Texas Rangers, which built a baseball stadium by having the city of Arlington condemn private land and give millions in taxpayer money to the ball club owners. Later, when the club was sold, many considered the land revenue with zero sales tax and the stadium that came with the deal more valuable than the team.

Bush's share from the sale was $2.3 million (1.8%), but the other owners had voted to give him an additional $12.6 million (10%) of the sale as a bonus. One of the owners was William O. DeWitt, Jr., Bush's partner in an oil company that bought out Bush's failed oil company and whose father once owned the Cincinnati Reds. Another Texas Rangers owner was Richard Rainwater, once the money manager for the Bass brothers, then a billionaire speculator. When Bush became Texas Governor in '95 but prior to the Texas Rangers sale to Thomas Hicks in 1998, one of the bills he pushed was a Bush-backed stadium-financing bill that gave a $10 million bonus payment to Texas Rangers partners when a Dallas arena is built. This arena would also enhance the worth of Thomas Hicks' Dallas hockey team. "In the six months after that bill was signed, Bush's political fund received $37,000 from Hicks, $11,000 from (Rainwater's) Crescent President Haddock and $5,000 from Ross Perot, Jr. A 1999 press release notes "Ross Perot Jr., owner of the Mavericks, and Tom Hicks, owner of the Stars, will develop 50 acres around the arena with hotels, restaurants, stores and office space."

Thomas Hicks, another billionaire friend, is Bush's fith highest career patron. During Bush's term as governor he had Hicks in charge of a $1.7 billion university investment fund. Almost a third of the $1.7 billion was committed to funds run by Hicks' business associates or friends, including five funds run by major Republican political donors. $9 million of the fund was invested in a Rainwater equity fund and $10 million of the fund was invested in the Carlyle Group, an investment company staffed by former Reagan-Bush officials, including Bush's father and James Baker, a member of the Bush Cabinet. Bush then signed a law carving $13 million away from the fund and into a more agressive fund run by Hicks, exempt from state laws mandating open meetings and public records, UTIMCO

While UTIMCO performed well below the Dow Jones Average, an impressive list of GOP worthies and Bush campaign contributors have been direct beneficiaries of UTIMCO's investment strategies, through the fund's purchase of their stocks or through their fee-based participation in the fund's money management. State auditors had criticized the secretive nature of the Hicks committee's investment decisions and had complained about the potential for conflicts of interest for board members, but Hicks eventually resigned without providing such information to the public. Meanwhile, among others, The Bass brothers, Lee and Bob, (see first paragraph) benefited from UTIMCO's investment deals. --Politex, July 18,2002. For documentation, direct quotes, and further information, see below

CONTINUED...

http://www.bushwatch.com/bushwater.htm

Politex is great. He's a real Book.

Thanks for your great post on Jebthro and SBA, seafan. Couldn't kick it fast enough.

These turds think they'll never be caught. Lehman Brothers, too.

[LiberalFighter]

6. Yes... tie jeb with the scandal... make sure all of Florida knows about it

[seafan]

7. An afternoon kick. n/t

[HCE SuiGeneris]

8. Hard to believe that the BFEE would be caught in such conduct.

:mad: :mad:

When can we lock these F'ers up?

[flashl]

9. K&R n/t

[KoKo]

10. K&R!

[seafan]

11. It's only the tip of the iceberg with "Veto Corleone" Bush.

Marcy Wheeler at The Next Hurrah also weighed in today on Florida's investment fund debacle:

Which made me wonder what happened to investigations into Jeb's role in the last piece of shitpile Florida bought: Over $300 million in Enron stock, also approved while Bush was in charge of Florida's State Board of Administration.

According to a report by AFSCME Florida Council 79, Inside the Florida State Board of Administration: Mismanagement Made the Enron Loss Inevitable, the State Board of Administration (SBA) repeatedly engaged in poor investment practices under the watch of its Board of Trustees, chaired by Gov. Jeb Bush. Despite warnings from inside and outside the SBA, the trustees failed to correct these problems, leading to a stunning loss on Enron stock nearly three times greater than that of any other state retirement fund. The trustees failed to act as Alliance Capital Management, one of the pension fund's money managers, continued to invest in Enron even as its financial instability became public and the Securities and Exchange Commission was investigating the corporation.

.....

The possibility that Jeb presided over not one but two massive transfers of money from Florida's government coffers into the pockets of his friends raises the possibility he'll be remembered as more corrupt than his brother, Neil. I know it's a tough contest, trying to figure out which Bush brother is the most corrupt. But Neil Bush only indirectly stole from taxpayers with his Silverado Savings & Loan. And while it's pretty clear Neil's company was shafting taxpayers to put money in Ignite's bank accounts, I'm not sure if that matches the scale of Jeb's apparent wholesale emptying of Florida's coffers into corrupt and losing business deals.

(See link for several embedded hyperlinks.)




With Jeb "Veto Corleone" Bush, this is only the tip of the iceberg.


Get ready.

[HCE SuiGeneris]

12. Great post. Thanks seafan. n/t

[seafan]

13. Krugman and Atrios have now picked this up. Now we're cookin'.

Other Bush bashing

Paul Krugman
December 2, 2007, 1:01 pm

Well, whaddya know. It appears that Jeb Bush has some about the bad investments of the fund that was supposed to provide a risk-free place for school districts to bank taxpayers’ money.

The board whose actions are now being questioned is the same board that, under the same governor, put pension money into Enron in the firm’s dying days, and bailed out Edison Schools, a largely failed venture in school privatization.

But, but, but... all we ever hear is how *he was such a popular and effective governor.* Even Poppy just now said, Jeb? "Ended with his head high. Clean administration."


Jeb Bush was effective, all right. And he cleaned us out.


Since Jeb took up in Florida in 1980, it's finally all catching up with him.

[seafan]

14. Coleman Stipanovich, State Board of Administration chief, resigns

Florida Investment Chief Quits; Fund Rescue Approved

By David Evans and Darrell Preston
December 4, 2007

Dec. 4 (Bloomberg) -- Coleman Stipanovich, the head of an agency managing a troubled $14 billion Florida investment pool for local governments, quit as officials approved a plan by BlackRock Inc. to salvage the fund.
BlackRock, which worked through the weekend on a proposal to save the pool whose assets tumbled 48 percent last month amid withdrawals, will take over management from the State Board of Administration while an outside firm is sought, officials led by Governor Charlie Crist decided.

.....

Stipanovich's resignation came after the meeting when he stood up and said it ``was time to do the right thing'' to ``instill the confidence of the'' administration.

``He had to do what he thinks is right,'' Crist said.

State board trustees halted withdrawals last week after governments from Orange County to Pompano Beach asked for their money back amid disclosures that the fund held $1.5 billion of downgraded and defaulted debt.
Florida's $138 billion retirement system, also managed by the state board, holds more than $1 billion of similar debt, documents show.

.....

Stipanovich, whose brother J.M. ``Mac'' Stipanovich is a Tallahassee lobbyist and Republican strategist who ran former Governor Jeb Bush's campaign for governor in 1994, was appointed executive director of the state board in 2002.
In the late 1990s, Coleman Stipanovich worked as a lobbyist for PaineWebber Inc. in Florida and was paid $7,500 per month to help the firm win municipal bond business.

.....

[seafan]

15. More Stipanovich fallout:

Herald-Tribune:

December 5, 2007

It was a sudden demise for Stipanovich, who was praised by the trustees for nearly six years of excellent returns on the state pension fund, the nation's fifth largest.

Gov. Jeb Bush tapped Stipanovich for the top SBA job in 2002, drawing criticism for not conducting a national search and hiring a man whose brother -- powerful Tallahassee lobbyist Mac Stipanovich -- is a well-known Republican strategist.

Coleman Stipanovich, a Gainesville High School graduate who attended the University of Florida on a football scholarship, began his career as a deputy sheriff in Alachua County after a stint in the Army.

His plan last week to protect the local government pool by hedging losses with the state's pension fund was criticized by Sink and Crist, setting the stage for his resignation. In an emotional moment unusual in a town where resignations are usually submitted quietly via letter, Stipanovich thanked the SBA staff and trustees.

"There is nothing more important to me, except my family and friends, to restore the confidence of the people in the State Board of Administration," he said. "I hope my actions today help the SBA move forward."