28 April 2007

Niccolo: Call Your Office

John Mack announced yesterday that he supports Hillary Clinton's campaign for President. I suspect his real reasons have a Machiavellian cast.

Some of my readers might now be asking, "Who's John Mack?" If you receive a newspaper at your home, then, the business section goes unread. Not that there's anything wrong with that. Here's the short answer: Mack is the CEO of the giant Wall Street brokerage firm Morgan Stanley. Mack was also at the center of a whistle-blowing scandal a year and a half ago.

Gary Aguirre, fired from his job as a staff lawyer for the Securities and Exchange Commission in the fall of 2005, started telling the press and various committees of Congress that he was fired because people in the upper echelons of the SEC wanted to protect John Mack, who (Aguirre alleged) was at the heart of an insider trading operation.

Aguirre's charges were rather short in the supportive-evidence department, and in time the flap faded. But they do help give me this neat transition back to the issue of Machiavellianism.

What is Mack really doing in publicly supporting Hillary? If he wanted to help her become the Democratic Party's nominee, after all, he might simply have written her a check while keeping his mouth shut. But he thought it necessary to make a public statement.

Will that help her? There are, I think, people in the world who are more likely to vote for you than against you in a campaign if the CEO of Morgan Stanley has shown confidence in you. But aren't those people generally known as Republicans?

Hillary is in the midst of a fight over the Democratic base. In the context of this fight, her weakness is that she is suspected of being too plastic, too much given to the family trait of "triangulation," disinclined to pick fights with the country's prominent CEOs and Wall Street honchos. In the context of this fight, the open support of Mack is, IMHO, more likely to hurt her than to help.

(Maybe the open support of Gary Aguirre would help.)

But here is the Machiavellian question: Couldn't Mack have figured that out? Is he endorsing her precisely to hurt her? If I were running Barack Obama's campaign, I'd consider Mack's endorsement of Senator Clinton to be red-letter wonderful news. Wouldn't you?

Mack might be working any of several angles here. I hesitate to speculate further. But that there's more than meets the eye, I'm pretty sure.


Gary Aguirre said...

You’ve picked up on an intriguing role reversal by well heeled financial execs—they’ve gone Democratic. Nice call.

I would, however, like to clarify a couple of comments you made about me.

Regarding your point that “Aguirre's charges were rather short in the supportive-evidence department …,” you might want to take a peek at my testimony on the Senate Judiciary website (http://judiciary.senate.gov/hearing.cfm?id=2437) or the Senate Interim Findings at: http://www.pbs.org/now/shows/315/Congress-SEC-Investigation.pdf

As for my speaking to the media, you might want to take a closer look at the June 23 NY Times that broke the story. It reads: “Mr. Aguirre writes to Congress about his case without naming the fund or the executive.” The article goes on to state that the NY Times obtained the identity of Mr. Mack, the identity of the hedge fund (Pequot), the identity of the companies whose stock was traded, the status of the investigation, and the letter itself from government officials. Finally, here is what the Times said about my involvement: “Mr. Aguirre … declined to elaborate on the letter or to provide a copy. The New York Times obtained it from a government official who released it without authorization and asked not to be identified.”

Regarding Mr. Mack’s support for Hillary, that should come as no surprise. PBS’s NOW reported on April 13 that 2/3’s of financial industry money goes to Democrats. Here are the top five recipients of financial industry political contributions according to Open Secrets:

Lieberman, Joe: $1,806,260
Clinton, Hillary: $1,683,478
Ford, Harold E Jr.: $1,115,971
Santorum, Rick: $834,645
Dodd, Christopher J: $607,150

Perhaps, this sheds some light on why Senator Spector’s and Senator Grassley’s separate bills for minimum regulation of hedge funds were DOA when the Democrats took over Capital Hill. And no, I am not a Republican.

Christopher said...
This comment has been removed by the author.
Christopher said...


Welcome. I'm happy to have your clarifications on my blog.

Since my audience generally consists only of a very select group, i.e. family and friends, I'm a bit surprised at your appearance. But, hey, this is the age of the internet. Everybody is at least a potential reader of everything.

So, again, welcome. Make yourself at home.

Knowledge is warranted belief -- it is the body of belief that we build up because, while living in this world, we've developed good reasons for believing it. What we know, then, is what works -- and it is, necessarily, what has worked for us, each of us individually, as a first approximation. For my other blog, on the struggles for control in the corporate suites, see www.proxypartisans.blogspot.com.