Harkening Back to Texas: The Market's Tumbling, Confidence Is Soft and Bush Is Facing Questions about What He Did and When He Did It Long Ago. the Battle to Calm Investors, Rein in CEOs-And Keep the Past at Bay
Fineman, Howard, Newsweek
Byline: Howard Fineman
It was what they call in west Texas "a short-fuse deal," George W. Bush's accountant recalls. In Midland parlance, Robert McClesky explained, that meant Bush--a boyhood buddy and longtime client--needed a hunk of fast cash. In April 1989, he'd found the last clear chance of his sputtering business career, becoming drummer and door opener for a syndicate of rich guys lining up to buy the Texas Rangers. The group wanted to reward him by making him a co-managing general partner. His father, after all, was president of the United States. But Bush would still need to put up $500,000 (out of a purchase price of $86 million) for his stake.
Where was he going to get that kind of scratch? He was not a rich man (at least not by Texan standards). Nor was he "liquid," as they say on Wall Street. Bush's chief asset--317,00 shares of Harken Energy stock--was tied up as collateral on existing loans. But Bush was able to quickly free up some of the stock without, apparently, immediately doing the required paperwork. In that way, he could use it to get a $500,000 loan from the United Bank of Midland, where Bush had served on the board, and where he still was an "advisory director."
It was all conducted in the old-fashioned west Texas way: honorable enough (Bush seems to have done the paperwork some six months later), but with friendly terms for an inside player and a laissez-faire attitude toward regulatory detail. Or, as Joe O'Neill, another Midland buddy, puts it: "We don't call in lawyers till we wrap up a deal. They'll just screw it up. You don't call a lawyer until you have to."
Well, we aren't in Midland anymore, and everybody in Washington is busy calling the lawyers. Cozy is OK in west Texas, where you can judge a man by his handshake and his daddy's name. And it worked when share prices were rising like rockets at Cape Canaveral. But not now, not in Washington. Eighty million Americans are invested in the stock market. A two-year price decline and a year of boardroom scandal changed everything. Suddenly, everyone--including President Bush--is demanding strict compliance with the letter of the laws. Many leaders--though not primarily Bush--are rushing to propose sweeping new statutes and regulatory agencies. The goal: to restore faith in corporate America--and protect Congress from the voters' wrath this fall.
Now Bush and others on his team have to reconfigure an old Republican adage. The new version: do what we say now, not what we did then. In the case of Bush's 18-year career in business, no one has found any evidence of unethical conduct, let alone what he calls "malfee-ance." Yet some of the rules he now propounds he ignored when they applied to him, and some of the reforms he now proposes would eliminate perks he once enjoyed. White House aides don't think his history limits his ability to be a reformer. "That's like saying you couldn't be for campaign-finance reform if you took contributions," says White House communications director Dan Bartlett. "People learn from experience."
Can the first M.B.A. president crack down on the world he comes from? He filled his team with an unprecedented number of CEOs, executives and lobbyists. When the markets were up, it made sense enough to bring a profit-margin mind-set to the capital. Even now, his aides argue, Bush's business background enables him to suture the market's ethics wounds without killing the patient. But voters may wonder if this CEO White House has the interests of average investors, employees and retirees in mind. The president's widely panned Wall Street speech--tough in tone but containing few legislative specifics--was kept cautious on the advice of business-world alumni, among them Vice President Dick Cheney (late of Halliburton) and domestic-policy chief Joshua Bolten (of Goldman Sachs).
For Bush, there's a profound family question lurking in the market numbers: is he destined to repeat the pattern of his father's presidency? …