Jeb Bush's involvement with Lehman Brothers is low hanging fruit for some truth reporting by media.
Instead, it's a virtual blackout.
Jeff Connaughton, author of the book “The Payoff: Why Wall Street Always Wins,” said the transactions illustrate a larger culture that dominates the politics of finance.
“The Bush family is so wired that Jeb Bush would be incredibly valuable to Lehman even without him having thrown some business their direction,” said Connaughton, the former chief of staff to U.S. Sen. Ted Kaufman, a Democrat who served on the panel that investigated financial fraud after the bank crisis of 2008. “The fact that he did shows once again that there is utterly zero deterrence preventing public officials from being on the receiving end of pay to play when they leave office. It’s par for the course -- it has the appearance that Bush was using his public office for personal gain.”
Florida originally began investing money in Lehman in 2005, while Bush was the highest profile member of the SBA, which oversees the $150 billion pension fund. The Bush-led SBA that year committed $176 million to Lehman; in 2006, as Florida moved another $87 million into the Lehman investment, the firm hired Jeb Bush’s cousin, George Herbert Walker, to run the firm’s investment management division.
The next year, Lehman offered the outgoing Florida governor the consulting job. Bush had worked briefly at a Texas-based bank after college, but he lacked significant Wall Street experience.
Most of the investment losses that hit Florida starting in July 2007 were tied to the Lehman mortgage-backed securities bought the year Bush began his employment at the firm.
In many states, governors have a modicum of distance and plausible deniability from pension policy because they have limited connections to the officials who oversee specific investment decisions. That was not the case when Florida invested in Lehman in 2005 and 2007. The fund’s executive director in both cases was Coleman Stipanovich, the brother of a Bush campaign aide who became one of the most powerful lobbyists in the state. The SBA appointed Stipanovich to his position in September 2002, while Bush was on the SBA board. And though Stipanovich has said Bush did not involve himself in specific pension investment decisions, emails reviewed by IBTimes show that Bush periodically consulted with Stipanovich on prospective state investments.
As Florida cemented its relationship with Lehman, troubling signs about the bank’s stability were intensifying.
In a 2011 study, Canadian business school professors Danielle Marin and Julien Le Maux found that Lehman’s publicly available financial statements -- easily accessible to Bush and the investment staff -- contained clear warnings about Lehman’s precarious condition during Florida’s initial and subsequent investments in Lehman.
The “signs of financial distress were detectable” beginning in 2005, their report concluded. The signs included a “chronic inability to generate cash from operating activities,” taking on too much risk in untested financial products like derivatives, issuing bonds for itself to mask its operating deficits, and a “steady deterioration of the cash situation over three consecutive years.”
But that didn't stop Jeb Bush from steering Florida's pension funds Lehman's way. His payoff came just after he left office in 2007, in the form of a $1.3M Job At Lehman.
This family is running a decades-long con on the American people.
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