Fixers (11 page)

Mankoff has been certain all along that Washington must sooner or later get involved: worst case, as a lender of last resort. Yesterday he got word that certain key aides are pressing his friend the Secretary of the Treasury to rein in the subprime market, which has gone completely Wild West. The problem is that an enforced slowdown—even a moratorium—on subprime origination and securitization would probably lead to a chain reaction that would require an outlay from either the Treasury or the Federal Reserve.

Washington’s trying to avoid that, and is seeking ways to prod the system into fixing itself, which Mankoff says is like pushing on a string. If there has to be a bailout, he told me the other day, he wants STST positioned to take profitable advantage of it—and he hinted that there may be a role for yours truly in that process. But for now, Orteig has our full attention.

Do you remember that old movie
Zulu
? It’s set in the 1880s and starts with a bunch of British soldiers at an outpost in South Africa going about their routine daily tasks when they suddenly become aware of a sound like thunder in the distance. This turns out to be a thousand Zulu warriors stamping the ground as they work themselves into a battle frenzy. That’s how Wall Street feels right now. There’s thunder in the distance, but is it big trouble or just weather? In the Battle of Rorke’s Drift, as the ensuing battle in
Zulu
was called, the most Victoria Crosses ever handed out for a single engagement were awarded. When the shit hits the fan on Wall Street, I doubt there’ll be many medals pinned on pinstriped lapels.

I like the deal I’ll be proposing to Orteig. The $75 million, leveraged in the way political dollars can be (Mankoff estimates 5–1, meaning our $75 million could generate $375 million in cash-and-kind campaign contributions), will put OG head to head with Hillary. As for our side of the trade, the brilliance of Mankoff’s concept is that it doesn’t involve secret understandings with Winters et al. He’s betting solely on past form, ego, ambition, and character to make sure that what Mankoff wants, Mankoff gets: Winters to make sure the White House sticks to a policy that puts Wall Street’s welfare above all others; Holloway to protect the banks; Brewer to neuter any eager beavers at Justice who have grand ideas of criminally prosecuting Wall Street executives; and a fourth name, Patrick Vollmer, to supply the halo. Vollmer is the man who dragged America out of the Carter stagflation of the 1980s. He wasn’t on the index card at Three Guys, but Mankoff has decided to secure the fortifications with an old CIA trick. At the Agency, we always tried to mask our shadier gambits by bringing in a front man of impeccable reputation and soaring self-regard. If there’s anyone who can still provoke admiration from more than one side of the aisle, it’s Vollmer. And word is that he’s dying to get back to Washington to try to undo the mess that Greenspan and Bernanke have made of monetary policy.

Sounds like a long shot, doesn’t it, to make a bet like this? Just remember Scaramouche’s remark about character and destiny. I’m confident of success. Orteig has to be a practical yet imaginative sort to have brought his man this far this fast. He’ll bite.

The captain just came on the speaker to tell me that we’re an hour away from starting our final descent into Santa Rosa. Gentle Reader, are you ready to rumble?

“Mission accomplished.”

That was the message I left on Mankoff’s voicemail an hour ago, as soon as we were wheels-up out of Chicago’s Midway Airport after dropping off Orteig.

I’m not going to bore you with the details of my forty-eight hours among the Bohemian Grove’s redwoods. What’s it like? Well, if you’re the sort who thinks it a mark of status to be able to watch a European prime minister take a piss on a sequoia, or to be able to tell the folks back home what Henry Kissinger “dressed down” looks like (a pretty gruesome sight), you’ll love the place. It’s funny. The official motto of the Bohemian Club is a line from
A Midsummer Night’s Dream
: “Weaving spiders, come not here.” But if you just sat back and watched the goings-on among the giant redwoods—the sucking-up, the deal-seeking, the obvious social calculation—you’d conclude there’s nothing but arachnids on the make (including yours truly) all baked into a gigantic pastry of self-congratulation. Think Davos with trees and you’ve got the picture.

I went right to work, and it took just a bit over an hour for carefully planned happy coincidence to cause me to be introduced to Homer Orteig at an afternoon function.

He’s a guy of middling height and weight, whose sleepy, heavy-lidded eyes and old-fashioned brush mustache are the distinctive features in an otherwise uninteresting face. Not someone you’d notice even in a small crowd, but take a second, closer look, and you’ll see that here’s a guy to watch out for at the weekly Friday poker table at the Lions Club. I knew him to be a couple of years older than me, a longtime Chicago lawyer, sometimes professor of law at the University’s downtown campus, and an established
Cook County political insider, notwithstanding that the word on him is that he’s a total straight shooter; I sized him up at once as someone I could do business with.

I contrived to run into him again at cocktails at Mandalay, the fanciest of the camps. By the second Ramos Gin Fizz, we were fast becoming new friends. I’d done my homework and played the right Chicago cards: sympathy concerning the Cubs and Bears, hatred of the White Sox, enthusiasm for the Second City, Steppenwolf and the Lyric Opera and Mies van der Rohe’s Lakeside towers. My research had established that his favorite hangout was a North Side deli called Sonny’s, so I told him that I’d heard it compared favorably in the smoked meat department to Katz’s down on Houston Street. Then I threw in my love of the novels of Patrick O’Brian and Gilbert and Sullivan. By the time I finished, we agreed that we seemed to be kindred spirits, and wasn’t it good luck that we’d met?

We walked together to the lakeside theater (the Grove offers two theatrical presentations, “the High Jinks” and “the Low Jinks”), and after the show, over more drinks, I learned that he was planning to fly back to Chicago in two days, on Saturday the 21st. Commercial, of course, which meant driving through weekend traffic to Oakland to catch JetBlue.

This was the opening I’d counted on. I was betting on the assumption that at this stage, OG’s campaign has to watch its pennies, and chartered jets aren’t an option for anyone except the candidate himself.

“Look,” I told Orteig, “I have a consulting client who’s flying out here tomorrow night for some big wine hootenanny in Napa. I was just talking to him on the phone, and he told me the plane has to go back to New York on Saturday to pick up his wife. I need to get back, so I asked him if maybe I could snatch a free ride and he said fine. Let me check with him and see if it’ll be OK to drop
you off in Chicago on the way to New York. I know he’s a fan of the candidate, which ought to cinch the deal. I’ll check with him just to make sure.”

Show me an American male or female who’d turn down a freebie on a private jet and I’ll show you a freak of nature. I went off to a Wi-Fi zone, pretended to call, then returned and gave Orteig the thumbs-up. His smile let up the glade. Still, I had to figure that behind the beaming, grateful face, the political animal would be wondering if there’d be a quid pro quo, and if so, what it might be. In Orteig’s world, there’s no such thing as a favor without a price tag.

First thing Saturday morning, a taxi ferried us over to Santa Rosa, where a spick-and-span Falcon awaited us on the runway. By eleven o’clock we were en route to White Plains by way of Chicago-Midway.

The opportunity to start my pitch came about an hour into the flight, just after we tucked into the gourmet sandwiches provided by the French Laundry, the three-star Napa restaurant that I’d arranged to cater the flight home.

Orteig looked across the table at me and said, “This is great chow.” Then he asked me: “You told me you do some consulting for various Wall Street firms?”

I couldn’t have scripted it better. I’d figured he might take the initiative, if only to get a sense of what I might be looking for as a return favor—as well as to see whether I might have other uses. After all, I’d made him well aware by now that I routinely worked with some pretty rich people.

“That’s right,” I replied. “A few. Hedge-fund people mostly. A couple of firms. My big investment banking client is Leon Mankoff at STST. You probably know who he is.” That “probably” was, I thought, a bit of an artful touch.

Orteig nodded. “Who doesn’t?” He took a couple of thoughtful
bites, then asked: “How do people like Mankoff see things shaping up politically for next year?”

“At the moment, if you’re a betting man, you have to send it all in on Hillary. She’s hit the ground running, and she’s raised a ton of money. Still, people have reservations about her. Even people who say they support her. People just don’t trust the Clintons. If there’s a financial crisis, which Mankoff and others think is likely, given what Washington’s let the Street get away with—not to mention what the Street’s let itself get away with—there’s likely to be a lynch mob calling for the Street’s blood. And Hillary will be leading it. It doesn’t matter what she or her people have said or promised so far—if they see real political opportunity to do an ideological one-eighty, that’s the way they’ll go.

“You say Mankoff thinks a financial crisis is likely? Any timing on that?”

I shrugged. “Who can say? There’s going to be a point at which a lot of the bad stuff can no longer be swept under the carpet. Subprime credit, for example. And nobody really has a handle on what’s going on with derivatives. If any of this blows up at scale, you might be looking at a major convulsion. Still, these things always take longer than people expect. One of my clients is always quoting Keynes to the effect that the market can remain irrational much longer than you can remain solvent. Wall Street can fight the inevitable off for a while: borrow more money, uncover a fresh bunch of greater fools, pray for divine intervention. It’s all a function, really, of how much money how many people can invest in keeping the balloon afloat. Once they run out of money, or inclination, or blind courage, or trust, or stupidity—although there’s no way this country can ever run out of
that
—it’s finished. Once they’ve got no more skin left to put in the game: game over!”

“And you think this will happen when?”

I gave it the old “who knows” with the hands, then said, “The
storm might hit tomorrow, but it equally might hold off until next year, which is how Mankoff’s betting. It’s really a function of how much bad money people are willing to throw after good.”

I watched Orteig digest that, then added: “One sure thing—if there’s a crisis, the GOP is dead meat. The Democratic candidate will be a lock. Hillary won’t even have to campaign. She can just sit on her ass in Chappaqua and watch her husband fuck the help.”

I gave him a minute or so to think about that while I munched on my sandwich, then added, “Too bad your guy got started so late. He’s an attractive candidate. Born to run. Great stage presence, impressive CV. Obviously very smart. People I know who’ve met him have been impressed. He has that ‘it” factor that Hillary lacks. But he’s got an awful lot of ground to make up. Speaking honestly, how do you think he’s doing? Really doing.”

“We’re gaining momentum,” he said, trying to sound positive and only half-succeeding.

“How much have you raised so far?”

I knew it was a question he wouldn’t care to answer, and he didn’t. “We’re OK. Just starting to get traction.”

That was bullshit, and yet it wasn’t. My Internet research suggests that OG is doing better than Hillary in terms of current fund-raising, probably something around $40 million since the beginning of the year, but that’s not translating into good poll numbers. But those would shift overnight if Orteig had $75 million to put to work next week.

“Who knows?” I said. “You still may have a shot.”

I paused. Time to drag the fly under the trout’s nose.

“From what I’m hearing,” I said, “there’s a lot of firepower out there that hasn’t committed. That’s still on the sidelines.”

I watched him think carefully about his next move. Then he leaned forward until his face was practically up against mine and asked, in a low voice, almost if he feared the plane might be bugged:
“You work with a lot of big-money people, Chauncey. If you were in our shoes, how would you reach out to them?”

Bingo!

I didn’t want to move things along too fast. “Well, I’m no political pro. But right now, I’d have to say, you need to hook up with one or two really big hitters. Dribs and drabs won’t get it done; I’m talking tens of millions. Just to take an example, how much do you figure that party at the Museum of Modern Art raised for your guy? That was a pretty fancy crowd. Still, you probably cleared what? A couple of million?” I knew the answer, but I was highballing him to set him up.

“Half a million,” he replied. He looked disconsolate. Then he brightened and added, “But probably more to come. And we’ve been doing a lot better.” He didn’t sound confident.

“When’s the convention?”

“August 25 next year—in Denver. But before that, there are the primaries and caucuses, starting with Iowa in January.”

“Not a lot of time. Your guy’s made a strong start. The books, the Lincoln connection, and the throwdown at Springfield: all good shit. Apparently the money’s coming in OK, but just. To get off the schneid, you’re going to need a quantum jump: money for the Internet, state volunteer organizations, advertising—a ton of very expensive infrastructure. They don’t give that stuff away.”

I let that sink in, then set the hook: “Let me ask you this, Homer. Say you had an incremental $75 million—I’m just picking a number out of the air—that you knew you could count on right now. Money you could start laying out next week. How big a difference would that make?”

“You’re speaking theoretically, of course?” he asked.

“Of course.”

There was no need for me to wink. Orteig’s a pro. He got it. I watched his expression change, his features sharpen, eyes wake up.
The smell of actual money does that to people. Greed, opportunism, the anticipation of real spending power, even a hint of potential victory: all were visible as I watched Orteig mentally translate $75 million into a powerful political database and its corollaries: websites, server costs, office space, thousands of volunteers and their care and feeding and deployment, call centers, TV time, chartered jets, Nielsen ratings points, audience share.