Jeff Connaughton - The Payoff: Why Wall Street Always Wins

COPYRIGHT 2012 JEFF CONNAUGHTON

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Book design by Barbara Aronica-Buck
Cover design by Carly Schnur

Paperback ISBN: 978-1-935212-96-6
E-book ISBN: 978-1-935212-97-3

First hardcover printing: September 2012
First ebook publication: August 2012

Printed in the United States of America

FIRST EDITION

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ON NOVEMBER 24, 2008, Governor Ruth Ann Minner of Delaware announced her intention to appoint Ted Kaufman to Joe Bidens Senate seat. Upon accepting the appointment, Ted made it clear that hed hold the office for only two years; he absolutely wouldnt run in the special election that would determine his successor. He thought it best for the voters to pick Delawares next U.S. senator, without his using the advantages of incumbency to try to hold the seat.

He knew that, if he planned to run for election, hed have to spend almost half his time preparing for a future campaign, and most of that working to raise the enormous number of dollars it takes to compete in a Senate election. After having been in and around the Senate for almost thirty-six years, he wanted to enjoy being a full-time senatorand explode out of the blocks for a two-year sprint on the issues he cared deeply about. He didnt want to fundraise, play politics, or avoid making enemies. He wanted to be his own man, completely independent. In Washington: a rara avis.

Ted was truly motivated to work hard and make a difference. Initially, few outside Delaware perceived this, which, in hindsight, may have been a good thing. Many in Delaware respected him, but from the beginning they labeled him a placeholderand, worse, a seat warmerfor Beau Biden, then the Delaware attorney general. Everyone saw Ted as the guy Biden most trusted not to run against his son in the special election. Biden, not known for his tact or sensitivity to the positions of others, didnt help matters when he issued a long statement describing his son as, potentially, a great U.S. senator.

Ted had to defend himself against the placeholder label in every early media interview. I could tell the misperception stung, but, if anything, the denigration and condescension made him even more determined to disprove the cynics and make his days in office count. He was going to swing a big bat if he could get his hands around one. He told the Delaware media: Im not about having a bunch of bills with Kaufman on them. What Im about is, at the end of two years, being able to say that I tried as hard as I could to help make the country a better place. For those who know Ted, that wasnt blarney. It was as if hed been waiting all those years, watching government and the country change, accumulating knowledge, storing up his lifes purpose until he had the opportunity to harness it to a just cause.

Ted Kaufman is, indeed, a humanitarian who cares deeply about the effect government can have on peoples lives. His father, a secular Jew, was a social worker and later became the deputy commissioner for public welfare for Philadelphia, (Someone had asked his father if he was disappointed that he was only deputy, and his father had said, No, no, no, and turning to his son, he said, Ted, you want to be number two, you dont want to be the number one.) His mother was Irish Catholic and had been a social worker and teacher. Ted is a devout Catholic himself. Now that he was finally moving from being the number two to out front, he told a reporter he was most concerned about people with power taking advantage of the powerless.

Teds association with Biden began in 1972, when he ran the voter-turnout organization for Bidens insurgent Senate campaign against a popular two-term Republican incumbent. The cause seemed hopeless, with polls before the election putting Biden thirty percentage points behind. Nevertheless, the upstart twenty-nine-year-old wound up winning narrowly. On the wall of his office, Ted kept a picture of the wild celebration that night and always said, After that election, Ill never, ever, again believe that anything is impossible. Ted can tilt at windmills and genuinely believe hell slay a giant. Because he once did.

But behind this optimism was a savvy realism. At the very beginning of our time together, Ted gave me what I thought was a great piece of advice: identify each staffers strengths and use them; dont expect people to repair their weaknesses and dont assign them tasks they cant do well. I suspected that this was something Ted had learned in part through his interactions with Biden: Take advantage of Bidens strengths, because after years of trying, youre never going to change his weaknesses. Ted, along with Bidens wife, Jill, sister Valerie, brother Jimmy, and sons (when they became adults), tried to compensate for Bidens weakness. They were the ones who exuded personal warmth towards staffers. They were the ones who called and stroked Bidens big campaign contributors and fundraisers. They knew Biden would ignore every task he didnt want to do and every person he didnt want to deal with. So they filled in for him. Seen in a positive light, they were using their strengths to complement Bidens; in a negative light, they were systematically enabling his weaknesses and worst habits.

Ted and I made an interesting pair. Both of us were insulated from the usual pressures of Washington. He didnt have to raise a single dollar to get to the Senate or in the two years he spent there. For my part, I was older than most staffers and had already made my lucre from lobbying. So I too felt immune to Wall Streets power and the social and cultural glue that coats the corridors of the Washington Establishment.

Ted was an engineer by training who also had an MBA from the Wharton School at the University of Pennsylvania and had worked in finance for the DuPont Company. After graduating from Alabama, I earned an MBA in finance from the University of Chicago and then spent four years working for Wall Street firms, first for Smith Barney and then for E. F. Hutton. I later went to Stanford Law School before working in the Clinton White House Counsels office. Ted had been investing for fifty years, I for twenty. Ted and I both saw ourselves as finance-savvy, even though we were in politics. For this reason, we thought very much alike and hit it off well.

Ted and I also had differences. One of them, I believe, reveals the deference that politiciansmany of whom are extraordinary people whose breadth and depth of knowledge are often limited by the time drain of perpetual campaigningshow when dealing with hard-to-understand financial and economic issues and those who have mastered them. In October 2008, with the presidential election still roughly a month away, Ted and Mark Gitenstein (Teds co-chair of the Biden transition team) came back from an Obama-Biden pre-transition meeting audibly excited that Bob Rubin, the former Clinton treasury secretary, might return to serve as Obamas. Ted and Mark were downright giddy. I wasnt. Maybe because of my experience in Costa Rica, I was stunned about what Rubins excitedly anticipated return said about the Obama team. I feared it meant Wall Street in the White House. I feared that the people of this country would see right off the bat that one of Wall Streets own would ensure a bank-friendly approach to economic policy and that no banker would be held accountable.