Gore Warms Up to Wall Street
By Ianthe Jeanne Dugan
What on earth was Henry Paulson, the conservative co-chief executive of Goldman Sachs & Co., doing there? Also drawing double-takes was J.P. Morgan & Co. chief Douglas "Sandy" Warner, a well-known Republican supporter.
They were invited by Steven Rattner, chief executive of the large investment bank Lazard Freres & Co., who has been a key force in helping Gore introduce his ideas on the economy and finance to a traditionally conservative contingent that has long associated the vice president with being more concerned about the environment and technology than high finance.
"The vice president is not as well known in the Wall Street community as the president," Rattner said. "But as people have gotten to know him, they have been impressed."
As Gore gears up for his presidential race, he is carefully wooing Wall Street a source of not only potential campaign contributions but also credibility in the corporate world.
Using a trio of investment executives as his tour guides to Wall Street, Gore has been getting a crash education in the markets through breakfast brainstorms, White House coffees, New York jaunts and three Christmas parties held at his home.
Wall Street executives and a Gore aide said the vice president in turn has reached out to Wall Street officials to solicit advice on economic issues and vet his speeches on business matters. Executives have encouraged him to tone down the environment rhetoric and encouraged him to promote a broader theme the track record of the economy that has enriched both Wall Street players and ordinary investors.
This week, Gore intends to embark on what aides call "economics week," in which he will announce two budget initiatives designed to boost the economy, such as a doubling of the economic empowerment zones that have revitalized inner-city neighborhoods.
A Gore aide said the vice president played a crucial role in shaping the economic policies that fueled growth in recent years but took a back seat to the president. "Now, as we head into 2000," the aide said, "there's a desire to showcase what he's been doing behind the scenes."
The lunch at the Four Seasons was one of several "cultivational" meetings organized by Rattner and two fellow executives John Tisch of Loews Corp. and money manager Orin Kramer, an aide to former president Jimmy Carter who contributed $295,000 in "soft money" to Democratic Party organizations in the 1997-98 election cycle, according to Federal Election Commission records. Loosely regulated soft money is used by the party for general purposes, such as issue advertising and voter-registration drives.
The trio has become a quasi "kitchen cabinet" working behind the scenes virtually since Clinton's 1996 victory to help Gore meet and convert key players on Wall Street.
Rattner, Tisch and Kramer this month spearheaded fund-raising efforts, serving as the New York muscle of a national effort expected to raise $1 million by the end of January. Previously, they had helped raise $1 million for Leadership '98, Gore's political action committee.
Gore supporters said Wall Street serves not only as the doorway to mounds of million-dollar salaries and some of the world's biggest political donors, but the hearts of a populace infatuated with stocks. "With a third of American households invested in Wall Street, and mushrooming millionaires made there, Wall Street is more important than ever," said former deputy treasury secretary Roger Altman, a New York investment banker.
All this elbow-rubbing in the upper echelons of Wall Street holds another opportunity for Gore: He has been able to size up prospects for potential key roles in the Treasury Department and the Securities and Exchange Commission. "Some of the people involved now could well wind up with a role in the new administration," a source said.
Rattner, a one-time New York Times reporter, was mum about public aspirations. Tisch declined to speculate. Kramer said simply: "Steve Rattner has assumed more than anybody else the role that was once played by [Treasury Secretary and former Goldman Sachs co-chairman] Bob Rubin and Arthur Krim," the late United Artists chief who was a major Democratic fund-raiser and supporter.
To pave the way to the financial support, Gore first had to refashion his image to appeal to a conservative world where executives often supported the Republicans whose policies served wealthy investors. That's why he has emphasized economic growth.
"For a lot of people on Wall Street, the single most important narrow policy that would be beneficial would be lower capital-gains rates, which is not something you go to the Democratic Party for," Kramer said. "But a healthy economy is vital for business. And the economic environment we've had is something the president and vice president can take credit for."
Gore especially turned to these executives in August, when the Russian debt default threatened to destabilize world financial markets. The vice president wanted to understand the ramifications, so he invited a Wall Street "Who's Who" to the White House.
Tisch, Rattner and Kramer attended the meeting, along with a strong list of powerful financial executives: global investor George Soros; Lionel Pincus of E.M. Warburg, Pincus & Co.; Bankers Trust Corp. chief executive Frank Newman; Lehman Brothers Inc. chief executive Richard Fuld; American International Group Inc. chief executive Hank Greenberg; Stan Schuman of Allen & Co.; and David Shaw, a former Columbia University computer science professor who runs a major investment pool in New York.
The idea was to gather intelligence about how to stabilize world financial markets. "He asked us for our ideas," Shaw recalled. Soros suggested a credit insurance facility to help combat what several people advised the vice president was a severe credit crunch. Some suggestions appear to be echoed in parts of the Brazilian rescue package coordinated by the International Monetary Fund and actions taken by the Group of Seven industrialized nations a few weeks later.
"I thought all he was interested in was science and the environment," said Shaw, who contributed $220,000 in soft money to Democrats in 1997-98. "I was surprised when I met him how much he knew about the economy and finance."
Jon Corzine, the co-chief executive of Goldman Sachs who is one of the biggest Democratic soft-money donors ($380,000 in 1997-98), could not make the breakfast. But he went to Washington in the fall to meet Gore one-on-one for a half-hour chat over coffee. Among other things, Gore wanted to understand how Long-Term Capital Management L.P., the huge investment pool in Greenwich, Conn., fell apart, nearly collapsing financial markets around the world.
"The vice president has tried to understand how the global economy works from the eyes of someone sitting in Wall Street," Corzine said. "He wanted to understand the relative impact of the solutions, or lack of solutions, with respect to IMF funding, the Brazilian rescue and the Japanese stimulus package, and how they all fit together."
Jamie Dimon, who recently stepped down as president of Citigroup, was also invited to the White House breakfast. Dimon, long a staunch Democratic supporter, was a key figure in Democratic Rep. Charles E. Schumer's unseating of Republican Sen. Alfonse M. D'Amato in the New York Senate race, despite an already strained relationship with Citigroup co-chief executive Sanford "Sandy" Weill, a major D'Amato supporter.
"I wanted to do what was right for my country, not my company," Dimon said, sitting in his new office piled high with unpacked boxes.
Given the fallout of the world economic turmoil at Citigroup, Dimon could not make the breakfast. But he met with Gore soon after at Dimon's home on Park Avenue, where he held a victory party for Schumer. One of Dimon's three daughters was in her bedroom playing with her friends when Gore walked in, mistaking her door for the bathroom. "Her friends were shocked to look up and see the vice president standing there," Dimon said.
A few weeks later, before Gore delivered a speech to the Detroit business community, an aide called Dimon to get advice on the speech. Dimon reinforced a message Gore had been hearing repeatedly from Wall Street: Steer clear of a pure environmental theme.
"He needs to convey that you can balance economic and environmental policies," Dimon said. "He needs business leaders to know that you can do it rationally."
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