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Poiz Rips eMeg on Goldman but No Game Changer

Sunday, May 2nd, 2010

Five minutes into the GOP governor’s debate, Steve Poizner ripped into Meg Whitman on her ties to Goldman Sachs – charging that “a lot of people got damaged by Goldman Sachs and Meg Whitman’s right in the middle of it.”

“Meg Whitman has massive investments in Goldman Sachs, made huge amounts of money from the collapse of the housing market, and then, when it was time for Goldman Sachs to get bailed out by taxpayers, Meg Whitman actively campaigned for a taxpayer funded (bailout). The question is, did she let people know?”

It was the first of a series of aggressive and effective attacks on eMeg’s character and ideology that he landed against his front-running rival for the Republican nomination for governor in Sunday’s hour-long debate at San Jose’s Tech Museum, a solid performance that Calbuzz scored as a win for Poizner.

But solid as his victory was in the only televised debate of the contest, it fell short of the kind of dramatic game changer that the state Insurance Commissioner needs to overcome the former eBay CEO’s commanding lead five weeks before the June 8 primary.

It’s a plain fact that debates rarely change the basic dynamics of a major political race, especially one broadcast at 5 p.m. on a splendidly sunny Sunday in May; beyond this, and despite her feckless answers on Goldman Sachs and other in-your-face challenges, Whitman to her credit never wilted under Poizner’s withering fire, nor did she hand him a truly memorable moment suitable for a devastating TV ad – no lasting image of blunder, weakness or faltering faux pas.

With both of the contenders pandering shamelessly to the Tea Party wing of the GOP on issues from immigration to gun control, the core of the proceedings was Poizner’s line of attack on her personal integrity over her multiple connections to scandal-tainted Goldman Sachs.

As Whitman stood by glowering, arms tightly crossed in a defensive posture, Poizner bluntly assailed both her ethics and her judgment, particularly for accepting from the investment bank repeated IPO stock issues, then quickly “spinning” them to make quick and easy profits worth millions – a practice that was later made illegal.

“I did not do anything wrong,” Whitman insisted at one point. “It was a legal and standard practice. With 20-20 hindsight, would I do it again? No, because it was called into question.”

Poizner pounded at her answer:

Wow, you really don’t get this Meg…You were the CEO of eBay receiving investment banking services from Goldman Sachs, then you joined the Goldman Sachs board and their compensation committee, then Goldman Sachs started to feed you these sweetheart deals, not one, not two but 100 of them, and you made a fortune, a separate fortune from your eBay fortune and then until you got caught you didn’t think anything was wrong. But the fact is, Congress investigated what you did, they called it corrupt, the SEC investigated what you did and immediately declared what you did illegal, and the eBay shareholders investigated what you did and they sued you. They sued you for a huge conflict of interest and the only reason why you paid back any of this money is because you had to settle the lawsuit.

Not to put too fine a point on it.

Here’s a look at some of the other highlights of the debate:

Immigration: Just days after declaring his opposition to Arizona’s controversial new law aimed at illegal immigrants, Poizner announced that he now supports the measure, claiming that new amendments will prevent it from authorizing de facto racial profiling by law enforcement. He repeated the mantra of actions he has said he would take as governor against illegals – “turning off the magnets” of education and social services, cracking down on employers who employ undocumented workers and “sanctuary cities” in California, and using state resources to increases security at the Mexican border.

Poizner also charged that Whitman supports “amnesty” based on earlier comments she made about support for legislation that would offer illegals a path to citizenship. Whitman, who has said she misspoke in making those comments, was left to deny that she backs “amnesty,” but scored some points by pointing to Poizner’s conversion on the Arizona law as emblematic of his flip flops on other issues, from his days as a moderate Republican candidate for the Assembly to his current full-throated, red meat conservatism:

“This is a classic case of Steve Poizner changing his mind,” she said, noting that he is “an engineer…every election cycle he engineers a new position” to match the moment.

Tea Party – Asked if they considered themselves members of the Tea Party movement, the two fell over each other gushing about it. “Yes, I’ve been to a whole bunch of Tea Party events…I find myself really in synch with the Tea Party,” Poizner said, while eMeg chimed in, “I am a supporter…they are at their core fiscal conservatives…if the Tea Partiers and others are looking for the tough fiscal conservative in this race, I promise you it is me.”

Poizner’s record – Whitman was at her best in assailing Poizner’s political shape shifting, noting that he backed a 2004 ballot initiative to lower the Proposition 13 vote threshold on school bonds and opposed President Bush’s tax cuts, while also accusing him of increasing the budget in the Insurance Commissioner’s office. The latter charge led to an inconclusive exchange, as the rivals hurled conflicting newspaper reports on the issue: “You just do not know what you’re talking about,” Poizner snarled at Whitman, “They (the Sacramento Bee) called you a liar.”

Whitman’s record – Playing directly to the GOP right-wing, Poizner repeatedly hit eMeg for taking a cruise that was organized to examine the issue of global warming, and for having embraced the ideas of Van Jones, the left-wing green energy activist who was fired by the Obama White House after a series of his past radical statements were made public. He also blasted her for having supported Barbara Boxer’s re-election in 2004, ostensibly because Boxer opposed a new tax on internet services: “Because Barbara Boxer took a certain position on an Internet tax that would personally benefit her and her investment funds…Is that the way you make decisions about who to endorse?”

Right-wing pandering - Beyond their gushing comments about the Tea Party, both rushed to woo right-wingers on other issues.  Both of them blasted California’s AB32 climate change laws, and refused to say that they believe global warming is caused by human activity, claiming the science is unclear on the question, and both also claimed to support “open carry” anti-gun control legislation.

Voting – After refusing to say she had done anything wrong on Goldman Sachs, Whitman switched course on questions about her poor voting record and offered a direct apology:  “I was not as engaged and connected as I should have been…but I’m 100% engaged now.” But Poizner sharply criticized Whitman for her failure to vote until the last several years: “Not voting is a big deal – you can’t just wash it away with a simple apology.”

Near the end of the debate, Whitman made a statement that will reflect the frame of the rest of the primary campaign: “So I would ask you, not to judge me on the mistakes I have made, but the ideas that I have to fix California, to restore California to its greatness.”

As eMeg tries to spend the next five weeks telling voters about her ideas, you can be sure Poizner will stay tightly focused on telling them about her mistakes.

Meyer Nails PG&E’s Prop 16; Poizner Bites eMeg

Saturday, May 1st, 2010

There’s rich irony in the fact that the man who gave California the initiative process — Hiram Johnson — fought against what was then the dominant utility in the state: the Southern Pacific Railroad. And that he’d be rolling over in his grave today to see another dominant utility — Pacific Gas and Electric Co. — using the initiative process in a naked bid to further entrench its monopoly power in half the state.

Tom Meyer’s take on Prop. 16, the June 8 primary initiative backed by $35 million from PG&E., won’t get much argument from a group of local public utilties, which are suing to get the measure off the ballot, charging that it’s an illegal effort by PG&E to destroy competition. Whether it’s illegal or not, Calbuzz is not equipped to judge. But there’s little doubt that seeking to require a two-thirds vote for communities that want to create their own public power is a pure-bred play to kill competition.

This is supposed to be a blank line, pushing text down the page a bit .

Not so subtle: vulture picking at carrion

Poizner Flips Meg the Bird: His bird of choice just happens to be the vulture, as in “Goldman Sachs Vulture Funds” to which Steve Poizner links Meg Whitman in his first truly populist hit on Whitman in a 30-second TV spot. Calbuzz prediction: if he puts enough money behind this ad, he will take Whitman down several notches. Whether it’s enough to close the gap is doubtful, but this is the toughest ad we’ve seen out of the Poizner camp.

“This type of pathetic distortion is exactly what Republicans expect from Team Brown and it’s convincing evidence that Steve Poizner has joined it,” replied Whitman spokesvolcano Sarah Pompei. “The truth is that Jerry Brown’s union allies and Steve Poizner will say and do anything to try and defeat Meg Whitman who is the only fiscal conservative running for Governor.”

Both Sides Now: Great catch by our friend Anthony York of Capitol Weekly and the LA Times Blog who noticed that Goldman Sachs has hired Mark Fabiani to defend the investment bank’s reputation while his partner, Chris Lehane, is a principal in the  anti-Whitman group Level the Playing Field which has attacked eMeg viciously for her ties to . . .  Goldman Sachs.

Press Clips: A Confederacy of Punches

Friday, April 30th, 2010

All Goldman all the time: Putting aside the New York Post’s instant classic cover hed, the week’s best commentary on the Goldman Sachs mess (California division) is a new web ad from Steve Poizner’s campaign featuring a nice mashup of TV blow drys reading eMeg-ties-to-Wall Street stories.

Combining quick cuts of newspaper quotes with excerpts from Whitman’s shifting explanations about her stock spinning, the piece from Team Commish delivers a 1:52 flurry of punches to eMeg’s patrician nose, all set to the strains of a stock, investigative-type remix score called “Caught Red-Handed.”

We’re scratching our heads, however, over the short clip of Joe Mathews, our favorite Mr. Cranky Pants blogger, telling KNBC-TV why Goldman Sachs matters to the governor’s race, just one day before he wagged his finger at the silliness of the governor’s race hubbub over…Goldman Sachs. No truth to the rumor that the unsafest spot to stand in California is between Mathews and a TV camera. . . . To be “fair,” we note, after Joe complained in a comment below, that after explaining why Whitman was furiously spinning the issue back on Brown and Poizner he apparently also told KNBC that he’s not convinced the Goldman issue will affect the outcome of the governor’s race and that he thinks solving the state’s budget woes is a more relevant issue.  So there.

Traders to their country: Euro-econ blogger Georges Ugeux offered a demystifying take on the whole matter that concludes Goldman isn’t really an investment bank at all. After watching this week’s parade of arrogant traders condescending to the Senate Banking Committee Permanent Subcommittee on Investigations wrote:

What became completely obvious for all the world to see is that Goldman Sachs is a hedge fund dressed up like a client business and that they are absolutely not interested in clients except to use them as screen for their own proprietary trading activities. As a hedge fund, Goldman Sachs is just a group of astute risk managers, brilliant market strategists who managed during the crisis to weather the storm. Their claim that they were not “directional” in their proprietary or principal business was absolutely disingenuous. .

Another G-S must-read: Gretchen Morgenson’s bottom-line take on what’s wrong with the financial regulation “reform“ legislation before the Congress:

Unfortunately, the leading proposals would do little to cure the epidemic unleashed on American taxpayers by the lords of finance and their bailout partners. The central problem is that neither the Senate nor House bills would chop down big banks to a more manageable and less threatening size. The bills also don’t eliminate the prospect of future bailouts of interconnected and powerful companies.

Too big to fail is alive and well, alas. Indeed several aspects of the legislative proposals sanction and codify the special status conferred on institutions that are seen as systemically important. Instead of reducing the number of behemoth firms assigned this special status, the bills would encourage smaller companies to grow large and dangerous so that they, too, could have a seat at the bailout buffet.

At least he’s for literacy: Scoop of the Week honors to Capitol Weekly’s Malcolm Maclachlan whose Actual Reporting dug down deeply on the mysterious question of how “Mount Pleasant,” Poizner’s besieged memoir about teaching in a San Jose high school, managed to hit #5 on the New York Times best seller list.

Exactly what role Team Poizner played in pushing the tome up the list has been one his handlers have assiduously ducked for weeks, up to and including their refusal to discuss the matter at all with Cap Weekly.

Although he doesn’t come up with a definitive answer on how the author managed to soar briefly (it tanked after one week)  to the commercial  heights occupied by slightly better known literary lights as Michael Lewis and Mitch Albom, the resourceful Maclachlan uncovers a host of intriguing clues, including the below-the-radar  maneuverings by a couple of Southern California book marketing companies, and a spate of folks still head-scratching  over how and why the book appeared in their mail boxes.

More evidence may be forthcoming when Poizner files his Q2 campaign expense and contribution reports in a few months, but Malcolm meanwhile suggests that buying enough copies of his own book to become a “best-selling author” wouldn’t exactly break the bank for the wannbe guv:

Poizner certainly has the wealth, having sold his last company for $1 billion. If he paid the $11.69 asking price on Amazon, not counting shipping, 5,000 copies would set him back $58,450, or about 1/1,000th of what Whitman has put into her own campaign.

Book notes: If you haven’t heard it, believe all the hype about Ira Glass’s takedown of Poizner and “Mount Pleasant” on PRI’s “This American Life” last weekend. In our 121 years on the planet, we’ve never listened to such a skillful, subtle and surgically precise evisceration of a pol. The tape is here and the transcript here.

Crusty’s lucha con el lenguaje: Conservative radio yakker and Calbuzz blogroller Eric Hogue also scored a sweet little scooplet with his report that Jerry Brown’s campaign had no Spanish-speaking representative to offer when Univision called to find a surrogate to face off in a televised debate with one from eMeg’s camp.

That’s right – Jerry Brown has no Spanish speaking member on his gubernatorial campaign team. One wonders how he is “communicating with the base of the Latino worker in California” if he has a language barrier.

“We haven’t filled that position yet,” a Brown spokesperson said weakly.

Team Crusty finally scared up the reliable Tenoch Flores, the communications director for the state Democratic party, to face off against the redoubtable Hector Barajas from Megland, but the incident is a flat-out  embarrassment for a candidate who has been known to brag on his connections to Cesar Chavez and appointment of the first Latino supreme court justice.

As a political matter, it’s also the first glaring example of why Brown’s skinflint, who-needs-consultants operation could prove costly against the Armada of eMeg (or The Platoons of Poizner, for that matter).

Yikes, the end of civilization really is near!

Meg vs Meg on Those Goldman Sachs Stock Deals

Thursday, April 29th, 2010

In her autobiography, “The Power of Many,” Meg Whitman discusses the charges against her for “spinning” initial public offerings that Goldman Sachs made available for her personal portfolio when she was CEO of eBay. It’s in a chapter titled “Results matter. Be accountable.”

Comparing what she wrote about her entanglement with Goldman Sachs  and what she told the Associated Press on Tuesday, however, we wonder what exactly eMeg means – if anything — by accountability.

Since this has become a big deal both nationally and in the California governor’s race, we’re reprinting some extended quotations from Whitman’s account of the affair, to see how they stack up against her more recent statements. We pick up her narrative on Page 148 (emphasis, ours):

After we [eBay] went public and Griff [her husband] and I needed professional help handling our investment portfolio, we decided to invest some of our personal funds with a completely separate group at Goldman Sachs, the Private Wealth Management group. As a wealth management client, I was indeed given access to IPO shares of other companies, which my private broker bought and sold for my account . . . However, the implication that there was a connection between eBay using Goldman Sachs as its banker on an ongoing basis and any benefit to my personal account investments was totally false;

I had never let my personal financial benefit influence my input on eBay’s banking choices. There was nothing illegal about IPO transactions my wealth manager made on my behalf. Such investment opportunities were common at the time, and I had never seen anyone in government, the media, or anywhere else raise the idea that this practice was a conflict of interest. . . .

When I learned I was on a list under scrutiny, I was surprised. The IPO investments made by Goldman Sachs on my behalf were a very small fraction of my personal investment portfolio. Given that I was a major individual eBay shareholder, I had far more to gain by working to make sure eBay used the most competent investment banking we could find. Anything that benefited eBay shareholders benefited me. . . .

Despite the inflammatory language of the investigation, these transactions were legal. No one ever suggested that they were not. . . . My board stood behind me and urged me to fight these [law]suits because they knew I had done nothing wrong and was deeply upset at the assault on my personal reputation and aghast at having eBay dragged into these stories about corporate greed. . . .

There was no conflict of interest, but when I look back I can see why the [congressional] committee pounced on the appearance of one. As I said earlier, [where she described how Goldman CEO Hank Paulson ran board meetings] I was not a good fit for the Goldman board which was the primary reason I resigned from it in December 2002.

In an interview Tuesday with the AP, Whitman repeated her statement that she resigned from the Goldman Sachs board of directors because it “wasn’t a good fit.”

“There was no link between accepting these IPO shares and funneling business to Goldman,” she insisted.

“The lesson learned about it is you have to be extra vigilant about seeing any actual or perceived conflict of interest. I missed the signposts here,” she said. “As I look back on it, would I do it again? No.”

There you have it: eMeg says she would not do the same thing over again — not because it was so unethical that it was later made illegal — but because she would want to avoid the appearance of a conflict of interest. In other words, she seems to be saying, “spinning” may have been outlawed later, but “It was legal when I did it, so what’s the problem?”

The only reason she acknowledges settling the lawsuit against her and other eBay board members for $3 million – including her share of $1.78 million – appears, at least in her book, to have been  because it was an annoyance:

The lawsuit remained a distraction and there was so much to do to run eBay and keep it growing that eventually I huddled with our lawyers and with Pierre [Omidyar] and Jeff [Skoll], who were also named in the suits, and we three decided to personally settle the suit with our own funds.

As Lance Williams noted, Whitman in the AP interview “didn’t address her service on Goldman’s compensation committee, where in two annual pay cycles she signed off on $79 million in bonuses for five top Goldman executives, including then-vice chairman Lloyd Blankfein, now the CEO.” (SEE BELOW)

In her book, Whitman said she put the story of Goldman Sachs in the chapter about accountability because, “.  . . the fact is, there was the appearance of a conflict and it bloodied our noses – mine in particular. . . . Those of us fortunate to hold any kind of leadership position in business must reject any appearance of a conflict even when we know that one does not exist . . . we have to be willing to be held to a higher standard.”

Um, how about just the standard we demand of our children, friends and mates: admit that you did something wrong and apologize. Whitman’s responses don’t even come close.

As Sterling Clifford, spokesman for Attorney General Jerry Brown put it, “Does she regret it because it was wrong or because it’s become an issue in her race for governor?”

Said Jarrod Agen, communications director for Whitman’s Republican rival, Insurance Commissioner Steve Poizner: “I’m sure there are several convicts that regret their crimes, but it doesn’t make them any less guilty.”

It’s worth noting that it was AP’s Juliet Williams who actually used the word “regret.” If Whitman said it, there was no quote to that effect. And let’s be clear what it was that got settled.

“In effect, the plaintiff shareholders allege that Goldman Sachs bribed certain eBay insiders, using the currency of highly profitable investment opportunities,”  wrote Delaware Judge William Chandler, who presided over the case

As Lance Williams reported, the executives “were able to flip these investments into instant profit,” the judge also wrote. “Whitman sold these equities in the open market and reaped millions of dollars in profit.”

But Whitman’s take on the whole affair is quite different. As she said in her book: her board knew she had done nothing wrong. That’s her story and she’s sticking to it.

This correction was later posted on Lance Williams story: (UPDATE: Whitman served on Goldman’s compensation committee, where in two annual pay cycles she signed off on $79 million in bonuses for five top Goldman executives, including then-vice chairman Lloyd Blankfein, now the CEO. The bonuses were based on competitive industry norms and the firm’s performance, the AP quoted her as saying.)

Fix My Ticket: Why Lite Gov Candidates May Matter

Wednesday, April 28th, 2010

California has no history of major party candidates for governor and lite gov running as a single entry, but both sides in the 2010 campaign are suddenly talking ticket.

“I can’t recall any time that the governor ran with a lieutenant governor as a team – that would be unique,” the venerable Allan Hoffenblum told Calbuzz.*

Co-founder and publisher of the invaluable California Target Book, and a recovering Republican consultant, Hoffenblum added: “Often as not, they kind of run away from each other.”

Despite bipartisan memories of politically troubled lieutenant governors of the past (see Curb, Mike and Dymally, Mervyn), there’s widespread chatter among California’s chattering class these days over scenarios that posit the major candidates for governor may actually benefit – or actually suffer – from their party’s nominees for lite guv.

On the Republican side, the confirmation of Abel Maldonado to fill the #2 spot has sparked speculation that GOP front-runner Meg Whitman could boost her general election chances, if she wins the nomination, by raising Abel to a veritable partnership position on the ticket.

Hoffenblum said that in order to win election, Whitman’s must pull at least one third of the Latino vote, and having the first Republican Latino to hold statewide office since 1875 , who happens to speak Spanish, could help.

“I can see Meg trying to work closely with Abel Maldonado,” Hoffenblum told us. “Nothing would be better for her.”

Of course, the notion depends entirely on Maldonado surviving a primary battle against state Senator Sam Aanestad, in one of those chest-beating fight-for-the-soul of the Republican party type things .

Longtime political analyst Tony Quinn, Hoffenblum’s Target Book colleague, agreed that Maldonado could prove an asset to eMeg, and suggested that eMeg might even discover a sudden rush of generosity towards Maldonado.

Although a gov-lite gov mutual aid pact has “never happened before,” Quinn said, Maldonado “could definitely help her.”

“I wouldn’t be surprised to see her try to help Maldonado get the nomination sub rosa,” he added. “It would be smart for her to see that he gets the nomination.”

(Calbuzz sez: We would not be too surprised if eMeg finds a spare $1 million in the sofa cushions and feels a sudden onset of generosity towards Maldonado.)

Even if Maldo wins the nomination, and even if he helps Whitman in the general, of course, he could still easily lose in November to the Democrats, among whom there’s some top-of-the-ticket intrigue as well.

With San Francisco Mayor Prince Gavin Newsom and L.A. City Council member Janice Hahn competing for the nomination, her handlers unveiled “Jerry and Janice” campaign signs at the party convention this month.

Planned and produced without the assent of Jerry Brown’s campaign for governor, the slogan served the purpose of sharply making the political point that, even if Hahn didn’t help Brown, as a woman from Southern California, she potentially would hurt him less than having Newsom running for lieutenant governor.

Having two white male San Francisco Bay Democrats at the top of the ballot would give Republicans a big target, not only ideologically, in a year when voters are worried about government spending, but also demographically, in a campaign where the GOP could turn the tables and become the party offering diversity in its statewide slate.

Offshore update: With the still growing oil spill off the coast of Louisiana now about 2,000 square miles in size, NASA has produced some extraordinary images of the mess.

As we’ve reported, the political fallout from the spill could impact the future  chances Governor Schwarzmuscle’s pet Tranquillon Ridge project. First shot comes from Assemblyman Pedro Nava, a staunch foe of the proposal who was recently named the new chair of the Environmental Safety and Toxic Materials committee; he plans to hold “an investigative hearing” in Hermosa Beach on Friday to examine the “threats” posed by drilling.

“Given the disaster in the Gulf, we need to evaluate the dangers posed by both off-shore and on-shore oil drilling in California,” Nava said in a statement announcing the hearing.  “Many parts of the state are impacted by oil development and drilling.  Whether it is Hermosa Beach and Baldwin Hills in Los Angeles County or Santa Barbara…we must make sure that we do not have the type of catastrophe that is occurring in the Gulf of Mexico.”

First the verdict, then the trial.

Liar, Liar, Pants on Fire: Calbuzz mistakenly reported the other day that Jerry Brown had sold the state airplane. We couldn’t remember where we got that alleged factoid which, the Sacramento Bee’s Dan Walters informed us, was wrong. Ronald Reagan sold the plane. Tuesday, we found the source of our mistake: it was in Jerry Brown’s own video — the one they showed at the Democratic Party state convention and the one that’s on his web site here (or at least it was before we spoke to Brown campaign manager Steve Glazer who tried to argue that it wasn’t their mistake, they just pulled together news clips!). “He sold the governor’s executive jet and travels commercially,” the narrator intones in the video. After first trying to argue that the mistake was Mike Wallace’s or Morley Safer’s, Glazer finally said, “I’m sorry that our video had a factual inaccuracy and you reprinted it.”

* From the Calbuzz Department of Corrections: Steve Merksamer and Kurt Schuparra, two of the sharpest guys in Sacramento, noted a couple of instances where candidates for  governor and lieutenant governor ran as a team.

According to Kurt, “In 1966, Ronald Reagan and Robert Finch ran ads in the LA Times and other papers, with a picture of them together, urging voters to “Elect California’s new team,” a duo with “common sense and integrity” and committed to dealing firmly with ‘Beatniks, taxes, riots, [and] crime.’  Like Reagan, Finch won by a wide margin.”

In addition, says Steve, “Reagan and Ed Reinecke ran as a ticket in 1970.  Advertising was joint and billboards throughout the state said “reelect Reagan/Reinecke Team 70.”

We note that Finch later joined Richard Nixon’s administration as Secretary of Health, Education and Welfare and later as Counselor to the President  until his resignation in 1973. Reinecke resigned his post after he was indicted by the Watergate Grand Jury in 1974 on three counts of perjury before Sam Ervin’s Senate Watergate Committee.