I question the fact that he started anything.I wonderwho was behind the insurance company and also who was behind the founding of NCFE?
We do now know all of the facts. We must find out the facts and then we will find the real founder.
Associated Press has failed to mention that there is one,one, ex-executive,who has yet to go on trial.Why is this? Who is this ex-executive? Before joining NCFE , James K Happ was employed at Columbia Homecare Group/HCA subsidiary.While at Columbia ,this ex-CFO was responsible for dumping the 'losing home healthcare companies' after Welfare Reform was passed.Where did he dump these losing companies? NCFE. James K Happ has yet to go on trial? A little familar with the 'mortgage related securities' dumped into other private investment firms.
Poulsen slowly worked his way up in the business world, from a marketing assistant for a beer company to the owner of an auto parts company, he told jurors. Eventually he formed an insurance company, then created National Century Financial Enterprises in Dublin in suburban Columbus in the early 1990s.
At its height National Century employed more than 300 people. Executives made millions, with Poulsen alone earning more than $9.1 million between 1996 and 2002, according to the government. He also owned a yacht, a private corporate jet and a Florida mansion.
The company's bubble burst in November 2002. A meeting with angry investors that month deteriorated into a shouting match with Poulsen screaming at investors and threatening to have them thrown off the property.
FBI agents raided National Century the weekend of Nov. 16-17, 2002, carting away boxes of documents and computers.
The business offered financing to small hospitals, nursing homes and other health care providers by purchasing their accounts receivable, usually for 80 or 90 cents on the dollar, so they wouldn't have to wait for insurance payments. National Century then collected the full amount of the payments.
The company raised the money to fund its business by selling bonds to investors.
Prosecutors argued Poulsen and other executives of the company authorized millions in unsecured loans to the health care providers, then misled investors about the loans. The government says company officials moved money between accounts to cover shortfalls, fabricated data and loaded false information on a company computer system.
Poulsen says the government has misunderstood a complex business model and failed to explain exactly what he did that was illegal.
At least nine former National Century executives have been convicted of corporate fraud related to the case to date.
Showing posts with label McCain. Show all posts
Showing posts with label McCain. Show all posts
Thursday, October 2, 2008
Monday, September 29, 2008
McCain’s bill died, largely because Indian gambling interests fought back...
McCain’s bill died, largely because Indian gambling interests fought back. But the Department of Interior picked up where Mr. McCain left off, effectively doing through regulations what he had hoped to accomplish legislatively. Carl Artman, who served as the Interior Department’s assistant secretary of Indian Affairs until May, said Mr. McCain pushed him to rewrite the off-reservation rules. “It became one of my top priorities because Senator McCain made it clear it was one of his top priorities,” he said.
September 28, 2008
By JO BECKER and DON VAN NATTA Jr.
Senator John McCain was on a roll. In a room reserved for high-stakes gamblers at the Foxwoods Resort Casino in Connecticut, he tossed $100 chips around a hot craps table. When the marathon session ended around 2:30 a.m., the Arizona senator and his entourage emerged with thousands of dollars in winnings.
A lifelong gambler, Mr. McCain takes risks, both on and off the craps table. He was throwing dice that night not long after his failed 2000 presidential bid, in which he was skewered by the Republican Party’s evangelical base, opponents of gambling. Mr. McCain was betting at a casino he oversaw as a member of the Senate Indian Affairs Committee, and he was doing so with the lobbyist who represents that casino, according to three associates of Mr. McCain.
The visit had been arranged by the lobbyist, Scott Reed, who works for the Mashantucket Pequot, a tribe that has contributed heavily to Mr. McCain’s campaigns and built Foxwoods into the world’s second-largest casino. Joining them was Rick Davis, Mr. McCain’s current campaign manager. Their night of good fortune epitomized not just Mr. McCain’s affection for gambling, but also the close relationship he has built with the gambling industry and its lobbyists during his 25-year career in Congress.
As a two-time chairman of the Indian Affairs Committee, Mr. McCain has done more than any other member of Congress to shape the laws governing America’s casinos, helping to transform the once-sleepy Indian gambling business into a $26-billion-a-year behemoth with 423 casinos across the country. He has won praise as a champion of economic development and self-governance on reservations.
“One of the founding fathers of Indian gaming” is what Steven Light, a University of North Dakota professor and a leading Indian gambling expert, called Mr. McCain.
As factions of the ferociously competitive gambling industry have vied for an edge, they have found it advantageous to cultivate a relationship with Mr. McCain or hire someone who has one, according to an examination based on more than 70 interviews and thousands of pages of documents.
Mr. McCain portrays himself as a Washington maverick unswayed by special interests, referring recently to lobbyists as “birds of prey.” Yet in his current campaign, more than 40 fund-raisers and top advisers have lobbied or worked for an array of gambling interests — including tribal and Las Vegas casinos, lottery companies and online poker purveyors.
When rules being considered by Congress threatened a California tribe’s planned casino in 2005, Mr. McCain helped spare the tribe. Its lobbyist, who had no prior experience in the gambling industry, had a nearly 20-year friendship with Mr. McCain.
In Connecticut that year, when a tribe was looking to open the state’s third casino, staff members on the Indian Affairs Committee provided guidance to lobbyists representing those fighting the casino, e-mail messages and interviews show. The proposed casino, which would have cut into the Pequots’ market share, was opposed by Mr. McCain’s colleagues in Connecticut.
Mr. McCain declined to be interviewed. In written answers to questions, his campaign staff said he was “justifiably proud” of his record on regulating Indian gambling. “Senator McCain has taken positions on policy issues because he believed they are in the public interest,” the campaign said.
Mr. McCain’s spokesman, Tucker Bounds, would not discuss the senator’s night of gambling at Foxwoods, saying: “Your paper has repeatedly attempted to insinuate impropriety on the part of Senator McCain where none exists — and it reveals that your publication is desperately willing to gamble away what little credibility it still has.”
Over his career, Mr. McCain has taken on special interests, like big tobacco, and angered the capital’s powerbrokers by promoting campaign finance reform and pushing to limit gifts that lobbyists can shower on lawmakers. On occasion, he has crossed the gambling industry on issues like regulating slot machines.
Perhaps no episode burnished Mr. McCain’s image as a reformer more than his stewardship three years ago of the Congressional investigation into Jack Abramoff, the disgraced Republican Indian gambling lobbyist who became a national symbol of the pay-to-play culture in Washington. The senator’s leadership during the scandal set the stage for the most sweeping overhaul of lobbying laws since Watergate.
“I’ve fought lobbyists who stole from Indian tribes,” the senator said in his speech accepting the Republican presidential nomination this month.
But interviews and records show that lobbyists and political operatives in Mr. McCain’s inner circle played a behind-the-scenes role in bringing Mr. Abramoff’s misdeeds to Mr. McCain’s attention — and then cashed in on the resulting investigation. The senator’s longtime chief political strategist, for example, was paid $100,000 over four months as a consultant to one tribe caught up in the inquiry, records show.
Mr. McCain’s campaign said the senator acted solely to protect American Indians, even though the inquiry posed “grave risk to his political interests.”
As public opposition to tribal casinos has grown in recent years, Mr. McCain has distanced himself from Indian gambling, Congressional and American Indian officials said.
But he has rarely wavered in his loyalty to Las Vegas, where he counts casino executives among his close friends and most prolific fund-raisers. “Beyond just his support for gaming, Nevada supports John McCain because he’s one of us, a Westerner at heart,” said Sig Rogich, a Nevada Republican kingmaker who raised nearly $2 million for Mr. McCain at an event at his home in June.
Only six members of Congress have received more money from the gambling industry than Mr. McCain, and five hail from the casino hubs of Nevada and New Jersey, according to data from the Center for Responsive Politics dating back to 1989. In the presidential race, Senator Barack Obama has also received money from the industry; Mr. McCain has raised almost twice as much.
In May 2007, as Mr. McCain’s presidential bid was floundering, he spent a weekend at the MGM Grand on the Las Vegas strip. A fund-raiser hosted by J. Terrence Lanni, the casino’s top executive and a longtime friend of the senator, raised $400,000 for his campaign. Afterward, Mr. McCain attended a boxing match and hit the craps tables.
For much of his adult life, Mr. McCain has gambled as often as once a month, friends and associates said, traveling to Las Vegas for weekend betting marathons. Former senior campaign officials said they worried about Mr. McCain’s patronage of casinos, given the power he wields over the industry. The officials, like others interviewed for this article, spoke on condition of anonymity.
“We were always concerned about appearances,” one former official said. “If you go around saying that appearances matter, then they matter.”
The former official said he would tell Mr. McCain: “Do we really have to go to a casino? I don’t think it’s a good idea. The base doesn’t like it. It doesn’t look good. And good things don’t happen in casinos at midnight.”
“You worry too much,” Mr. McCain would respond, the official said.
A Record of Support
In one of their last conversations, Representative Morris K. Udall, Arizona’s powerful Democrat, whose devotion to American Indian causes was legendary, implored his friend Mr. McCain to carry on his legacy.
“Don’t forget the Indians,” Mr. Udall, who died in 1998, told Mr. McCain in a directive that the senator has recounted to others.
More than a decade earlier, Mr. Udall had persuaded Mr. McCain to join the Senate Indian Affairs Committee. Mr. McCain, whose home state has the third-highest Indian population, eloquently decried the “grinding poverty” that gripped many reservations.
The two men helped write the Indian Gaming Regulatory Act of 1988 after the Supreme Court found that states had virtually no right to control wagering on reservations. The legislation provided a framework for the oversight and growth of Indian casinos: In 1988, Indian gambling represented less than 1 percent of the nation’s gambling revenues; today it captures more than one third.
On the Senate floor after the bill’s passage, Mr. McCain said he personally opposed Indian gambling, but when impoverished communities “are faced with only one option for economic development, and that is to set up gambling on their reservations, then I cannot disapprove.”
In 1994, Mr. McCain pushed an amendment that enabled dozens of additional tribes to win federal recognition and open casinos. And in 1998, Mr. McCain fought a Senate effort to rein in the boom.
He also voted twice in the last decade to give casinos tax breaks estimated to cost the government more than $326 million over a dozen years.
The first tax break benefited the industry in Las Vegas, one of a number of ways Mr. McCain has helped nontribal casinos. Mr. Lanni, the MGM Mirage chief executive, said that an unsuccessful bid by the senator to ban wagering on college sports in Nevada was the only time he could recall Mr. McCain opposing Las Vegas. “I can’t think of any other issue,” Mr. Lanni said.
The second tax break helped tribal casinos like Foxwoods and was pushed by Scott Reed, the Pequots’ lobbyist.
Mr. McCain had gotten to know Mr. Reed during Senator Bob Dole’s 1996 presidential campaign, which Mr. Reed managed. Four years later, when Mr. McCain ran for president, Mr. Reed recommended he hire his close friend and protégé, Rick Davis, to manage that campaign.
During his 2000 primary race against George W. Bush, Mr. McCain promoted his record of helping Indian Country, telling reporters on a campaign swing that he had provided critical support to “the Pequot, now the proud owners of the largest casino in the world.”
But Mr. McCain’s record on Indian gambling was fast becoming a difficult issue for him in the primary. Bush supporters like Gov. John Engler of Michigan lambasted Mr. McCain for his “close ties to Indian gambling.”
A decade after Mr. McCain co-authored the Indian gambling act, the political tides had turned. Tribal casinos, which were growing at a blazing pace, had become increasingly unpopular around the country for reasons as varied as morality and traffic.
Then came the biggest lobbying scandal to shake Washington.
Behind an Inquiry
At a September 2004 hearing of the Indian Affairs Committee, Mr. McCain described Jack Abramoff as one of the most brazen in a long line of crooks to cheat American Indians. “It began with the sale of Manhattan, and has continued ever since,” he said. “What sets this tale apart, what makes it truly extraordinary, is the extent and degree of the apparent exploitation and deceit.”
Over the next two years, Mr. McCain helped uncover a breathtaking lobbying scandal — Mr. Abramoff and a partner bilked six tribes of $66 million — that showcased the senator’s willingness to risk the wrath of his own party to expose wrongdoing. But interviews and documents show that Mr. McCain and a circle of allies — lobbyists, lawyers and senior strategists — also seized on the case for its opportunities.
For McCain-connected lobbyists who were rivals of Mr. Abramoff, the scandal presented a chance to crush a competitor. For senior McCain advisers, the inquiry allowed them to collect fees from the very Indians that Mr. Abramoff had ripped off. And the investigation enabled Mr. McCain to confront political enemies who helped defeat him in his 2000 presidential run while polishing his maverick image.
The Abramoff saga started in early 2003 when members of two tribes began questioning Mr. Abramoff’s astronomical fees. Over the next year, they leaked information to local newspapers, but it took the hiring of lobbyists who were competitors of Mr. Abramoff to get the attention of Mr. McCain’s committee.
Bernie Sprague, who led the effort by one of the tribes, the Saginaw Chippewas in Michigan, hired a Democratic lobbyist who recommended that the tribe retain Scott Reed, the Republican lobbyist, to push for an investigation.
Mr. Reed had boasted to other lobbyists of his access to Mr. McCain, three close associates said. Mr. Reed “pretty much had open access to John from 2000 to at least the end of 2006,” one aide said.
Lobbyist disclosure forms show that Mr. Reed went to work for the Saginaw Chippewa on Feb. 15, 2004, charging the tribe $56,000 over a year. Mr. Abramoff had tried to steal the Pequots and another tribal client from Mr. Reed, and taking down Mr. Abramoff would eliminate a competitor.
Mr. Reed became the chief conduit to Mr. McCain’s committee for billing documents and other information Mr. Sprague was digging up on Mr. Abramoff, Mr. Sprague said, who said Mr. Reed “did a great to service to me.”
“He had contacts I did not,” Mr. Sprague said. “Initially, I think that the senator’s office was doing Reed a favor by listening to me.”
A few weeks after hiring Mr. Reed, Mr. Sprague received a letter from the senator. “We have met with Scott Reed, who was very helpful on the issue,” Mr. McCain wrote.
Information about Mr. Abramoff was also flowing to Mr. McCain’s committee from another tribe, the Coushatta of Louisiana. The source was a consultant named Roy Fletcher, who had been Mr. McCain’s deputy campaign manager in 2000, running his war room in South Carolina.
It was in that primary race that two of Mr. Abramoff’s closest associates, Grover Norquist, who runs the nonprofit Americans for Tax Reform, and Ralph Reed, the former director of the Christian Coalition, ran a blistering campaign questioning Mr. McCain’s conservative credentials. The senator and his advisers blamed that attack for Mr. McCain’s loss to Mr. Bush in South Carolina, creating tensions that would resurface in the Abramoff matter.
“I was interested in busting” Mr. Abramoff, said Mr. Fletcher, who was eventually hired to represent the tribe. “That was my job. But I was also filled with righteous indignation, I got to tell you.”
Mr. Fletcher said he began passing information to John Weaver, Mr. McCain’s chief political strategist, and other staff members in late 2003 or January 2004. Mr. Weaver confirmed the timing.
Mr. McCain announced his investigation on Feb. 26, 2004, citing an article on Mr. Abramoff in The Washington Post. He did not mention the action by lobbyists and tribes in the preceding weeks. His campaign said no one in his “innermost circle” brought information to Mr. McCain that prompted the investigation.
The senator declared he would not investigate members of Congress, whom Mr. Abramoff had lavished with tribal donations and golf outings to Scotland. But in the course of the investigation, the committee exposed Mr. Abramoff’s dealings with the two men who had helped defeat Mr. McCain in the 2000 primary.
The investigation showed that Mr. Norquist’s foundation was used by Mr. Abramoff to launder lobbying fees from tribes. Ralph Reed was found to have accepted $4 million to run bogus antigambling campaigns. And the investigation also highlighted Mr. Abramoff’s efforts to curry favor with the House majority leader at the time, Tom DeLay, Republican of Texas, a longtime political foe who had opposed many of Mr. McCain’s legislative priorities.
Mr. McCain’s campaign said the senator did not “single out” Ralph Reed or Mr. Norquist, neither of whom were ever charged, and that both men fell within the “scope of the investigation.” The inquiry, which led to guilty pleas by over a dozen individuals, was motivated by a desire to help aggrieved tribes, the campaign said.
Inside the investigation, the sense of schadenfreude was palpable, according to several people close to the senator. “It was like hitting pay dirt,” said one associate of Mr. McCain’s who had consulted with the senator’s office on the investigation. “And face it — McCain and Weaver were maniacal about Ralph Reed and Norquist. They were sticking little pins in dolls because those guys had cost him South Carolina.”
Down on the Coushattas reservation, bills related to the investigation kept coming. After firing Mr. Abramoff, the tribe hired Kent Hance, a lawyer and former Texas congressman who said he had been friends with Mr. McCain since the 1980s.
David Sickey, the tribe’s vice chairman, said he was “dumbfounded” over the bills submitted by Mr. Hance’s firm, Hance Scarborough, which had been hired by Mr. Sickey’s predecessors.
“The very thing we were fighting seemed to be happening all over again — these absurd amounts of money being paid,” Mr. Sickey said.
Mr. Hance’s firm billed the tribe nearly $1.3 million over 11 months in legal and political consulting fees, records show. But Mr. Sickey said that the billing statements offered only vague explanations for services and that he could not point to any tangible results. Two consultants, for instance, were paid to fight the expansion of gambling in Texas — even though it was unlikely given that the governor there opposed any such prospect, Mr. Sickey said.
Mr. Hance and Jay B. Stewart, the firm’s managing partner, defended their team’s work, saying they successfully steered the tribe through a difficult period. “We did an outstanding job for them,” Mr. Hance said. “When we told them our bill was going to be $100,000 a month, they thought we were cheap. Mr. Abramoff had charged them $1 million a month.”
The firm’s fees covered the services of Mr. Fletcher, who served as the tribe’s spokesman. Records also show that Mr. Hance had Mr. Weaver — who was serving as Mr. McCain’s chief strategist — put on the tribe’s payroll from February to May 2005.
It is not precisely clear what role Mr. Weaver played for his $100,000 fee.
Mr. Stewart said Mr. Weaver was hired because “he had a lot of experience with the Senate, especially the new chairman, John McCain.” The Hance firm told the tribe in a letter that Mr. Weaver was hired to provide “representation for the tribe before the U.S. Senate.”
But Mr. Weaver never registered to lobby on the issue, and he has another explanation for his work.
“The Hance law firm retained me to assist them and their client in developing an aggressive crisis management and communications strategy,” Mr. Weaver said. “At no point was I asked by Kent Hance or anyone associated with him to set up meetings with anyone in or outside of government to discuss this, and if asked I would have summarily declined to do so.”
In June 2005, the tribe informed Mr. Hance that his services were no longer needed.
Change in Tone
After the Abramoff scandal, Mr. McCain stopped taking campaign donations from tribes. Some American Indians were offended, especially since Mr. McCain continued to accept money from the tribes’ lobbyists.
Resentment in Indian Country mounted as Mr. McCain, who was preparing for another White House run, singled out the growth in tribal gambling as one of three national issues that were “out of control.” (The others were federal spending and illegal immigration.)
Franklin Ducheneaux, an aide to Morris Udall who helped draft the 1988 Indian gambling law, said that position ran contrary to Mr. McCain’s record. “What did he think? That Congress intended for the tribes to be only somewhat successful?” Mr. Ducheneaux said.
Mr. McCain began taking a broad look at whether the laws were sufficient to oversee the growing industry. His campaign said that the growth had put “considerable stress” on regulators and Mr. McCain held hearings on whether the federal government needed more oversight power.
An opportunity to restrain the industry came in the spring of 2005, when a small tribe in Connecticut set off a political battle. The group, the Schaghticoke Tribal Nation, had won federal recognition in 2004 after producing voluminous documentation tracing its roots.
The tribe wanted to build Connecticut’s third casino, which would compete with Foxwoods and another, the Mohegan Sun. Facing public opposition on the proposed casino, members of the Connecticut political establishment — many of whom had received large Pequot and Mohegan campaign donations — swung into action.
Connecticut officials claimed that a genealogical review by the Bureau of Indian Affairs was flawed, and that the Schaghticoke was not a tribe.
The tribe’s opponents, led by the Washington lobbying firm Barbour Griffith & Rogers, turned to Mr. McCain’s committee. It was a full-circle moment for the senator, who had helped the Pequots gain tribal recognition in the 1980s despite concerns about their legitimacy.
Now, Mr. McCain was doing a favor for allies in the Connecticut delegation, including Senator Joseph I. Lieberman, a close friend, according to two former Congressional aides. “It was one of those collegial deals,” said one of the aides, who worked for Mr. McCain.
Barbour Griffith & Rogers wanted Mr. McCain to hold a hearing that would show that the Bureau of Indian Affairs was “broken,” said Bradley A. Blakeman, who was a lobbyist for the firm at the time.
“It was our hope that the hearing would shed light on the fact that the bureau had not followed their rules and had improperly granted recognition to the Schaghticoke,” Mr. Blakeman said. “And that the bureau would revisit the issue and follow their rules.”
Mr. McCain’s staff helped that effort by offering strategic advice.
His staff told a lobbyist for the firm that the Indian Affairs Committee “would love to receive a letter” from the Connecticut governor requesting a hearing, according to an e-mail exchange, and offered “guidance on what the most effective tone and approach” would be in the letter.
On May 11, 2005, Mr. McCain held a hearing billed as a general “oversight hearing on federal recognition of Indian tribes.” But nearly all the witnesses were Schaghticoke opponents who portrayed the tribe as imposters.
Mr. McCain set the tone: “The role that gaming and its nontribal backers have played in the recognition process has increased perceptions that it is unfair, if not corrupt.”
Chief Richard F. Velky of the Schaghticokes found himself facing off against the governor and most of the state’s congressional delegation. “The deck was stacked against us,” Mr. Velky said. “They were given lots of time. I was given five minutes.”
He had always believed Mr. McCain “to be an honest and fair man,” Mr. Velky said, “but this didn’t make me feel that good.”
Mr. Velky said he felt worse when the e-mail messages between the tribe’s opponents and Mr. McCain’s staff surfaced in a federal lawsuit. “Is there a letter telling me how to address the senator to give me the best shot?” Mr. Velky asked. “No, there is not.”
After the hearing, Pablo E. Carrillo, who was Mr. McCain’s chief Abramoff investigator at the time, wrote to a Barbour Griffith & Rogers lobbyist, Brant Imperatore. “Your client’s side definitely got a good hearing record,” Mr. Carillo wrote, adding “you probably have a good sense” on where Mr. McCain “is headed on this.”
“Well done!” he added.
Cynthia Shaw, a Republican counsel to the committee from 2005 to 2007, said Mr. McCain made decisions based on merit, not special interests. “Everybody got a meeting who asked for one,” Ms. Shaw said, “whether you were represented by counsel or by a lobbyist — or regardless of which lobbyist.”
Mr. McCain’s campaign defended the senator’s handling of the Schaghticoke case, saying no staff member acted improperly. The campaign said the session was part of normal committee business and the notion that Mr. McCain was intending to help Congressional colleagues defeat the tribe was “absolutely false.”
It added that the senator’s commitment to Indian sovereignty “remains as strong as ever.”
Within months of the May 2005 hearing, the Bureau of Indian Affairs took the rare step of rescinding the Schaghticokes’ recognition. A federal court recently rejected the tribe’s claim that the reversal was politically motivated.
Making an Exception
That spring of 2005, as the Schaghticokes went down to defeat in the East, another tribe in the West squared off against Mr. McCain with its bid to construct a gambling emporium in California. The stakes were similar, but the outcome would be far different.
The tribe’s plan to build a casino on a former Navy base just outside San Francisco represented a trend rippling across the country: American Indians seeking to build casinos near population centers, far from their reservations.
The practice, known as “off-reservation shopping,” stemmed from the 1988 Indian gambling law, which included exceptions allowing some casinos to be built outside tribal lands. When Mr. McCain began his second stint as chairman of the Indian Affairs Committee three years ago, Las Vegas pressed him to revisit the exceptions he had helped create, according to Sig Rogich, the Republican fund-raiser from Nevada.
“We told him this off-reservation shopping had to stop,” Mr. Rogich said. “It was no secret that the gaming industry, as well as many potentially affected communities in other states, voiced opposition to the practice.”
In the spring of 2005, Mr. McCain announced he was planning a sweeping overhaul of Indian gambling laws, including limiting off-reservation casinos. His campaign said Las Vegas had nothing to do with it. In a 2005 interview with The Oregonian, Mr. McCain said that if Congress did not act, “soon every Indian tribe is going to have a casino in downtown, metropolitan areas.”
Prospects for the proposed California project did not look promising. Then the tribe, the Guidiville Band of Pomo Indians, hired a lobbyist based in Phoenix named Wes Gullett.
Mr. Gullett, who had never represented tribes before Congress, had known Mr. McCain since the early 1980s. Mr. Gullett met his wife while they were working in Mr. McCain’s Washington office. He subsequently managed Mr. McCain’s 1992 Senate campaign and served as a top aide to his 2000 presidential campaign. Their friendship went beyond politics. When Mr. McCain’s wife, Cindy, brought two infants in need of medical treatment back to Arizona from Bangladesh, the Gulletts adopted one baby and the McCains the other. The two men also liked to take weekend trips to Las Vegas.
Another of Mr. McCain’s close friends, former Defense Secretary William S. Cohen, was a major investor in the Guidivilles’ proposed casino. Mr. Cohen, who did not return calls, was best man at Mr. McCain’s 1980 wedding.
Scott Crowell, lawyer for the Guidivilles, said Mr. Gullett was hired to ensure that Mr. McCain’s overhaul of the Indian gambling laws did not harm the tribe.
Mr. Gullett said he never talked to Mr. McCain about the legislation. “If you are hired directly to lobby John McCain, you are not going to be effective,” he said. Mr. Gullett said he only helped prepare the testimony of the tribe’s administrator, Walter Gray, who was invited to plead his case before Mr. McCain’s committee in July 2005. Mr. Gullett said he advised Mr. Gray in a series of conference calls.
On disclosure forms filed with the Senate, however, Mr. Gullett stated that he was not hired until November, long after Mr. Gray’s testimony. Mr. Gullett said the late filing might have been “a mistake, but it was inadvertent.” Steve Hart, a former lawyer for the Guidivilles, backed up Mr. Gullett’s contention that he had guided Mr. Gray on his July testimony.
When asked whether Mr. Gullett had helped him, Mr. Gray responded, “I’ve never met the man and couldn’t tell you anything about him.”
On Nov. 18, 2005, when Mr. McCain introduced his promised legislation overhauling the Indian gambling law, he left largely intact a provision that the Guidivilles needed for their casino. Mr. McCain’s campaign declined to answer whether the senator spoke with Mr. Gullett or Mr. Cohen about the project. In the end, Mr. McCain’s bill died, largely because Indian gambling interests fought back. But the Department of Interior picked up where Mr. McCain left off, effectively doing through regulations what he had hoped to accomplish legislatively. Carl Artman, who served as the Interior Department’s assistant secretary of Indian Affairs until May, said Mr. McCain pushed him to rewrite the off-reservation rules. “It became one of my top priorities because Senator McCain made it clear it was one of his top priorities,” he said.The new guidelines were issued on Jan. 4. As a result, the casino applications of 11 tribes were rejected. The Guidivilles were not among them.
Kitty Bennett and Griff Palmer contributed to reporting.
September 28, 2008
By JO BECKER and DON VAN NATTA Jr.
Senator John McCain was on a roll. In a room reserved for high-stakes gamblers at the Foxwoods Resort Casino in Connecticut, he tossed $100 chips around a hot craps table. When the marathon session ended around 2:30 a.m., the Arizona senator and his entourage emerged with thousands of dollars in winnings.
A lifelong gambler, Mr. McCain takes risks, both on and off the craps table. He was throwing dice that night not long after his failed 2000 presidential bid, in which he was skewered by the Republican Party’s evangelical base, opponents of gambling. Mr. McCain was betting at a casino he oversaw as a member of the Senate Indian Affairs Committee, and he was doing so with the lobbyist who represents that casino, according to three associates of Mr. McCain.
The visit had been arranged by the lobbyist, Scott Reed, who works for the Mashantucket Pequot, a tribe that has contributed heavily to Mr. McCain’s campaigns and built Foxwoods into the world’s second-largest casino. Joining them was Rick Davis, Mr. McCain’s current campaign manager. Their night of good fortune epitomized not just Mr. McCain’s affection for gambling, but also the close relationship he has built with the gambling industry and its lobbyists during his 25-year career in Congress.
As a two-time chairman of the Indian Affairs Committee, Mr. McCain has done more than any other member of Congress to shape the laws governing America’s casinos, helping to transform the once-sleepy Indian gambling business into a $26-billion-a-year behemoth with 423 casinos across the country. He has won praise as a champion of economic development and self-governance on reservations.
“One of the founding fathers of Indian gaming” is what Steven Light, a University of North Dakota professor and a leading Indian gambling expert, called Mr. McCain.
As factions of the ferociously competitive gambling industry have vied for an edge, they have found it advantageous to cultivate a relationship with Mr. McCain or hire someone who has one, according to an examination based on more than 70 interviews and thousands of pages of documents.
Mr. McCain portrays himself as a Washington maverick unswayed by special interests, referring recently to lobbyists as “birds of prey.” Yet in his current campaign, more than 40 fund-raisers and top advisers have lobbied or worked for an array of gambling interests — including tribal and Las Vegas casinos, lottery companies and online poker purveyors.
When rules being considered by Congress threatened a California tribe’s planned casino in 2005, Mr. McCain helped spare the tribe. Its lobbyist, who had no prior experience in the gambling industry, had a nearly 20-year friendship with Mr. McCain.
In Connecticut that year, when a tribe was looking to open the state’s third casino, staff members on the Indian Affairs Committee provided guidance to lobbyists representing those fighting the casino, e-mail messages and interviews show. The proposed casino, which would have cut into the Pequots’ market share, was opposed by Mr. McCain’s colleagues in Connecticut.
Mr. McCain declined to be interviewed. In written answers to questions, his campaign staff said he was “justifiably proud” of his record on regulating Indian gambling. “Senator McCain has taken positions on policy issues because he believed they are in the public interest,” the campaign said.
Mr. McCain’s spokesman, Tucker Bounds, would not discuss the senator’s night of gambling at Foxwoods, saying: “Your paper has repeatedly attempted to insinuate impropriety on the part of Senator McCain where none exists — and it reveals that your publication is desperately willing to gamble away what little credibility it still has.”
Over his career, Mr. McCain has taken on special interests, like big tobacco, and angered the capital’s powerbrokers by promoting campaign finance reform and pushing to limit gifts that lobbyists can shower on lawmakers. On occasion, he has crossed the gambling industry on issues like regulating slot machines.
Perhaps no episode burnished Mr. McCain’s image as a reformer more than his stewardship three years ago of the Congressional investigation into Jack Abramoff, the disgraced Republican Indian gambling lobbyist who became a national symbol of the pay-to-play culture in Washington. The senator’s leadership during the scandal set the stage for the most sweeping overhaul of lobbying laws since Watergate.
“I’ve fought lobbyists who stole from Indian tribes,” the senator said in his speech accepting the Republican presidential nomination this month.
But interviews and records show that lobbyists and political operatives in Mr. McCain’s inner circle played a behind-the-scenes role in bringing Mr. Abramoff’s misdeeds to Mr. McCain’s attention — and then cashed in on the resulting investigation. The senator’s longtime chief political strategist, for example, was paid $100,000 over four months as a consultant to one tribe caught up in the inquiry, records show.
Mr. McCain’s campaign said the senator acted solely to protect American Indians, even though the inquiry posed “grave risk to his political interests.”
As public opposition to tribal casinos has grown in recent years, Mr. McCain has distanced himself from Indian gambling, Congressional and American Indian officials said.
But he has rarely wavered in his loyalty to Las Vegas, where he counts casino executives among his close friends and most prolific fund-raisers. “Beyond just his support for gaming, Nevada supports John McCain because he’s one of us, a Westerner at heart,” said Sig Rogich, a Nevada Republican kingmaker who raised nearly $2 million for Mr. McCain at an event at his home in June.
Only six members of Congress have received more money from the gambling industry than Mr. McCain, and five hail from the casino hubs of Nevada and New Jersey, according to data from the Center for Responsive Politics dating back to 1989. In the presidential race, Senator Barack Obama has also received money from the industry; Mr. McCain has raised almost twice as much.
In May 2007, as Mr. McCain’s presidential bid was floundering, he spent a weekend at the MGM Grand on the Las Vegas strip. A fund-raiser hosted by J. Terrence Lanni, the casino’s top executive and a longtime friend of the senator, raised $400,000 for his campaign. Afterward, Mr. McCain attended a boxing match and hit the craps tables.
For much of his adult life, Mr. McCain has gambled as often as once a month, friends and associates said, traveling to Las Vegas for weekend betting marathons. Former senior campaign officials said they worried about Mr. McCain’s patronage of casinos, given the power he wields over the industry. The officials, like others interviewed for this article, spoke on condition of anonymity.
“We were always concerned about appearances,” one former official said. “If you go around saying that appearances matter, then they matter.”
The former official said he would tell Mr. McCain: “Do we really have to go to a casino? I don’t think it’s a good idea. The base doesn’t like it. It doesn’t look good. And good things don’t happen in casinos at midnight.”
“You worry too much,” Mr. McCain would respond, the official said.
A Record of Support
In one of their last conversations, Representative Morris K. Udall, Arizona’s powerful Democrat, whose devotion to American Indian causes was legendary, implored his friend Mr. McCain to carry on his legacy.
“Don’t forget the Indians,” Mr. Udall, who died in 1998, told Mr. McCain in a directive that the senator has recounted to others.
More than a decade earlier, Mr. Udall had persuaded Mr. McCain to join the Senate Indian Affairs Committee. Mr. McCain, whose home state has the third-highest Indian population, eloquently decried the “grinding poverty” that gripped many reservations.
The two men helped write the Indian Gaming Regulatory Act of 1988 after the Supreme Court found that states had virtually no right to control wagering on reservations. The legislation provided a framework for the oversight and growth of Indian casinos: In 1988, Indian gambling represented less than 1 percent of the nation’s gambling revenues; today it captures more than one third.
On the Senate floor after the bill’s passage, Mr. McCain said he personally opposed Indian gambling, but when impoverished communities “are faced with only one option for economic development, and that is to set up gambling on their reservations, then I cannot disapprove.”
In 1994, Mr. McCain pushed an amendment that enabled dozens of additional tribes to win federal recognition and open casinos. And in 1998, Mr. McCain fought a Senate effort to rein in the boom.
He also voted twice in the last decade to give casinos tax breaks estimated to cost the government more than $326 million over a dozen years.
The first tax break benefited the industry in Las Vegas, one of a number of ways Mr. McCain has helped nontribal casinos. Mr. Lanni, the MGM Mirage chief executive, said that an unsuccessful bid by the senator to ban wagering on college sports in Nevada was the only time he could recall Mr. McCain opposing Las Vegas. “I can’t think of any other issue,” Mr. Lanni said.
The second tax break helped tribal casinos like Foxwoods and was pushed by Scott Reed, the Pequots’ lobbyist.
Mr. McCain had gotten to know Mr. Reed during Senator Bob Dole’s 1996 presidential campaign, which Mr. Reed managed. Four years later, when Mr. McCain ran for president, Mr. Reed recommended he hire his close friend and protégé, Rick Davis, to manage that campaign.
During his 2000 primary race against George W. Bush, Mr. McCain promoted his record of helping Indian Country, telling reporters on a campaign swing that he had provided critical support to “the Pequot, now the proud owners of the largest casino in the world.”
But Mr. McCain’s record on Indian gambling was fast becoming a difficult issue for him in the primary. Bush supporters like Gov. John Engler of Michigan lambasted Mr. McCain for his “close ties to Indian gambling.”
A decade after Mr. McCain co-authored the Indian gambling act, the political tides had turned. Tribal casinos, which were growing at a blazing pace, had become increasingly unpopular around the country for reasons as varied as morality and traffic.
Then came the biggest lobbying scandal to shake Washington.
Behind an Inquiry
At a September 2004 hearing of the Indian Affairs Committee, Mr. McCain described Jack Abramoff as one of the most brazen in a long line of crooks to cheat American Indians. “It began with the sale of Manhattan, and has continued ever since,” he said. “What sets this tale apart, what makes it truly extraordinary, is the extent and degree of the apparent exploitation and deceit.”
Over the next two years, Mr. McCain helped uncover a breathtaking lobbying scandal — Mr. Abramoff and a partner bilked six tribes of $66 million — that showcased the senator’s willingness to risk the wrath of his own party to expose wrongdoing. But interviews and documents show that Mr. McCain and a circle of allies — lobbyists, lawyers and senior strategists — also seized on the case for its opportunities.
For McCain-connected lobbyists who were rivals of Mr. Abramoff, the scandal presented a chance to crush a competitor. For senior McCain advisers, the inquiry allowed them to collect fees from the very Indians that Mr. Abramoff had ripped off. And the investigation enabled Mr. McCain to confront political enemies who helped defeat him in his 2000 presidential run while polishing his maverick image.
The Abramoff saga started in early 2003 when members of two tribes began questioning Mr. Abramoff’s astronomical fees. Over the next year, they leaked information to local newspapers, but it took the hiring of lobbyists who were competitors of Mr. Abramoff to get the attention of Mr. McCain’s committee.
Bernie Sprague, who led the effort by one of the tribes, the Saginaw Chippewas in Michigan, hired a Democratic lobbyist who recommended that the tribe retain Scott Reed, the Republican lobbyist, to push for an investigation.
Mr. Reed had boasted to other lobbyists of his access to Mr. McCain, three close associates said. Mr. Reed “pretty much had open access to John from 2000 to at least the end of 2006,” one aide said.
Lobbyist disclosure forms show that Mr. Reed went to work for the Saginaw Chippewa on Feb. 15, 2004, charging the tribe $56,000 over a year. Mr. Abramoff had tried to steal the Pequots and another tribal client from Mr. Reed, and taking down Mr. Abramoff would eliminate a competitor.
Mr. Reed became the chief conduit to Mr. McCain’s committee for billing documents and other information Mr. Sprague was digging up on Mr. Abramoff, Mr. Sprague said, who said Mr. Reed “did a great to service to me.”
“He had contacts I did not,” Mr. Sprague said. “Initially, I think that the senator’s office was doing Reed a favor by listening to me.”
A few weeks after hiring Mr. Reed, Mr. Sprague received a letter from the senator. “We have met with Scott Reed, who was very helpful on the issue,” Mr. McCain wrote.
Information about Mr. Abramoff was also flowing to Mr. McCain’s committee from another tribe, the Coushatta of Louisiana. The source was a consultant named Roy Fletcher, who had been Mr. McCain’s deputy campaign manager in 2000, running his war room in South Carolina.
It was in that primary race that two of Mr. Abramoff’s closest associates, Grover Norquist, who runs the nonprofit Americans for Tax Reform, and Ralph Reed, the former director of the Christian Coalition, ran a blistering campaign questioning Mr. McCain’s conservative credentials. The senator and his advisers blamed that attack for Mr. McCain’s loss to Mr. Bush in South Carolina, creating tensions that would resurface in the Abramoff matter.
“I was interested in busting” Mr. Abramoff, said Mr. Fletcher, who was eventually hired to represent the tribe. “That was my job. But I was also filled with righteous indignation, I got to tell you.”
Mr. Fletcher said he began passing information to John Weaver, Mr. McCain’s chief political strategist, and other staff members in late 2003 or January 2004. Mr. Weaver confirmed the timing.
Mr. McCain announced his investigation on Feb. 26, 2004, citing an article on Mr. Abramoff in The Washington Post. He did not mention the action by lobbyists and tribes in the preceding weeks. His campaign said no one in his “innermost circle” brought information to Mr. McCain that prompted the investigation.
The senator declared he would not investigate members of Congress, whom Mr. Abramoff had lavished with tribal donations and golf outings to Scotland. But in the course of the investigation, the committee exposed Mr. Abramoff’s dealings with the two men who had helped defeat Mr. McCain in the 2000 primary.
The investigation showed that Mr. Norquist’s foundation was used by Mr. Abramoff to launder lobbying fees from tribes. Ralph Reed was found to have accepted $4 million to run bogus antigambling campaigns. And the investigation also highlighted Mr. Abramoff’s efforts to curry favor with the House majority leader at the time, Tom DeLay, Republican of Texas, a longtime political foe who had opposed many of Mr. McCain’s legislative priorities.
Mr. McCain’s campaign said the senator did not “single out” Ralph Reed or Mr. Norquist, neither of whom were ever charged, and that both men fell within the “scope of the investigation.” The inquiry, which led to guilty pleas by over a dozen individuals, was motivated by a desire to help aggrieved tribes, the campaign said.
Inside the investigation, the sense of schadenfreude was palpable, according to several people close to the senator. “It was like hitting pay dirt,” said one associate of Mr. McCain’s who had consulted with the senator’s office on the investigation. “And face it — McCain and Weaver were maniacal about Ralph Reed and Norquist. They were sticking little pins in dolls because those guys had cost him South Carolina.”
Down on the Coushattas reservation, bills related to the investigation kept coming. After firing Mr. Abramoff, the tribe hired Kent Hance, a lawyer and former Texas congressman who said he had been friends with Mr. McCain since the 1980s.
David Sickey, the tribe’s vice chairman, said he was “dumbfounded” over the bills submitted by Mr. Hance’s firm, Hance Scarborough, which had been hired by Mr. Sickey’s predecessors.
“The very thing we were fighting seemed to be happening all over again — these absurd amounts of money being paid,” Mr. Sickey said.
Mr. Hance’s firm billed the tribe nearly $1.3 million over 11 months in legal and political consulting fees, records show. But Mr. Sickey said that the billing statements offered only vague explanations for services and that he could not point to any tangible results. Two consultants, for instance, were paid to fight the expansion of gambling in Texas — even though it was unlikely given that the governor there opposed any such prospect, Mr. Sickey said.
Mr. Hance and Jay B. Stewart, the firm’s managing partner, defended their team’s work, saying they successfully steered the tribe through a difficult period. “We did an outstanding job for them,” Mr. Hance said. “When we told them our bill was going to be $100,000 a month, they thought we were cheap. Mr. Abramoff had charged them $1 million a month.”
The firm’s fees covered the services of Mr. Fletcher, who served as the tribe’s spokesman. Records also show that Mr. Hance had Mr. Weaver — who was serving as Mr. McCain’s chief strategist — put on the tribe’s payroll from February to May 2005.
It is not precisely clear what role Mr. Weaver played for his $100,000 fee.
Mr. Stewart said Mr. Weaver was hired because “he had a lot of experience with the Senate, especially the new chairman, John McCain.” The Hance firm told the tribe in a letter that Mr. Weaver was hired to provide “representation for the tribe before the U.S. Senate.”
But Mr. Weaver never registered to lobby on the issue, and he has another explanation for his work.
“The Hance law firm retained me to assist them and their client in developing an aggressive crisis management and communications strategy,” Mr. Weaver said. “At no point was I asked by Kent Hance or anyone associated with him to set up meetings with anyone in or outside of government to discuss this, and if asked I would have summarily declined to do so.”
In June 2005, the tribe informed Mr. Hance that his services were no longer needed.
Change in Tone
After the Abramoff scandal, Mr. McCain stopped taking campaign donations from tribes. Some American Indians were offended, especially since Mr. McCain continued to accept money from the tribes’ lobbyists.
Resentment in Indian Country mounted as Mr. McCain, who was preparing for another White House run, singled out the growth in tribal gambling as one of three national issues that were “out of control.” (The others were federal spending and illegal immigration.)
Franklin Ducheneaux, an aide to Morris Udall who helped draft the 1988 Indian gambling law, said that position ran contrary to Mr. McCain’s record. “What did he think? That Congress intended for the tribes to be only somewhat successful?” Mr. Ducheneaux said.
Mr. McCain began taking a broad look at whether the laws were sufficient to oversee the growing industry. His campaign said that the growth had put “considerable stress” on regulators and Mr. McCain held hearings on whether the federal government needed more oversight power.
An opportunity to restrain the industry came in the spring of 2005, when a small tribe in Connecticut set off a political battle. The group, the Schaghticoke Tribal Nation, had won federal recognition in 2004 after producing voluminous documentation tracing its roots.
The tribe wanted to build Connecticut’s third casino, which would compete with Foxwoods and another, the Mohegan Sun. Facing public opposition on the proposed casino, members of the Connecticut political establishment — many of whom had received large Pequot and Mohegan campaign donations — swung into action.
Connecticut officials claimed that a genealogical review by the Bureau of Indian Affairs was flawed, and that the Schaghticoke was not a tribe.
The tribe’s opponents, led by the Washington lobbying firm Barbour Griffith & Rogers, turned to Mr. McCain’s committee. It was a full-circle moment for the senator, who had helped the Pequots gain tribal recognition in the 1980s despite concerns about their legitimacy.
Now, Mr. McCain was doing a favor for allies in the Connecticut delegation, including Senator Joseph I. Lieberman, a close friend, according to two former Congressional aides. “It was one of those collegial deals,” said one of the aides, who worked for Mr. McCain.
Barbour Griffith & Rogers wanted Mr. McCain to hold a hearing that would show that the Bureau of Indian Affairs was “broken,” said Bradley A. Blakeman, who was a lobbyist for the firm at the time.
“It was our hope that the hearing would shed light on the fact that the bureau had not followed their rules and had improperly granted recognition to the Schaghticoke,” Mr. Blakeman said. “And that the bureau would revisit the issue and follow their rules.”
Mr. McCain’s staff helped that effort by offering strategic advice.
His staff told a lobbyist for the firm that the Indian Affairs Committee “would love to receive a letter” from the Connecticut governor requesting a hearing, according to an e-mail exchange, and offered “guidance on what the most effective tone and approach” would be in the letter.
On May 11, 2005, Mr. McCain held a hearing billed as a general “oversight hearing on federal recognition of Indian tribes.” But nearly all the witnesses were Schaghticoke opponents who portrayed the tribe as imposters.
Mr. McCain set the tone: “The role that gaming and its nontribal backers have played in the recognition process has increased perceptions that it is unfair, if not corrupt.”
Chief Richard F. Velky of the Schaghticokes found himself facing off against the governor and most of the state’s congressional delegation. “The deck was stacked against us,” Mr. Velky said. “They were given lots of time. I was given five minutes.”
He had always believed Mr. McCain “to be an honest and fair man,” Mr. Velky said, “but this didn’t make me feel that good.”
Mr. Velky said he felt worse when the e-mail messages between the tribe’s opponents and Mr. McCain’s staff surfaced in a federal lawsuit. “Is there a letter telling me how to address the senator to give me the best shot?” Mr. Velky asked. “No, there is not.”
After the hearing, Pablo E. Carrillo, who was Mr. McCain’s chief Abramoff investigator at the time, wrote to a Barbour Griffith & Rogers lobbyist, Brant Imperatore. “Your client’s side definitely got a good hearing record,” Mr. Carillo wrote, adding “you probably have a good sense” on where Mr. McCain “is headed on this.”
“Well done!” he added.
Cynthia Shaw, a Republican counsel to the committee from 2005 to 2007, said Mr. McCain made decisions based on merit, not special interests. “Everybody got a meeting who asked for one,” Ms. Shaw said, “whether you were represented by counsel or by a lobbyist — or regardless of which lobbyist.”
Mr. McCain’s campaign defended the senator’s handling of the Schaghticoke case, saying no staff member acted improperly. The campaign said the session was part of normal committee business and the notion that Mr. McCain was intending to help Congressional colleagues defeat the tribe was “absolutely false.”
It added that the senator’s commitment to Indian sovereignty “remains as strong as ever.”
Within months of the May 2005 hearing, the Bureau of Indian Affairs took the rare step of rescinding the Schaghticokes’ recognition. A federal court recently rejected the tribe’s claim that the reversal was politically motivated.
Making an Exception
That spring of 2005, as the Schaghticokes went down to defeat in the East, another tribe in the West squared off against Mr. McCain with its bid to construct a gambling emporium in California. The stakes were similar, but the outcome would be far different.
The tribe’s plan to build a casino on a former Navy base just outside San Francisco represented a trend rippling across the country: American Indians seeking to build casinos near population centers, far from their reservations.
The practice, known as “off-reservation shopping,” stemmed from the 1988 Indian gambling law, which included exceptions allowing some casinos to be built outside tribal lands. When Mr. McCain began his second stint as chairman of the Indian Affairs Committee three years ago, Las Vegas pressed him to revisit the exceptions he had helped create, according to Sig Rogich, the Republican fund-raiser from Nevada.
“We told him this off-reservation shopping had to stop,” Mr. Rogich said. “It was no secret that the gaming industry, as well as many potentially affected communities in other states, voiced opposition to the practice.”
In the spring of 2005, Mr. McCain announced he was planning a sweeping overhaul of Indian gambling laws, including limiting off-reservation casinos. His campaign said Las Vegas had nothing to do with it. In a 2005 interview with The Oregonian, Mr. McCain said that if Congress did not act, “soon every Indian tribe is going to have a casino in downtown, metropolitan areas.”
Prospects for the proposed California project did not look promising. Then the tribe, the Guidiville Band of Pomo Indians, hired a lobbyist based in Phoenix named Wes Gullett.
Mr. Gullett, who had never represented tribes before Congress, had known Mr. McCain since the early 1980s. Mr. Gullett met his wife while they were working in Mr. McCain’s Washington office. He subsequently managed Mr. McCain’s 1992 Senate campaign and served as a top aide to his 2000 presidential campaign. Their friendship went beyond politics. When Mr. McCain’s wife, Cindy, brought two infants in need of medical treatment back to Arizona from Bangladesh, the Gulletts adopted one baby and the McCains the other. The two men also liked to take weekend trips to Las Vegas.
Another of Mr. McCain’s close friends, former Defense Secretary William S. Cohen, was a major investor in the Guidivilles’ proposed casino. Mr. Cohen, who did not return calls, was best man at Mr. McCain’s 1980 wedding.
Scott Crowell, lawyer for the Guidivilles, said Mr. Gullett was hired to ensure that Mr. McCain’s overhaul of the Indian gambling laws did not harm the tribe.
Mr. Gullett said he never talked to Mr. McCain about the legislation. “If you are hired directly to lobby John McCain, you are not going to be effective,” he said. Mr. Gullett said he only helped prepare the testimony of the tribe’s administrator, Walter Gray, who was invited to plead his case before Mr. McCain’s committee in July 2005. Mr. Gullett said he advised Mr. Gray in a series of conference calls.
On disclosure forms filed with the Senate, however, Mr. Gullett stated that he was not hired until November, long after Mr. Gray’s testimony. Mr. Gullett said the late filing might have been “a mistake, but it was inadvertent.” Steve Hart, a former lawyer for the Guidivilles, backed up Mr. Gullett’s contention that he had guided Mr. Gray on his July testimony.
When asked whether Mr. Gullett had helped him, Mr. Gray responded, “I’ve never met the man and couldn’t tell you anything about him.”
On Nov. 18, 2005, when Mr. McCain introduced his promised legislation overhauling the Indian gambling law, he left largely intact a provision that the Guidivilles needed for their casino. Mr. McCain’s campaign declined to answer whether the senator spoke with Mr. Gullett or Mr. Cohen about the project. In the end, Mr. McCain’s bill died, largely because Indian gambling interests fought back. But the Department of Interior picked up where Mr. McCain left off, effectively doing through regulations what he had hoped to accomplish legislatively. Carl Artman, who served as the Interior Department’s assistant secretary of Indian Affairs until May, said Mr. McCain pushed him to rewrite the off-reservation rules. “It became one of my top priorities because Senator McCain made it clear it was one of his top priorities,” he said.The new guidelines were issued on Jan. 4. As a result, the casino applications of 11 tribes were rejected. The Guidivilles were not among them.
Kitty Bennett and Griff Palmer contributed to reporting.
Tuesday, September 23, 2008
Paulsen, "...protecting the global financial network "
Transcript
A Conversation with Henry Paulson [Rush Transcript; Federal News Service]
Speaker: Henry M. Paulson, U.S. Secretary of The Treasury
Presider: Peter Ackerman, Managing Director, Rockport Capital, Inc.
October 24, 2007
Council on Foreign Relations
Council on Foreign Relations
Washington, DC
Audio
Oct 2007, Henry M. Paulson, U.S. Secretary of The Treasury
"...we need to get some market access in areas where we're already open and market access in services and financial services and non-agriculture and which is where the biggest part of the global economy is. "
"...head of investment banking in 1990.." at Goldman Sachs
"...Both India and the United States recognize that an integrated world economy requires protecting the global financial network against those who want to harm our people and our free economic systems by financing terrorism, weapons proliferation or other dangerous illicit activity. "
--------------------------------------------------------------------------------
PETER ACKERMAN: Good afternoon. My name is Peter Ackerman. I'm a member of the Council's board, and I want to welcome you today to this meeting, which I think is going to be quite exciting to participate in.
Please turn off all your electronic equipment that can go beep. And I'd like to remind everyone here that -- (laughs) -- I'd like to remind everybody here that this meeting will be on the record.
I'm going to introduce the secretary. And then, because his time is a little constrained, I'm going to forgo my rights as presider and he's going to actually select people for Q&A from the group.
Henry M. Paulson Jr., on June 19th, 2006 was nominated by President Bush to be the 74th secretary of the Treasury. A mere nine days later, he was unanimously ratified by the Senate and then sworn into office on July 10th, 2006 by Supreme Court Chief Justice John Roberts.
As Treasury secretary, as you know, Secretary Paulson is the president's leading policy advisor on a broad range of domestic and international economic issues. Secretary Paulson also had an extraordinary career at Goldman Sachs, which he joined in 1974 and became a partner in 1982, then head of investment banking in 1990, then president and chief operating officer four years after that. And then when the public offering occurred, he became the chairman and CEO.
He also had a stint in government, so prior to Goldman Sachs he was on the White House domestic staff serving as the staff assistant to the president from 1972 to '73, and just before that as a staff assistant to the assistant secretary of Defense from 1970 to '72.
The secretary is a graduate from Dartmouth and Harvard Business School. And what impresses me the most, besides being a Phi Beta Kappa, he was all-East, honorable mention all-American football player.
So with no more introduction, I'd like to welcome the secretary. (Applause.)
SECRETARY HENRY PAULSON: Thank you very much, Peter. And it's very good to be with the Council here in Washington today. I appreciate the opportunity to talk with you about the economic power and the promise of India.
Earlier this year, Prime Minister Singh referred to India's history as an open house -- an open society, open to the free flow of ideas and scholarship. I will travel to India next week. I look forward to being a guest in India's house.
My objective is to pay tribute to the strong, growing partnership between India and the United States. I hope to help the Indian government advance their economic reform agenda, which will benefit India's citizens and the world.
India is a vibrant nation whose strength lies in its commitment to equal rights and to speech, religious and economic freedoms that enrich the lives of all citizens. India is not only the world's largest democracy; it is also a secular, pluralistic society committed to inclusive growth.
Through President Bush and Prime Minister Singh's leadership, political, economic and cultural ties between the United States and India have never been stronger. These ties enjoy bipartisan support in both countries. In the last few years we have launched major initiatives in areas including counterterrorism cooperation, space research, clean energy, agriculture, education and economic development.
The historic agreement on civilian nuclear cooperation is an important part of the U.S.-India relationship, and it is beneficial to both countries. India is one of the world's largest and most peaceful states with advanced nuclear technologies and has been isolated from the rest of the world on nuclear issues.
This agreement will bring India into the nuclear nonproliferation mainstream, providing access to the technology which can help it reach its economic and environmental objectives. The United States remains committed to this agreement.
The ties of our governments are, in some sense, catching up to the long history of personal and professional friendship among Indians and Americans. For decades, Indians have immigrated to the United States, joined our communities, and raised their families while maintaining their cultural heritage.
Indian-Americans are physicians, engineers, CEOs, professors, teachers, entrepreneurs. They are a vital part of the United States' economic and social fabric. Because of this long history, the bonds among our people and our cultures will remain strong.
Prime Minister Singh is to be commended for beginning the process of transforming India into a global economic power by initiating economic liberalization in the early 1990s. These economic reforms have continued at varying speed through the past 15 years, regardless of the party in power.
Observers do not question whether India's reforms will continue. They ask only about the pace. The great Indian poet, Tagore, wrote that he had become his own version of an optimist. He said, "If I can't make it through one door, I'll go through another door or I'll make a door." The revolution in Indian economic thinking is making doors and invigorating the Indian economy.
India is a young country with a young population that will be looking for stable, well-paying jobs to support their families. These reforms will help provide the jobs they will need.
Through dramatic increases in mutual trade and foreign direct investment, the United States has been a partner in India's economic emergence. In the last few years, Indian exports to the United States have more than doubled to $21 billion, while the U.S. exports to India have doubled to $10 billion.
Similarly, investment flows have increased dramatically. Last year Indian firms invested $2 billion in the United States and U.S. companies invested about $2 billion in India.
As the Indian government has embraced greater economic openness, the creativity and expertise of the Indian workforce has been unleashed onto the world economic stage. We share Indian policymakers' belief that market-based policies and programs will spread opportunities to all levels of society, reaching ahm adni (ph) -- the common man.
The success of India's software industry is often told, and the story bears repeating here. Through the combination of expertise aimed at the Indian -- excuse me -- gained at the Indian Institute of Technology and through innovative thinking, Indian industry has demonstrated that it can, as the CEO of an Indian software company recently said, take the work from any part of the world and do it in any part of the world.
India's GDP grew nearly 10 percent in 2006 compared to the world average of five and a half percent. India's economic reforms have taken root. And by accelerating them, the government can help ensure that India's growth rate will be, as projected, at least 8 percent for the foreseeable future. I am optimistic about India's economic prospects.
In pursuing economic growth, India and the United States share similar values and similar challenges. We understand that the global economy is here to stay. To keep growing and leading the world in innovation and opportunity, the United States and India must trade freely, openly, and according to the principles of the global marketplace.
Trade also brings a wider variety of lower-priced goods, and this especially benefits lower-income citizens. I look forward to talking with the Indian government about making progress in the Doha Development Round.
Working together to successfully conclude the Doha agreement will be the single most effective thing we can do to help raise living standards in India and around the world. A Doha agreement is within reach, and the potential is so great that we must not let it slip through our grasp.
We also understand how rapidly changing economies can lead to uncertainty, causing many to doubt that trade brings greater benefits than costs. Together, India and the United States must resist this protectionist sentiment.
I'm committed to working to maintain an open trade and investment climate in the United States. Both India and the United States recognize that an integrated world economy requires protecting the global financial network against those who want to harm our people and our free economic systems by financing terrorism, weapons proliferation or other dangerous illicit activity. We will continue implementing financial systems safeguards to help ensure our countries and our citizen's security.
The U.S. and India also share the challenge of ensuring secure and clean energy supplies. We understand that economic growth and environmental responsibility are necessary, compatible goals. Moving forward with the civilian nuclear agreement is one part of that solution. Working together in a post-2012 framework, the U.N. climate change process is another.
It is in the best interests of India, the United States and the world for India to continue and even accelerate the pace of economic reform and openness. As with any democratic transformative effort, India faces political challenges -- something the United States also knows well. The government is to be applauded for what it has already accomplished, and encouraged to move forward. We stand with them as a partner as they do so. Other countries are also developing financial sophistication and global integration. If India slows its pace now, it risks losing the ground it's already worked so hard to gain.
Now, let me talk about two areas where the United States, and particularly the Department of Treasury, want to be partners with India in advancing reform and inclusive economic growth. First, by assisting the government's plan to finance physical infrastructure improvements, which will benefit Indian families' daily lives and fuel the economy. Second, by supporting steps to strengthen and expand India's financial system by building an international financial center -- a so-called IFC in Mumbai. Achieving these two goals will require a firm commitment to adopt international standards and to move forward aggressively with reforms, despite political risks.
The Indian government estimates that to further transform its economy it needs to spend close to $500 billion over the next five years to build physical infrastructure that will deliver power to cities and villages and transport people and goods to market. Given India's fiscal constraints, it is looking to the private sector to fund up to one-third of this needed investment. The United States wants to support this effort to attract private financing. During my trip, I will participate in the India Infrastructure Financial Conference in Mumbai. At that conference and afterwards, we will highlight the opportunity of India's infrastructure initiatives to U.S. businesses.
This infrastructure investment is important to helping India achieve its second green revolution, which is what Prime Minister Singh has called for. Our private sectors must take an active role in developing sophisticated agricultural markets in India where farmers can tap modern supply chains and processing technologies to improve their productivity and to improve the lives of their families. The government can do more to encourage this private investment by establishing more hospital investment, regulatory and financial regimes. Capital limitations, combined with ongoing uncertainty about contract enforcement and regulatory consistency will make infrastructure investment more difficult to obtain.
Let me now turn to the expansion of India's financial sector, especially establishing a financial center in Mumbai. In 2006, Prime Minister Singh said that it is possible for Mumbai to emerge as a new financial capital of Asia and be the bridge between Asia and the West in the world of finance. Properly regulated, a well-functioning financial markets are critical for a balanced development and strong, inclusive growth. This is an area of enormous opportunity for India. Officiate markets link capital with ideas and ambition. They are the economic lifeblood through which people find the means to rise out of poverty. This is true in India, in the United States and around the world.
Today Indian firms in Bangalore play a key role in the back office operations of multinational firms. In this, India has revolutionized forever the way the world does business. The next step is for India to develop front offices in Mumbai and provide financial services to companies and investors in and across the region. By establishing an IFC in Mumbai, India will build a financial system that will help large and small businesses. Shopkeepers, farmers and craftsmen need access to credit, financial and insurance products, as much as the large industrial manufacturers need this access. The Indian government has recognized this need and commissioned a report from a high-powered expert committee. The committee's report outlined a requirement and a timetable for developing an IFC in Mumbai. The report is bold, thorough and ambitious. I believe it is the right path.
A financial footprint in Mumbai makes a door through which the world can invest in India and India can invest in the world. Equally importantly, it gives India an important stake in the rapidly growing global financial services industry. The report identifies the needed changes to fiscal and monetary policy and to financial regulation. It also outlines that Mumbai's own urban infrastructure must be improved. This demonstrates the wisdom of the Indian government's emphasis on physical and financial infrastructure improvements. Both goals must be met in order to achieve the transition that will provide inclusive growth.
India has already made significant accomplishments in developing its financial sector and the economy has responded positively. India's stock and commodities exchanges are thriving. Since deregulation, the asset management industry has grown and now manages over $100 billion in assets. By reducing constraints on financial firms, India's government can foster a more efficient allocation of financial resources. This will help free capital to finance infrastructure investment, develop new innovations in other industries and extend financial services to a larger portion of the population. India's large and growing middle class stands to benefit from new financial products that will help them to achieve home ownership and to invest in the best possible education for their children.
Many of the world's leading financial firms have already opened offices in Mumbai. They're eager to do their part in building an international financial center. I urge my Indian colleagues to move forward quickly on the recommendations of their expert committee report. The United States will continue as a partner with India in its economic transformation.
Treasury and the Finance Ministry have led an ongoing dialogue for several years among U.S. and Indian regulators to share experiences and best practices. We will kick off another session to help advance the Indian government's economic reform agenda. When I am in New Delhi next week, Mumbai's development into an IFC is an important element of that agenda. U.S. experience can help the Indian government and industry as they work to develop an IFC in Mumbai. And the private sector stands ready to share their experiences in dealing with the development of domestic bond markets and other elements that create the backbone of a financial center.
We understand that the Indian officials are concerned that the greater capital flows associated with a financial center can add to inflationary pressures, destabilize the domestic financial sector or add to exchange rate volatility. For the most part, India's on the right path to reduce these risks. India has allowed greater flexibility in the exchange rate in recent months and the appreciation of the rupee has helped to reduce inflationary pressures. India has also taken administrative steps to adjust the pace of capital outflows and inflows.
As recent experience in the region has shown, administrative restrictions of capital flows are blunt instruments and can have unintended consequences. They tend to inhibit efficiency and lose their effectiveness over time. I encourage India to continue liberalizing such restrictions. Steps abroad to deepen the domestic financial sector will also help to mitigate the risk posed by greater capital flows.
India's development plans will require additional capital, innovative financial instruments, and a commitment to financial openness. Recent growth in India's savings base and in the number of global firms setting up shop in India suggest that all of this is possible, that India can be a significant exporter of financial flows and investment in the years ahead. The development of Mumbai as a financial center will take some years to come to fruition. Nonetheless, it is a path worth taking, a path that will yield benefits all along the way for India and for the global economy.
The remarkable growth brought about by India's economic reforms has proven the wisdom of those reforms and their promise for the future. As Prime Minister Singh said, "India is an open house. It can become more open, more integrated into the global economy." This will bring the inclusive growth, which is India's aim: an economy in which small -- the small farmer, the craftsman and the next Indian entrepreneur with a dream makes the door and fulfills that dream. India and the United States have made a very good start on delivering on our new partnership, and we can do more to reach our full strategic and economic potential. I look forward to learning from my Indian colleagues during my visit and to working with them on these and future initiatives.
Thank you, and I welcome your questions. Thanks. (Applause.)
ACKERMAN: Do you want to stay up there and answer from the podium, or --
PAULSON: Yeah. Yeah, sounds good to me.
ACKERMAN: Okay.
PAULSON: So you'll pick --
ACKERMAN: Okay, we'll take time, so -- yes.
QUESTIONER: Mr. Secretary, I'm Teresita Schaffer. I'm retired Foreign Service India and I now run the South Asia Program at CSIS.
I was very interested in -- (off mike) -- you said that you wanted to concentrate on. And I wonder if you could say a bit more about what you see as the vehicle for infrastructure improvements. I know there's been some sense that there was a need to find ways of insulating those who would invest in infrastructure from the vagaries of politics and -- (off mike). Have you found -- (off mike) -- our Indian friends found ways of doing this?
PAULSON: Okay. Well, let me say you obviously know your topic well, and the -- I think the biggest concern on the part of foreign investors are sanctity of contracts, the way the regulatory system works, and so on. I think this government is doing a good job of working through a number of the outstanding commercial disputes and issues out there, and we don't have -- I don't have anything that overnight will solve this problem. But what we're going to be doing -- and this trip is built around a very big conference on infrastructure finance where you're going to -- it's going to be heavily attended by the private sector and by the government.
And given the size of India's needs and how key this infrastructure development is for the kind of inclusive economic growth this country is going to need, I look at it -- I think -- and a fund that has been -- I think there's been some good work that's already been done. And one of the things that I've -- you know, that I've been a small part of in attending the meetings has been this CEO forum with the CEOs of both countries. And I think it's pretty unique the way this works because you get -- you know, you get the key government leaders in there also and, again, working on tangible steps -- sometimes very small steps. And so we've have a number of banks come together with an infrastructure fund, again focusing on taking small and important steps.
So I think what we -- what you're going to see is you're going to see some positives come out of this and you'll see more private-sector investment, and we just have to keep building on success. But ultimately, the question you've raised is the big question hanging over the capital markets and the investment there.
Okay, let me -- we've got plenty of time. Let me go right to the woman right in front of me and then we'll go to this side and --
QUESTIONER: Thank you very much. I'm Paula Stern, former chairwoman of U.S. International Trade Commission.
And I would like to ask you to go back and discuss the flexibility of the exchange rates in India, the value of the rupee and what they have done, and invite you to contrast what the U.S. diplomacy has been there with regard to India and compare it with that of China. And see if you can help us understand what the magic formula was that's been successful in India.
PAULSON: Well, let me say this is about India, not about China. I'll talk about China later.
But I would say we have -- we have, in India, a -- we've seen real exchange-rate flexibility. And you know, when an exchange rate is in a competitive marketplace, it makes the difference. And India has a system that allows for that and, you know, there's a fair mount of pushback and concern in India among some that are concerned with the policy there. But you do see that the rupee has -- based upon the underlying strength and underlying economic fundamentals, it's appreciated. That has not slowed India's growth. And we -- and inflation seems to be -- seems to be under control, and so that's a very good thing.
And now there's been some movement to say, "Well, we need to be concerned about capital flows and so on." And again, I'm a big believer in market-driven means.
Now, again, as I said, China is in a different stage of development and no one has argued -- I have not argued that China is ready to have a totally market-determined exchange right now. But they need to get the part -- point where they can have one, and -- because it's of a -- of -- as I said, an unnatural act to be as integrated as they are into the global economic system and to goods and services and not when you look at financial markets. So what we're encouraging them to do is to move more quickly to appreciate in the short term so that you can have a currency that's more reflective of the market and send the proper market signals through their economy and around the world, and then make the kinds of changes in their capital markets they're going to need to make to get to the point where they could have a market-determined currency.
But I tend to -- I think what's happened in India here has been -- it's been good news in terms of what they've done with the exchange rate, and I'll just be encouraging them to stay the course and not backslide.
Thank you.
Yes, we'll go -- I don't want you to think I'm only -- I am right-handed, but I'll -- but I will --
QUESTIONER: Thank you. Mr. Secretary. Paul Marino (ph), EIR News.
I wanted to ask you about M-LEC, Congress and protectionism. It seems in light of the discussion around the Master-Liquidity Enhancement Conduit that Congress is considering many bills which are of more of a protectionist nature, maybe to freeze the mortgage sector or reconstitute our chartered banks. So Mr. Secretary, wouldn't prudence demand that we further this dialogue and offer our policies to India of a more protectionist nature for industrial development?
PAULSON: Well, let me just say that we have protectionist sentiment everywhere in the world today, and it is -- I would say if you had to say what's sort of the number one issue that I deal with and I'm concerned about in this country and in virtually every other part in the world, it is that the lessons for the last 30 years have been those countries that have liberalized, gone to market-based reforms, opened up investment and finance have benefited. Other have been left behind. But we -- there is great concern today in many places that somehow or other, in country after country, they can't compete or that foreign investment will be bad or harmful somehow or that the trade will be a negative. And of course, I believe we need to do absolutely the opposite.
And so it's just -- it's clear, and I think we need to do a better job. And I think policymakers need to do a better job explaining the benefits because the dislocations and the problems are very visible to everyone, and many of them have got nothing to do with trade. They have to do with automation and technology. And people are never saying, "Well, we think we should turn off the Internet or turn technology back." So a lot of it trade gets blamed and a lot of this is about skills and really getting, you know, the skills that people need to compete and do well in today's world. Yes?
QUESTIONER: Mr. Secretary -- I don't know if this is on -- my name is Clay Swisher. I'm a new term member. I'm with the Middle East Institute. Thanks for your remarks today. It helps put into perspective an article that was in "Foreign Affairs", this latest edition by Nick Burns over at State regarding I guess the warming of U.S.-India relations, and I'm wondering if you can explain given in India's neighborhood with Pakistan the internal crisis that's happening there as well as the unresolved issue of Kashmir, what's Pakistan going to have to say about all this? How are they going to interpret these moves?
PAULSON: Well, again, I think what I'm -- all I can say is, you know, there's been some positive developments in a number of areas and I tend to be a glass half full rather than half empty person and so I think the fact that India and Pakistan have a constructive dialogue and that they're working together and sharing information in the counterterrorism area -- that they're talking about difficult sensitive issues like Kashmir is all to the positive, and our only position on this is that it be resolved in a constructive way and taking into account the interests of the people in Kashmir. Okay, let me -- there.
QUESTIONER: Secretary -- (off mike) -- you mentioned that the -- India's growth rate for the foreseeable future was growing at about 8 percent annually -- (inaudible). What's the quid pro quo on this for the United States in terms of our growth rate here? Do you see something there you could translate -- (inaudible)?
PAULSON: To the -- I can't equate the -- their growth rate directly to ours but what I can say is something I see quite strongly, and I'm glad you asked the question because many people, you know, and it's part of the -- it's -- of a protectionist sentiment -- they're not understanding global economics and so there is a tendency for some people to think because India is doing well this will be bad for the U.S. and that somehow or other, you know, we're competing with them in a way in which the faster they grow the worse it will be for us, and it's exactly the opposite -- exactly the opposite.
Right now, one of the biggest things we've got going for us we have a very -- we have a healthy economy in the U.S. but we have exceptionally strong growth outside of the U.S. and a big part of that growth is in developing countries around the world. Developing countries are growing twice the fast -- twice as fast the major developing countries as to developed countries are and three times as fast as they did in the 1990s. And this is helping all of us and the thing that we should be -- if people want to be concerned about something it wouldn't be that India would continue to do well -- it would be if India wouldn't do as well or some of the other major developing countries didn't do as well that would not help us.
So again, this is a situation where for a number of years we were the engine of growth around the world. We are very important to global growth given the size and importance of our economy but it's nice right now. We're going through a period where our exports are growing much faster than our imports and growth we're seeing around the world is very much helping the U.S. economy today. Yes?
QUESTIONER: Mr. Secretary, my name is Sidney Weintraub. I'm with the Center for Strategic and International Studies.
You emphasize the importance of trade and the Doha Round. My understanding is that India together with Brazil recently has been reluctant to open its market, particularly to manufactured goods. How are you going to deal with that issue when you get there?
PAULSON: I tell you, this is an informed audience. I will say that, and you're asking the right questions and we -- obviously Sue Schwab, you know, our trade representative, is leading that effort. I talk with her regularly. I had an opportunity to talk with her again this morning about it. You are right that -- well, first of all let me say that Doha has never been more important given the protectionist sentiment around the world and given some of the issues that are going on in the capital markets, and Doha is still very much within reach. It's not easy but it is very much in reach, and the key to Doha is going to be market access in some of the major developing countries. You mentioned two of them -- Brazil and India -- some of the major developing countries that have been pushing the developed countries to further open their markets, which are already quite open, and have been resisting opening theirs.
And so we need real access and, you know, with India we're not -- there's all the conversation about agriculture and subsistence farmers and everybody understands that issue but it is -- we need more movement in the non-agriculture -- in the manufacturing tariffs and in services. And I think a very interesting lesson for India is in areas where they've either been liberalized or they never were very regulated to begin with India does great. Look at the whole IT software area. Look at airlines -- certain areas of the manufacturing.
So I think part of it is for them and it's -- we have these issues at every country for them to have the confidence that they will benefit and grow as they open up markets and as they liberalize. But you're right -- that is, seeing movement from India and Brazil and giving some market access and again, some of the countries that have had the most to gain from the global trading system and have benefited the most from it need now to be willing to buy into the system and be prepared to provide more access into their markets. Okay. Yes, in the front, and then I've got time after this for one more question so this'll be the last -- this one and then one more.
QUESTIONER: Jeff Pryce, Steptoe & Johnson. Thank you, Mr. Secretary.
I wonder if you could talk about the benefits that a bilateral investment agreement such as India has with other capital exporting countries would have for encouraging American investment in India and particularly addressing the regulatory environment issues that were mentioned and what the prospects are for negotiation of such an agreement.
PAULSON: Well, I think -- again, a very good question. It's one I've thought about a lot and I've had some preliminary conversations with the Indians on this and, again, to complete a deal and I think these deals have got great value because it provides -- it -- they provide protections and comfort for investors and normally countries -- but both sides have got to want to pursue an agreement like this, and normally our counterparties who are willing to sign these agreements usually do so because they either have a strong need to attract foreign investment or they are using them to help them bring about reforms -- one or the other.
And we have -- I think the Indian government and the finance minister and others when I've talked about it they're quite willing to talk about investment and the importance of investment. I think it is a tougher issue, some of the things that we normally ask for -- protections, intellectual property, other things that go along with these investments.
So the way I tend to think about investment is there's no country I go to -- well, maybe there's -- I can't think of any where we don't talk about investment and what we need to do. We're open for investment in the U.S., encouraging investment, talk about some of the issues and concerns some countries have around the CFIUS process or what have you and then we talk about -- I'm all the time talking about opening up for U.S. investment and for competition and investment because it's been a key to our development and to our growth, and it's one of the big keys to our success. And so we talk about it and we talk about it in tangible steps, but to conclude a formal bet is a major undertaking and many of our trading partners aren't ready to do such a thing. Okay. One more -- I'm going to go way to the back.
QUESTIONER: Secretary Paulson, Jim Moody, Merrill Lynch.
You talked about the Doha Round -- the importance of that and, of course, we all agree. One of the strong inhibitions to raising countries out of poverty people -- countries like India and Pakistan and those areas -- is American subsidies to our agriculture that makes their agriculture less competitive. I know that's not your direct portfolio -- agricultural subsidies -- but are you -- do you weighed (sic) or your people weighed in on those -- that topic? Europe, of course, is much worse than we but we have a major problem vis-a-vis countries that export agriculture.
PAULSON: Well, I would just simply say this. People point to that all the time because there are few other areas that -- in the U.S. that -- where they can point to issues like the subsidy, and what I say and I'm -- you know, I've learned a lot about that since coming to Washington and I deal with that very directly with my counterparts because I say the U.S. has moved in showing a willingness to move. We are quite comfortable negotiating with the tax, okay? If we don't complete an agreement this will not have to do with the U.S. and ag subsidies and supports. It will not.
It will be we -- we're negotiating with them to -- in the tax and we can do what we need to do. The key thing is going to be what I pointed to and this is not -- I'm not one for pointing fingers -- I'm never going to point a finger at one particular country but it really is -- we need to get some market access in areas where we're already open and market access in services and financial services and non-agriculture and which is where the biggest part of the global economy is. That's where the economic growth is going to come from and that's going to benefit the countries that provide that much more than it does all the rest of us because that will help them develop strong economies that are competitive, first-rate financial services, and so on. So anyway that's why it's not hard to get me going on that topic. (Laughter.) Thank you all.
ACKERMAN: Thank you, Secretary. (Applause.) Thanks so much. Good job.
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THIS IS A RUSH TRANSCRIPT.
A Conversation with Henry Paulson [Rush Transcript; Federal News Service]
Speaker: Henry M. Paulson, U.S. Secretary of The Treasury
Presider: Peter Ackerman, Managing Director, Rockport Capital, Inc.
October 24, 2007
Council on Foreign Relations
Council on Foreign Relations
Washington, DC
Audio
Oct 2007, Henry M. Paulson, U.S. Secretary of The Treasury
"...we need to get some market access in areas where we're already open and market access in services and financial services and non-agriculture and which is where the biggest part of the global economy is. "
"...head of investment banking in 1990.." at Goldman Sachs
"...Both India and the United States recognize that an integrated world economy requires protecting the global financial network against those who want to harm our people and our free economic systems by financing terrorism, weapons proliferation or other dangerous illicit activity. "
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PETER ACKERMAN: Good afternoon. My name is Peter Ackerman. I'm a member of the Council's board, and I want to welcome you today to this meeting, which I think is going to be quite exciting to participate in.
Please turn off all your electronic equipment that can go beep. And I'd like to remind everyone here that -- (laughs) -- I'd like to remind everybody here that this meeting will be on the record.
I'm going to introduce the secretary. And then, because his time is a little constrained, I'm going to forgo my rights as presider and he's going to actually select people for Q&A from the group.
Henry M. Paulson Jr., on June 19th, 2006 was nominated by President Bush to be the 74th secretary of the Treasury. A mere nine days later, he was unanimously ratified by the Senate and then sworn into office on July 10th, 2006 by Supreme Court Chief Justice John Roberts.
As Treasury secretary, as you know, Secretary Paulson is the president's leading policy advisor on a broad range of domestic and international economic issues. Secretary Paulson also had an extraordinary career at Goldman Sachs, which he joined in 1974 and became a partner in 1982, then head of investment banking in 1990, then president and chief operating officer four years after that. And then when the public offering occurred, he became the chairman and CEO.
He also had a stint in government, so prior to Goldman Sachs he was on the White House domestic staff serving as the staff assistant to the president from 1972 to '73, and just before that as a staff assistant to the assistant secretary of Defense from 1970 to '72.
The secretary is a graduate from Dartmouth and Harvard Business School. And what impresses me the most, besides being a Phi Beta Kappa, he was all-East, honorable mention all-American football player.
So with no more introduction, I'd like to welcome the secretary. (Applause.)
SECRETARY HENRY PAULSON: Thank you very much, Peter. And it's very good to be with the Council here in Washington today. I appreciate the opportunity to talk with you about the economic power and the promise of India.
Earlier this year, Prime Minister Singh referred to India's history as an open house -- an open society, open to the free flow of ideas and scholarship. I will travel to India next week. I look forward to being a guest in India's house.
My objective is to pay tribute to the strong, growing partnership between India and the United States. I hope to help the Indian government advance their economic reform agenda, which will benefit India's citizens and the world.
India is a vibrant nation whose strength lies in its commitment to equal rights and to speech, religious and economic freedoms that enrich the lives of all citizens. India is not only the world's largest democracy; it is also a secular, pluralistic society committed to inclusive growth.
Through President Bush and Prime Minister Singh's leadership, political, economic and cultural ties between the United States and India have never been stronger. These ties enjoy bipartisan support in both countries. In the last few years we have launched major initiatives in areas including counterterrorism cooperation, space research, clean energy, agriculture, education and economic development.
The historic agreement on civilian nuclear cooperation is an important part of the U.S.-India relationship, and it is beneficial to both countries. India is one of the world's largest and most peaceful states with advanced nuclear technologies and has been isolated from the rest of the world on nuclear issues.
This agreement will bring India into the nuclear nonproliferation mainstream, providing access to the technology which can help it reach its economic and environmental objectives. The United States remains committed to this agreement.
The ties of our governments are, in some sense, catching up to the long history of personal and professional friendship among Indians and Americans. For decades, Indians have immigrated to the United States, joined our communities, and raised their families while maintaining their cultural heritage.
Indian-Americans are physicians, engineers, CEOs, professors, teachers, entrepreneurs. They are a vital part of the United States' economic and social fabric. Because of this long history, the bonds among our people and our cultures will remain strong.
Prime Minister Singh is to be commended for beginning the process of transforming India into a global economic power by initiating economic liberalization in the early 1990s. These economic reforms have continued at varying speed through the past 15 years, regardless of the party in power.
Observers do not question whether India's reforms will continue. They ask only about the pace. The great Indian poet, Tagore, wrote that he had become his own version of an optimist. He said, "If I can't make it through one door, I'll go through another door or I'll make a door." The revolution in Indian economic thinking is making doors and invigorating the Indian economy.
India is a young country with a young population that will be looking for stable, well-paying jobs to support their families. These reforms will help provide the jobs they will need.
Through dramatic increases in mutual trade and foreign direct investment, the United States has been a partner in India's economic emergence. In the last few years, Indian exports to the United States have more than doubled to $21 billion, while the U.S. exports to India have doubled to $10 billion.
Similarly, investment flows have increased dramatically. Last year Indian firms invested $2 billion in the United States and U.S. companies invested about $2 billion in India.
As the Indian government has embraced greater economic openness, the creativity and expertise of the Indian workforce has been unleashed onto the world economic stage. We share Indian policymakers' belief that market-based policies and programs will spread opportunities to all levels of society, reaching ahm adni (ph) -- the common man.
The success of India's software industry is often told, and the story bears repeating here. Through the combination of expertise aimed at the Indian -- excuse me -- gained at the Indian Institute of Technology and through innovative thinking, Indian industry has demonstrated that it can, as the CEO of an Indian software company recently said, take the work from any part of the world and do it in any part of the world.
India's GDP grew nearly 10 percent in 2006 compared to the world average of five and a half percent. India's economic reforms have taken root. And by accelerating them, the government can help ensure that India's growth rate will be, as projected, at least 8 percent for the foreseeable future. I am optimistic about India's economic prospects.
In pursuing economic growth, India and the United States share similar values and similar challenges. We understand that the global economy is here to stay. To keep growing and leading the world in innovation and opportunity, the United States and India must trade freely, openly, and according to the principles of the global marketplace.
Trade also brings a wider variety of lower-priced goods, and this especially benefits lower-income citizens. I look forward to talking with the Indian government about making progress in the Doha Development Round.
Working together to successfully conclude the Doha agreement will be the single most effective thing we can do to help raise living standards in India and around the world. A Doha agreement is within reach, and the potential is so great that we must not let it slip through our grasp.
We also understand how rapidly changing economies can lead to uncertainty, causing many to doubt that trade brings greater benefits than costs. Together, India and the United States must resist this protectionist sentiment.
I'm committed to working to maintain an open trade and investment climate in the United States. Both India and the United States recognize that an integrated world economy requires protecting the global financial network against those who want to harm our people and our free economic systems by financing terrorism, weapons proliferation or other dangerous illicit activity. We will continue implementing financial systems safeguards to help ensure our countries and our citizen's security.
The U.S. and India also share the challenge of ensuring secure and clean energy supplies. We understand that economic growth and environmental responsibility are necessary, compatible goals. Moving forward with the civilian nuclear agreement is one part of that solution. Working together in a post-2012 framework, the U.N. climate change process is another.
It is in the best interests of India, the United States and the world for India to continue and even accelerate the pace of economic reform and openness. As with any democratic transformative effort, India faces political challenges -- something the United States also knows well. The government is to be applauded for what it has already accomplished, and encouraged to move forward. We stand with them as a partner as they do so. Other countries are also developing financial sophistication and global integration. If India slows its pace now, it risks losing the ground it's already worked so hard to gain.
Now, let me talk about two areas where the United States, and particularly the Department of Treasury, want to be partners with India in advancing reform and inclusive economic growth. First, by assisting the government's plan to finance physical infrastructure improvements, which will benefit Indian families' daily lives and fuel the economy. Second, by supporting steps to strengthen and expand India's financial system by building an international financial center -- a so-called IFC in Mumbai. Achieving these two goals will require a firm commitment to adopt international standards and to move forward aggressively with reforms, despite political risks.
The Indian government estimates that to further transform its economy it needs to spend close to $500 billion over the next five years to build physical infrastructure that will deliver power to cities and villages and transport people and goods to market. Given India's fiscal constraints, it is looking to the private sector to fund up to one-third of this needed investment. The United States wants to support this effort to attract private financing. During my trip, I will participate in the India Infrastructure Financial Conference in Mumbai. At that conference and afterwards, we will highlight the opportunity of India's infrastructure initiatives to U.S. businesses.
This infrastructure investment is important to helping India achieve its second green revolution, which is what Prime Minister Singh has called for. Our private sectors must take an active role in developing sophisticated agricultural markets in India where farmers can tap modern supply chains and processing technologies to improve their productivity and to improve the lives of their families. The government can do more to encourage this private investment by establishing more hospital investment, regulatory and financial regimes. Capital limitations, combined with ongoing uncertainty about contract enforcement and regulatory consistency will make infrastructure investment more difficult to obtain.
Let me now turn to the expansion of India's financial sector, especially establishing a financial center in Mumbai. In 2006, Prime Minister Singh said that it is possible for Mumbai to emerge as a new financial capital of Asia and be the bridge between Asia and the West in the world of finance. Properly regulated, a well-functioning financial markets are critical for a balanced development and strong, inclusive growth. This is an area of enormous opportunity for India. Officiate markets link capital with ideas and ambition. They are the economic lifeblood through which people find the means to rise out of poverty. This is true in India, in the United States and around the world.
Today Indian firms in Bangalore play a key role in the back office operations of multinational firms. In this, India has revolutionized forever the way the world does business. The next step is for India to develop front offices in Mumbai and provide financial services to companies and investors in and across the region. By establishing an IFC in Mumbai, India will build a financial system that will help large and small businesses. Shopkeepers, farmers and craftsmen need access to credit, financial and insurance products, as much as the large industrial manufacturers need this access. The Indian government has recognized this need and commissioned a report from a high-powered expert committee. The committee's report outlined a requirement and a timetable for developing an IFC in Mumbai. The report is bold, thorough and ambitious. I believe it is the right path.
A financial footprint in Mumbai makes a door through which the world can invest in India and India can invest in the world. Equally importantly, it gives India an important stake in the rapidly growing global financial services industry. The report identifies the needed changes to fiscal and monetary policy and to financial regulation. It also outlines that Mumbai's own urban infrastructure must be improved. This demonstrates the wisdom of the Indian government's emphasis on physical and financial infrastructure improvements. Both goals must be met in order to achieve the transition that will provide inclusive growth.
India has already made significant accomplishments in developing its financial sector and the economy has responded positively. India's stock and commodities exchanges are thriving. Since deregulation, the asset management industry has grown and now manages over $100 billion in assets. By reducing constraints on financial firms, India's government can foster a more efficient allocation of financial resources. This will help free capital to finance infrastructure investment, develop new innovations in other industries and extend financial services to a larger portion of the population. India's large and growing middle class stands to benefit from new financial products that will help them to achieve home ownership and to invest in the best possible education for their children.
Many of the world's leading financial firms have already opened offices in Mumbai. They're eager to do their part in building an international financial center. I urge my Indian colleagues to move forward quickly on the recommendations of their expert committee report. The United States will continue as a partner with India in its economic transformation.
Treasury and the Finance Ministry have led an ongoing dialogue for several years among U.S. and Indian regulators to share experiences and best practices. We will kick off another session to help advance the Indian government's economic reform agenda. When I am in New Delhi next week, Mumbai's development into an IFC is an important element of that agenda. U.S. experience can help the Indian government and industry as they work to develop an IFC in Mumbai. And the private sector stands ready to share their experiences in dealing with the development of domestic bond markets and other elements that create the backbone of a financial center.
We understand that the Indian officials are concerned that the greater capital flows associated with a financial center can add to inflationary pressures, destabilize the domestic financial sector or add to exchange rate volatility. For the most part, India's on the right path to reduce these risks. India has allowed greater flexibility in the exchange rate in recent months and the appreciation of the rupee has helped to reduce inflationary pressures. India has also taken administrative steps to adjust the pace of capital outflows and inflows.
As recent experience in the region has shown, administrative restrictions of capital flows are blunt instruments and can have unintended consequences. They tend to inhibit efficiency and lose their effectiveness over time. I encourage India to continue liberalizing such restrictions. Steps abroad to deepen the domestic financial sector will also help to mitigate the risk posed by greater capital flows.
India's development plans will require additional capital, innovative financial instruments, and a commitment to financial openness. Recent growth in India's savings base and in the number of global firms setting up shop in India suggest that all of this is possible, that India can be a significant exporter of financial flows and investment in the years ahead. The development of Mumbai as a financial center will take some years to come to fruition. Nonetheless, it is a path worth taking, a path that will yield benefits all along the way for India and for the global economy.
The remarkable growth brought about by India's economic reforms has proven the wisdom of those reforms and their promise for the future. As Prime Minister Singh said, "India is an open house. It can become more open, more integrated into the global economy." This will bring the inclusive growth, which is India's aim: an economy in which small -- the small farmer, the craftsman and the next Indian entrepreneur with a dream makes the door and fulfills that dream. India and the United States have made a very good start on delivering on our new partnership, and we can do more to reach our full strategic and economic potential. I look forward to learning from my Indian colleagues during my visit and to working with them on these and future initiatives.
Thank you, and I welcome your questions. Thanks. (Applause.)
ACKERMAN: Do you want to stay up there and answer from the podium, or --
PAULSON: Yeah. Yeah, sounds good to me.
ACKERMAN: Okay.
PAULSON: So you'll pick --
ACKERMAN: Okay, we'll take time, so -- yes.
QUESTIONER: Mr. Secretary, I'm Teresita Schaffer. I'm retired Foreign Service India and I now run the South Asia Program at CSIS.
I was very interested in -- (off mike) -- you said that you wanted to concentrate on. And I wonder if you could say a bit more about what you see as the vehicle for infrastructure improvements. I know there's been some sense that there was a need to find ways of insulating those who would invest in infrastructure from the vagaries of politics and -- (off mike). Have you found -- (off mike) -- our Indian friends found ways of doing this?
PAULSON: Okay. Well, let me say you obviously know your topic well, and the -- I think the biggest concern on the part of foreign investors are sanctity of contracts, the way the regulatory system works, and so on. I think this government is doing a good job of working through a number of the outstanding commercial disputes and issues out there, and we don't have -- I don't have anything that overnight will solve this problem. But what we're going to be doing -- and this trip is built around a very big conference on infrastructure finance where you're going to -- it's going to be heavily attended by the private sector and by the government.
And given the size of India's needs and how key this infrastructure development is for the kind of inclusive economic growth this country is going to need, I look at it -- I think -- and a fund that has been -- I think there's been some good work that's already been done. And one of the things that I've -- you know, that I've been a small part of in attending the meetings has been this CEO forum with the CEOs of both countries. And I think it's pretty unique the way this works because you get -- you know, you get the key government leaders in there also and, again, working on tangible steps -- sometimes very small steps. And so we've have a number of banks come together with an infrastructure fund, again focusing on taking small and important steps.
So I think what we -- what you're going to see is you're going to see some positives come out of this and you'll see more private-sector investment, and we just have to keep building on success. But ultimately, the question you've raised is the big question hanging over the capital markets and the investment there.
Okay, let me -- we've got plenty of time. Let me go right to the woman right in front of me and then we'll go to this side and --
QUESTIONER: Thank you very much. I'm Paula Stern, former chairwoman of U.S. International Trade Commission.
And I would like to ask you to go back and discuss the flexibility of the exchange rates in India, the value of the rupee and what they have done, and invite you to contrast what the U.S. diplomacy has been there with regard to India and compare it with that of China. And see if you can help us understand what the magic formula was that's been successful in India.
PAULSON: Well, let me say this is about India, not about China. I'll talk about China later.
But I would say we have -- we have, in India, a -- we've seen real exchange-rate flexibility. And you know, when an exchange rate is in a competitive marketplace, it makes the difference. And India has a system that allows for that and, you know, there's a fair mount of pushback and concern in India among some that are concerned with the policy there. But you do see that the rupee has -- based upon the underlying strength and underlying economic fundamentals, it's appreciated. That has not slowed India's growth. And we -- and inflation seems to be -- seems to be under control, and so that's a very good thing.
And now there's been some movement to say, "Well, we need to be concerned about capital flows and so on." And again, I'm a big believer in market-driven means.
Now, again, as I said, China is in a different stage of development and no one has argued -- I have not argued that China is ready to have a totally market-determined exchange right now. But they need to get the part -- point where they can have one, and -- because it's of a -- of -- as I said, an unnatural act to be as integrated as they are into the global economic system and to goods and services and not when you look at financial markets. So what we're encouraging them to do is to move more quickly to appreciate in the short term so that you can have a currency that's more reflective of the market and send the proper market signals through their economy and around the world, and then make the kinds of changes in their capital markets they're going to need to make to get to the point where they could have a market-determined currency.
But I tend to -- I think what's happened in India here has been -- it's been good news in terms of what they've done with the exchange rate, and I'll just be encouraging them to stay the course and not backslide.
Thank you.
Yes, we'll go -- I don't want you to think I'm only -- I am right-handed, but I'll -- but I will --
QUESTIONER: Thank you. Mr. Secretary. Paul Marino (ph), EIR News.
I wanted to ask you about M-LEC, Congress and protectionism. It seems in light of the discussion around the Master-Liquidity Enhancement Conduit that Congress is considering many bills which are of more of a protectionist nature, maybe to freeze the mortgage sector or reconstitute our chartered banks. So Mr. Secretary, wouldn't prudence demand that we further this dialogue and offer our policies to India of a more protectionist nature for industrial development?
PAULSON: Well, let me just say that we have protectionist sentiment everywhere in the world today, and it is -- I would say if you had to say what's sort of the number one issue that I deal with and I'm concerned about in this country and in virtually every other part in the world, it is that the lessons for the last 30 years have been those countries that have liberalized, gone to market-based reforms, opened up investment and finance have benefited. Other have been left behind. But we -- there is great concern today in many places that somehow or other, in country after country, they can't compete or that foreign investment will be bad or harmful somehow or that the trade will be a negative. And of course, I believe we need to do absolutely the opposite.
And so it's just -- it's clear, and I think we need to do a better job. And I think policymakers need to do a better job explaining the benefits because the dislocations and the problems are very visible to everyone, and many of them have got nothing to do with trade. They have to do with automation and technology. And people are never saying, "Well, we think we should turn off the Internet or turn technology back." So a lot of it trade gets blamed and a lot of this is about skills and really getting, you know, the skills that people need to compete and do well in today's world. Yes?
QUESTIONER: Mr. Secretary -- I don't know if this is on -- my name is Clay Swisher. I'm a new term member. I'm with the Middle East Institute. Thanks for your remarks today. It helps put into perspective an article that was in "Foreign Affairs", this latest edition by Nick Burns over at State regarding I guess the warming of U.S.-India relations, and I'm wondering if you can explain given in India's neighborhood with Pakistan the internal crisis that's happening there as well as the unresolved issue of Kashmir, what's Pakistan going to have to say about all this? How are they going to interpret these moves?
PAULSON: Well, again, I think what I'm -- all I can say is, you know, there's been some positive developments in a number of areas and I tend to be a glass half full rather than half empty person and so I think the fact that India and Pakistan have a constructive dialogue and that they're working together and sharing information in the counterterrorism area -- that they're talking about difficult sensitive issues like Kashmir is all to the positive, and our only position on this is that it be resolved in a constructive way and taking into account the interests of the people in Kashmir. Okay, let me -- there.
QUESTIONER: Secretary -- (off mike) -- you mentioned that the -- India's growth rate for the foreseeable future was growing at about 8 percent annually -- (inaudible). What's the quid pro quo on this for the United States in terms of our growth rate here? Do you see something there you could translate -- (inaudible)?
PAULSON: To the -- I can't equate the -- their growth rate directly to ours but what I can say is something I see quite strongly, and I'm glad you asked the question because many people, you know, and it's part of the -- it's -- of a protectionist sentiment -- they're not understanding global economics and so there is a tendency for some people to think because India is doing well this will be bad for the U.S. and that somehow or other, you know, we're competing with them in a way in which the faster they grow the worse it will be for us, and it's exactly the opposite -- exactly the opposite.
Right now, one of the biggest things we've got going for us we have a very -- we have a healthy economy in the U.S. but we have exceptionally strong growth outside of the U.S. and a big part of that growth is in developing countries around the world. Developing countries are growing twice the fast -- twice as fast the major developing countries as to developed countries are and three times as fast as they did in the 1990s. And this is helping all of us and the thing that we should be -- if people want to be concerned about something it wouldn't be that India would continue to do well -- it would be if India wouldn't do as well or some of the other major developing countries didn't do as well that would not help us.
So again, this is a situation where for a number of years we were the engine of growth around the world. We are very important to global growth given the size and importance of our economy but it's nice right now. We're going through a period where our exports are growing much faster than our imports and growth we're seeing around the world is very much helping the U.S. economy today. Yes?
QUESTIONER: Mr. Secretary, my name is Sidney Weintraub. I'm with the Center for Strategic and International Studies.
You emphasize the importance of trade and the Doha Round. My understanding is that India together with Brazil recently has been reluctant to open its market, particularly to manufactured goods. How are you going to deal with that issue when you get there?
PAULSON: I tell you, this is an informed audience. I will say that, and you're asking the right questions and we -- obviously Sue Schwab, you know, our trade representative, is leading that effort. I talk with her regularly. I had an opportunity to talk with her again this morning about it. You are right that -- well, first of all let me say that Doha has never been more important given the protectionist sentiment around the world and given some of the issues that are going on in the capital markets, and Doha is still very much within reach. It's not easy but it is very much in reach, and the key to Doha is going to be market access in some of the major developing countries. You mentioned two of them -- Brazil and India -- some of the major developing countries that have been pushing the developed countries to further open their markets, which are already quite open, and have been resisting opening theirs.
And so we need real access and, you know, with India we're not -- there's all the conversation about agriculture and subsistence farmers and everybody understands that issue but it is -- we need more movement in the non-agriculture -- in the manufacturing tariffs and in services. And I think a very interesting lesson for India is in areas where they've either been liberalized or they never were very regulated to begin with India does great. Look at the whole IT software area. Look at airlines -- certain areas of the manufacturing.
So I think part of it is for them and it's -- we have these issues at every country for them to have the confidence that they will benefit and grow as they open up markets and as they liberalize. But you're right -- that is, seeing movement from India and Brazil and giving some market access and again, some of the countries that have had the most to gain from the global trading system and have benefited the most from it need now to be willing to buy into the system and be prepared to provide more access into their markets. Okay. Yes, in the front, and then I've got time after this for one more question so this'll be the last -- this one and then one more.
QUESTIONER: Jeff Pryce, Steptoe & Johnson. Thank you, Mr. Secretary.
I wonder if you could talk about the benefits that a bilateral investment agreement such as India has with other capital exporting countries would have for encouraging American investment in India and particularly addressing the regulatory environment issues that were mentioned and what the prospects are for negotiation of such an agreement.
PAULSON: Well, I think -- again, a very good question. It's one I've thought about a lot and I've had some preliminary conversations with the Indians on this and, again, to complete a deal and I think these deals have got great value because it provides -- it -- they provide protections and comfort for investors and normally countries -- but both sides have got to want to pursue an agreement like this, and normally our counterparties who are willing to sign these agreements usually do so because they either have a strong need to attract foreign investment or they are using them to help them bring about reforms -- one or the other.
And we have -- I think the Indian government and the finance minister and others when I've talked about it they're quite willing to talk about investment and the importance of investment. I think it is a tougher issue, some of the things that we normally ask for -- protections, intellectual property, other things that go along with these investments.
So the way I tend to think about investment is there's no country I go to -- well, maybe there's -- I can't think of any where we don't talk about investment and what we need to do. We're open for investment in the U.S., encouraging investment, talk about some of the issues and concerns some countries have around the CFIUS process or what have you and then we talk about -- I'm all the time talking about opening up for U.S. investment and for competition and investment because it's been a key to our development and to our growth, and it's one of the big keys to our success. And so we talk about it and we talk about it in tangible steps, but to conclude a formal bet is a major undertaking and many of our trading partners aren't ready to do such a thing. Okay. One more -- I'm going to go way to the back.
QUESTIONER: Secretary Paulson, Jim Moody, Merrill Lynch.
You talked about the Doha Round -- the importance of that and, of course, we all agree. One of the strong inhibitions to raising countries out of poverty people -- countries like India and Pakistan and those areas -- is American subsidies to our agriculture that makes their agriculture less competitive. I know that's not your direct portfolio -- agricultural subsidies -- but are you -- do you weighed (sic) or your people weighed in on those -- that topic? Europe, of course, is much worse than we but we have a major problem vis-a-vis countries that export agriculture.
PAULSON: Well, I would just simply say this. People point to that all the time because there are few other areas that -- in the U.S. that -- where they can point to issues like the subsidy, and what I say and I'm -- you know, I've learned a lot about that since coming to Washington and I deal with that very directly with my counterparts because I say the U.S. has moved in showing a willingness to move. We are quite comfortable negotiating with the tax, okay? If we don't complete an agreement this will not have to do with the U.S. and ag subsidies and supports. It will not.
It will be we -- we're negotiating with them to -- in the tax and we can do what we need to do. The key thing is going to be what I pointed to and this is not -- I'm not one for pointing fingers -- I'm never going to point a finger at one particular country but it really is -- we need to get some market access in areas where we're already open and market access in services and financial services and non-agriculture and which is where the biggest part of the global economy is. That's where the economic growth is going to come from and that's going to benefit the countries that provide that much more than it does all the rest of us because that will help them develop strong economies that are competitive, first-rate financial services, and so on. So anyway that's why it's not hard to get me going on that topic. (Laughter.) Thank you all.
ACKERMAN: Thank you, Secretary. (Applause.) Thanks so much. Good job.
####
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THIS IS A RUSH TRANSCRIPT.
‘The Rise and Fall of America" JPMorgan Chase CEO and chair James Dimon
Economic Panel: Greenspan, Buffett, Paulson, Rubin, Volker, Levitt, Bloomberg
April 19, 2007
Christopher Bjorke, AFP
April 19,2007
"...addressing the health of U.S. capital markets.."
“If they write a book called, ‘The Rise and Fall of America,’ the fall would be from the legal system,” said JPMorgan Chase CEO and chair James Dimon, who called class-action suits “one-sided crap shoots” that mostly benefit outside lawyers.
“Where is the balance between hobbling the U.S. economy in a more competitive global marketplace and protecting investors from another Enron?”
Immelt said. “But is it in the best interest of the investors?”
Buffett was talking about the intensity of focus investors and regulators should bring to their scrutiny of companies
“In my judgment, we must rise above a rules-based mindset that asks, ‘Is this legal?’ and adopt a more principles-based approach that asks, ‘Is this right?’ ” Paulson said, according to a transcript from Treasury.
Buffett, Greenspan and Paulson were just a few of the big names at a U.S. Treasury conference addressing the health of U.S. capital markets. With SOX, IFRS and lawsuits, they had plenty to talk about.
A gathering of economic and financial superstardom in Washington, D.C., in March revealed a number of opinions from notables past and present.
Former Treasury Secretary Robert Rubin thinks Sarbanes-Oxley places too much liability on CEOs.
New York Mayor Michael Bloomberg believes future competitiveness requires increased immigration and better schools.
Legendary investor Warren Buffett really likes reading financial statements.
“I have an enthusiasm for reading reports. It’s like a teenager reading Playboy,” Buffett said, drawing the biggest laugh of the federal Treasury’s Conference on U.S. Capital Markets Competitiveness. “At 76, you have to get excited about something.”
Buffett was talking about the intensity of focus investors and regulators should bring to their scrutiny of companies. He and his fellow panelists met to bring their collective wisdom and experience to the question of American competitiveness in capital markets.
Current Secretary of Treasury Henry Paulson, recently returned from the latest travels in his campaign to influence Chinese economic policies, hosted the public panel discussions by the most famous and influential players in economics. Other names worthy of E.F. Hutton-type attentiveness were Alan Greenspan, Paul Volker, Arthur Levitt and Jeffrey Immelt, to name only a few.
And the question their discussions frequently came down to was, “Where is the balance between hobbling the U.S. economy in a more competitive global marketplace and protecting investors from another Enron?”
SOX and suits
U.S. companies are “digesting” regulations like Sarbanes-Oxley, Buffett said, though they have “no choice but to digest what’s being served up. ... Most of my friends are not pleased, but they, in a way, brought it on themselves.”
Since “Enron” became a byword for corporate chicanery rather than an energy company, executives in public companies have paid for the misdeeds of others, and questioned the burden of regulations like Sarbanes-Oxley and their effects on the strength of U.S. companies internationally.
“Having high standards is not a bad thing for business,” said Immelt, General Electric’s chief executive and board chair. Like other panelists, he showed an unwillingness to discount the ability of American business to adapt to a changing environment.
“Whatever the regulation is today, I can win. I can win in China, I can win in India,” Immelt said. “But is it in the best interest of the investors?”
The panelists, however, did not hesitate to discuss their frustration with audit committees, SOX 404 requirements and the threat of litigation.
“I think I’d be scared to death to sign one of these things now,” in light of the lawsuits an incorrect SOX 404 statement could bring, said former Treasury Secretary Robert Rubin.
Lawsuits and the jackpot mentality behind some litigation came in for a good share of the panelists’ ire, perhaps more so than the more politically sensitive Sarbanes-Oxley.
“If they write a book called, ‘The Rise and Fall of America,’ the fall would be from the legal system,” said JPMorgan Chase CEO and chair James Dimon, who called class-action suits “one-sided crap shoots” that mostly benefit outside lawyers.
International rules, competition
Beyond the internal regulations and legal system of the United States is the fact that it is not alone in the world as much as it was in the past. Other countries’ economies have grown up and so have international capital markets and the day when all international companies had to play by American rules—and Generally Accepted Accounting Principles—has passed.
Paulson in his opening statement broached the differences between the rules-based U.S. standards and the principles-based international standards.
“In my judgment, we must rise above a rules-based mindset that asks, ‘Is this legal?’ and adopt a more principles-based approach that asks, ‘Is this right?’ ” Paulson said, according to a transcript from Treasury.
Securities and Exchange Commission Chairman Christopher Cox, Paulson’s co-chair on the conference’s panels, put the rules/principles dichotomy another way.
“It’s ‘like tastes great, less filling.’ Everybody wants both,” Cox said. “Enron taught us that following rules punctiliously is not necessarily the way to truth.”
Former Federal Reserve Chairman Paul Volker said American adherence to its standards was out of step with companies.
“An overwhelming number of companies big and small are adopting IFRS,” he said. “The U.S. is going to be left behind.”
A frequent statistic meant to instill in business people and policy-makers a healthy fear of over-regulation is the issue of companies choosing to list on overseas equity markets and the shift of public companies to private ownership. Not all the panelists were convinced that complex U.S. rules were driving a trend.
According to former SEC chair Arthur Levitt, now an advisor to the Carlyle Group, companies listing overseas were merely a result of other countries mimicking American financial services, “the greatest export the U.S. has had.”
“It doesn’t make any difference in terms of jobs and basic business,” Levitt said.
Immelt and others said companies going private may be just a passing fad.
“We’re at a moment in time where that’s being played up as the nirvana of business.”
Bloomberg and Greenspan both took a long view on the economy, citing big-picture concerns such as immigration restrictions, poor education and wide income disparity as threats to the economy.
As for the more immediate regulatory concerns of the panel, opinions stayed on a theme: Laws are fine as long there is balance and clarity.
As Bloomberg expressed it, “Just tell us what the law is and we can compete.”
Copyright © 2007 Association for Financial Professionals. All Rights Reserved.
April 19, 2007
Christopher Bjorke, AFP
April 19,2007
"...addressing the health of U.S. capital markets.."
“If they write a book called, ‘The Rise and Fall of America,’ the fall would be from the legal system,” said JPMorgan Chase CEO and chair James Dimon, who called class-action suits “one-sided crap shoots” that mostly benefit outside lawyers.
“Where is the balance between hobbling the U.S. economy in a more competitive global marketplace and protecting investors from another Enron?”
Immelt said. “But is it in the best interest of the investors?”
Buffett was talking about the intensity of focus investors and regulators should bring to their scrutiny of companies
“In my judgment, we must rise above a rules-based mindset that asks, ‘Is this legal?’ and adopt a more principles-based approach that asks, ‘Is this right?’ ” Paulson said, according to a transcript from Treasury.
Buffett, Greenspan and Paulson were just a few of the big names at a U.S. Treasury conference addressing the health of U.S. capital markets. With SOX, IFRS and lawsuits, they had plenty to talk about.
A gathering of economic and financial superstardom in Washington, D.C., in March revealed a number of opinions from notables past and present.
Former Treasury Secretary Robert Rubin thinks Sarbanes-Oxley places too much liability on CEOs.
New York Mayor Michael Bloomberg believes future competitiveness requires increased immigration and better schools.
Legendary investor Warren Buffett really likes reading financial statements.
“I have an enthusiasm for reading reports. It’s like a teenager reading Playboy,” Buffett said, drawing the biggest laugh of the federal Treasury’s Conference on U.S. Capital Markets Competitiveness. “At 76, you have to get excited about something.”
Buffett was talking about the intensity of focus investors and regulators should bring to their scrutiny of companies. He and his fellow panelists met to bring their collective wisdom and experience to the question of American competitiveness in capital markets.
Current Secretary of Treasury Henry Paulson, recently returned from the latest travels in his campaign to influence Chinese economic policies, hosted the public panel discussions by the most famous and influential players in economics. Other names worthy of E.F. Hutton-type attentiveness were Alan Greenspan, Paul Volker, Arthur Levitt and Jeffrey Immelt, to name only a few.
And the question their discussions frequently came down to was, “Where is the balance between hobbling the U.S. economy in a more competitive global marketplace and protecting investors from another Enron?”
SOX and suits
U.S. companies are “digesting” regulations like Sarbanes-Oxley, Buffett said, though they have “no choice but to digest what’s being served up. ... Most of my friends are not pleased, but they, in a way, brought it on themselves.”
Since “Enron” became a byword for corporate chicanery rather than an energy company, executives in public companies have paid for the misdeeds of others, and questioned the burden of regulations like Sarbanes-Oxley and their effects on the strength of U.S. companies internationally.
“Having high standards is not a bad thing for business,” said Immelt, General Electric’s chief executive and board chair. Like other panelists, he showed an unwillingness to discount the ability of American business to adapt to a changing environment.
“Whatever the regulation is today, I can win. I can win in China, I can win in India,” Immelt said. “But is it in the best interest of the investors?”
The panelists, however, did not hesitate to discuss their frustration with audit committees, SOX 404 requirements and the threat of litigation.
“I think I’d be scared to death to sign one of these things now,” in light of the lawsuits an incorrect SOX 404 statement could bring, said former Treasury Secretary Robert Rubin.
Lawsuits and the jackpot mentality behind some litigation came in for a good share of the panelists’ ire, perhaps more so than the more politically sensitive Sarbanes-Oxley.
“If they write a book called, ‘The Rise and Fall of America,’ the fall would be from the legal system,” said JPMorgan Chase CEO and chair James Dimon, who called class-action suits “one-sided crap shoots” that mostly benefit outside lawyers.
International rules, competition
Beyond the internal regulations and legal system of the United States is the fact that it is not alone in the world as much as it was in the past. Other countries’ economies have grown up and so have international capital markets and the day when all international companies had to play by American rules—and Generally Accepted Accounting Principles—has passed.
Paulson in his opening statement broached the differences between the rules-based U.S. standards and the principles-based international standards.
“In my judgment, we must rise above a rules-based mindset that asks, ‘Is this legal?’ and adopt a more principles-based approach that asks, ‘Is this right?’ ” Paulson said, according to a transcript from Treasury.
Securities and Exchange Commission Chairman Christopher Cox, Paulson’s co-chair on the conference’s panels, put the rules/principles dichotomy another way.
“It’s ‘like tastes great, less filling.’ Everybody wants both,” Cox said. “Enron taught us that following rules punctiliously is not necessarily the way to truth.”
Former Federal Reserve Chairman Paul Volker said American adherence to its standards was out of step with companies.
“An overwhelming number of companies big and small are adopting IFRS,” he said. “The U.S. is going to be left behind.”
A frequent statistic meant to instill in business people and policy-makers a healthy fear of over-regulation is the issue of companies choosing to list on overseas equity markets and the shift of public companies to private ownership. Not all the panelists were convinced that complex U.S. rules were driving a trend.
According to former SEC chair Arthur Levitt, now an advisor to the Carlyle Group, companies listing overseas were merely a result of other countries mimicking American financial services, “the greatest export the U.S. has had.”
“It doesn’t make any difference in terms of jobs and basic business,” Levitt said.
Immelt and others said companies going private may be just a passing fad.
“We’re at a moment in time where that’s being played up as the nirvana of business.”
Bloomberg and Greenspan both took a long view on the economy, citing big-picture concerns such as immigration restrictions, poor education and wide income disparity as threats to the economy.
As for the more immediate regulatory concerns of the panel, opinions stayed on a theme: Laws are fine as long there is balance and clarity.
As Bloomberg expressed it, “Just tell us what the law is and we can compete.”
Copyright © 2007 Association for Financial Professionals. All Rights Reserved.
"...financial market liberalization ..."
"We are encouraging key reforms that will help China manage the blistering pace of its economic growth; these include financial market liberalization and a plan for rebalancing growth."
October 23, 2007
hp-633
Remarks by Secretary Paulson on Managing Complexity and
Establishing New Habits of Cooperation in U.S.-China Economic Relations
at the 2007 George Bush China-U.S. Relations Conference
Washington, DC--Good morning, General Scowcroft, Vice President Li, President Davis and Ambassador Popadiuk. I appreciate the opportunity to be here at the Third George Bush China-U.S. Relations Conference.
This room is filled with the very best of China expertise and experience from both sides of the Pacific. I applaud your commitment to this bilateral relationship. And of course, there is no better example of this than former President Bush – who has long been a stalwart advocate of advancing U.S.-China ties.
I have devoted much of my professional life – and far too many hours on planes – to learning about and increasing U.S. commercial ties with the People's Republic of China. Now, as Treasury Secretary, I would like to share my thoughts with you on the future of the U.S.-China economic relationship.
New Global Realities and Emerging Bilateral Challenges
China's re-emergence on the global stage is one of the most consequential geopolitical events of recent times. China's global influence is expanding. A cooperative, constructive and candid U.S.-China relationship is central to understanding and responding to China's re-emergence, in all its possible manifestations. The United States must manage our disagreements with China, foster greater bilateral cooperation and improve our ability to work constructively with China across all dimensions of national power.
There is hardly an issue – from trade, to national security, to climate change – or a place – from North Korea to Iran to Sudan – where American and Chinese interests do not increasingly overlap. Because China is now integrated into the global economy, what happens in China's economy affects the entire international community. The U.S.-China relationship has become central not only to each nation's interests, but also to the maintenance of a stable, secure and prosperous global system – which benefits the world.
My focus at Treasury is on the U.S.-China economic relationship, which is a core element of our overall bilateral ties. Yet, the tectonic plates of the U.S.-China economic relationship are shifting. This demands new visions from our leaders and new mechanisms from our governments.
First, U.S.-China economic interdependence is deepening. We need each other more and on a broader number of economic and economically consequential issues. Over the past five years, U.S. exports to China have grown at five times the pace of U.S. exports to the rest of the world, and China has become our fourth largest export market.
Exports to China benefit American businesses by providing new market opportunities for American products and services. Imports from China continue to benefit the American economy and the American consumer by providing an increased diversity of products at lower prices. Imports from China also raise challenges, as I will discuss in a moment. Just as competition from trade with China pushes our industries to stay on the cutting edge, competition will also speed China's development as a more market-oriented and balanced economy.
Moreover, the United States and China are shaping, and being shaped by, global energy and environmental trends, which have strong economic consequences. Our countries are the world's largest energy consumers and the largest emitters of greenhouse gases. What happens with China's environment impacts all nations; air and water know no boundaries.
These trends create challenges that can not be resolved by the United States or China alone. They certainly can not be solved without China at the table.
Second, whereas trade and investment were once largely a source of stability in bilateral relations, they are now increasingly also a source of tension. Such tensions are straining our domestic consensus on the benefits of economic engagement.
America's large corporations – the longtime proponents of bilateral engagement – as well as America's smaller businesses – who are finding new markets in China – increasingly are concerned about the openness of China's economy, and Chinese counterfeiting of trademarks and pirating of intellectual property. Some American workers believe the field of competition is uneven and unfair. Also, American consumers have very real concerns about the safety of food and product imports from China.
These anxieties manifest themselves in several ways, which leads me to the third dynamic confronting us: the rise of economic nationalism and protectionism in both our nations. These sentiments may constrain leaders from adopting policies that are in the long-term interests of the citizens and economies of the United States and China. Such views also obscure each nation's ability to assess the others' long-term intentions.
In responding to globalization, policymakers in both countries must resist the impulse to discard the hard-fought and long-term gains of open economies by pursuing short-term and misguided policy responses. I am committed to working to maintain an open trade and investment climate in America and to working to open markets in China to greater competition from American goods and services.
These three emerging dynamics to our economic relationship – deepening interdependence, a strained policy consensus, and the rise of economic protectionism – are mutual and require cooperative solutions.
Managing Complexity and Establishing New Habits of Cooperation
These dynamics informed the creation of the Strategic Economic Dialogue (SED) by President Bush and President Hu Jintao in 2006. They envisioned a forum to allow both governments to communicate at the highest levels and with one voice on issues of long-term and strategic importance to ensure bilateral economic stability and prosperity.
By definition, this is a complex relationship and managing complexity is daunting. It begins with speaking to the right people – at the right time – on the right issues – and in the right way.
The Strategic Economic Dialogue – as a new and leading institution in U.S.-China relations – has created these useful channels among policymakers in Washington and Beijing. Through this framework we have advanced the U.S.-China economic relationship by establishing new habits of bilateral cooperation and re-setting the foundation for stable and prosperous economic interactions.
We have embraced a broad agenda that covers cross-cutting economic and economically consequential issues, including regulatory transparency, energy conservation, environmental protection, food and product safety, as well as the important economic issues of exchange rate policy, market access, financial sector liberalization, and macroeconomic policy.
Our approach engages multiple and diverse government officials in both countries to facilitate more inclusive interactions. It breaks down classic bureaucratic stove-pipes that hinder effective communication and impede results. At the same time, we have continual, high-level interactions to set priorities and ensure their full implementation. I talk regularly on the phone with my counterpart Vice Premier Wu Yi, and our staffs are in constant contact.
That said – process is not result.
Dialogue among senior Chinese and American officials, while useful, needs to be more than talking for the sake of talking and can not give leaders "a pass" on issues of disagreement. It is about setting priorities, specifying consequences and fashioning practical solutions.
And that's what direct engagement does: it keeps the relationship on an even keel by lessening miscommunication and dispelling misperceptions so common in the history of the U.S.-China relationship.
Moreover, solidifying these habits of cooperation is critical to sustaining America's broader China policy, both at home and abroad. It further signals to China that we welcome the rise of a confident, peaceful and prosperous China, while also helping America to hedge against an uncertain Chinese future. A weak and insecure China is not in America's economic or security interests.
In addition to establishing new ways of working together, it is vitally important that our policies accelerate and deepen China's ongoing economic transition.
We applaud China's efforts to transition to an economy that is more market-oriented, less reliant on low-cost manufacturing exports, one that depends more on the skills and resourcefulness of the Chinese people and less on material inputs and natural resource consumption.
The pace of China's growth has clearly been remarkable, but it carries both opportunity and risk.
I liken it to some of America's fastest growing entrepreneurial companies, who see sales rise exponentially in a short time and then must earnestly work to build the infrastructure to sustain those sales. This is the challenge that China's leaders now face – to make the jump in strategy and policy needed for an economy that is no longer in the first stages of growth.
A major risk China faces is that its government won't act quickly enough to take the policy steps necessary to deal with the economic and social imbalances created by its growth model. Without strong policy underpinnings and implementation, China's economic performance becomes unsustainable. We are encouraging key reforms that will help China manage the blistering pace of its economic growth; these include financial market liberalization and a plan for rebalancing growth. China has proven to the world that it can grow fast, but can it grow differently and, ultimately, grow smarter?
Bold structural policies are needed to shift China's growth away from heavy industry, high energy use, and dependence on exports – towards greater reliance on domestic demand, greater production of services, and greater provision of material well-being to China's population.
As I have said before, this will be much easier, and the prospects for achieving sustained, balanced growth in China and in the world economy much greater, if the Chinese increase the pace of RMB appreciation in the short term and implement a fully market-determined currency in the medium term. Currency appreciation to date has not slowed the Chinese economy.
Accelerating the rate of appreciation and introduction of flexibility will help China deal with the imbalances that have grown in the economy and make monetary policy much more effective in responding to inflation.
We must also recognize that currency is not the only driver of China's economic imbalances. Even more fundamental and important are internal structural issues, such as why Chinese households save so much and consume so little. Rebalancing China's growth is necessary for China to grow without generating large external imbalances.
A key to China's success here will be its willingness to accelerate the pace of its market-based economic reforms. Going beyond its WTO commitments, resisting protectionist sentiment, and opening up its economy to greater international competition for goods and services will help rebalance the Chinese economy and spread prosperity more broadly among the Chinese people.
These reforms are – and will continue to be – resisted by increasingly influential Chinese businesses. In my judgment, the greatest risk to China's long-term economic security is that protectionists prevail, and Chinese reforms proceed too slowly.
And finally, we are also encouraging China to act responsibly as a global economic power. China is influencing capital and resource markets all over the world; its economic influence is being felt from Chicago, to Sao Paolo, to Kinshasa.
We welcome China into key international financial institutions and are giving China a greater voice in them as well. Increased participation will allow China to advance its interests in those institutions, but it is also important that Beijing recognize the responsibilities of greater participation.
China has become a major source of foreign aid for many of the poorest countries. We look forward to working with China to assure that foreign aid and lending practices promote sustainable development.
This new era in U.S.-China economic relations requires new and dynamic ways of doing business. We are meeting these challenges through the creation of the political space and the institutional capacity for long-term stability in our bilateral economic relations.
Signposts and Benchmarks
While dialogue and negotiations are important, they are far from sufficient to ensure that we keep the bilateral relationship future-oriented and on an even keel. The SED is both long-term and strategic, but tangible progress in the form of sign posts and benchmarks is critically important to demonstrating that we are making progress in achieving our long term objectives.
I believe that we are making progress and we are able to point to steps that are enhancing and transforming our economic relationship in mutually beneficial ways. Three brief examples illustrate my point: civil aviation, energy and the environment, and financial services.
In May, we announced a new air services agreement that will make it easier, cheaper, and more convenient to fly people and to ship goods across the Pacific. Not only will this agreement stimulate an estimated $5 billion in new business over the next several years, the new routes will double passenger traffic by 2012 and allow full air cargo services by 2011. Perhaps as early as April 2008, there will be the first non-stop flight between Atlanta and Shanghai, the first from America's southeast for a U.S. airline.
The benefits of the civil aviation accord are many, including more commerce, greater cultural exchanges, and enhanced understanding.
We have also collaborated with China on a series of policies to help promote energy conservation and environmental protection. Those specific agreements foster demand for the development and deployment of clean and efficient, next-generation energy technology. This, in turn, will create a future in which two of the largest economies in the world become examples of bilateral cooperation towards sustainable development.
The SED has made consistent strides to further develop China's capital markets. As a result of our deliberations, the New York Stock Exchange and NASDAQ will open offices in China. China has also removed a barrier to the entry of new foreign securities firms, and will expand the scope of business open to foreign-invested securities firms.
These actions do not only expand the opportunities for international financial services firms. By allowing greater financial flows, they will help China move more quickly to a fully market-determined exchange rate. Competitive and efficient capital markets are also key to balanced, sustainable and higher quality economic growth – a critical Chinese goal over the next two decades.
In addition to the areas of positive cooperation, our enhanced dialogue means we must confront problems frankly and honestly – and often rapidly. Recent and repeated reports of tainted food and product imports are causing fear and uncertainty in American consumers and harming the "Made in China" brand here in the United States.
The effectiveness with which China manages these safety issues will have long term implications for U.S.-China trade relations, the integration of China into the global trading system, and the sustainability of China's economic growth trajectory. We are actively working together to enhance the safety of products coming from China and to protect the American consumer. We also need to make sure that policymakers in both countries are focused on science-based safety decisions, not protectionism or retaliation.
Towards a New Future for Bilateral Economic Relations
President Bush and President Hu have set a positive agenda for strengthening our economic relationship. The SED is a core part of that agenda because it is long-term in its vision, comprehensive in its scope, and immediate in its ability to deal with the most sensitive bilateral economic tensions.
I congratulate the Chinese on the successful conclusion of their 17th Party Congress and related events. My colleagues and I look forward to developing constructive and productive relationships with the new members of Chinese leadership team. In his political report to the 17th Party Congress last week, President Hu emphasized the dual goals of continuing market reform and global integration, while simultaneously working to alleviate the negative domestic consequences of rapid economic growth.
Our next meeting of the SED in December will discuss a number of these objectives. Specifically, we will focus on the integrity of trade, balanced economic development, energy conservation, financial sector reform, environmental sustainability, and advancing bilateral investment.
The economic and geopolitical landscape of the 21st century will be greatly influenced by the way in which the United States and China work together. That emerging future requires a distinct vision and effective mechanisms to achieve it. The SED has allowed both the United States and China to begin to write the next chapter of our strategic economic relationship.
October 23, 2007
hp-633
Remarks by Secretary Paulson on Managing Complexity and
Establishing New Habits of Cooperation in U.S.-China Economic Relations
at the 2007 George Bush China-U.S. Relations Conference
Washington, DC--Good morning, General Scowcroft, Vice President Li, President Davis and Ambassador Popadiuk. I appreciate the opportunity to be here at the Third George Bush China-U.S. Relations Conference.
This room is filled with the very best of China expertise and experience from both sides of the Pacific. I applaud your commitment to this bilateral relationship. And of course, there is no better example of this than former President Bush – who has long been a stalwart advocate of advancing U.S.-China ties.
I have devoted much of my professional life – and far too many hours on planes – to learning about and increasing U.S. commercial ties with the People's Republic of China. Now, as Treasury Secretary, I would like to share my thoughts with you on the future of the U.S.-China economic relationship.
New Global Realities and Emerging Bilateral Challenges
China's re-emergence on the global stage is one of the most consequential geopolitical events of recent times. China's global influence is expanding. A cooperative, constructive and candid U.S.-China relationship is central to understanding and responding to China's re-emergence, in all its possible manifestations. The United States must manage our disagreements with China, foster greater bilateral cooperation and improve our ability to work constructively with China across all dimensions of national power.
There is hardly an issue – from trade, to national security, to climate change – or a place – from North Korea to Iran to Sudan – where American and Chinese interests do not increasingly overlap. Because China is now integrated into the global economy, what happens in China's economy affects the entire international community. The U.S.-China relationship has become central not only to each nation's interests, but also to the maintenance of a stable, secure and prosperous global system – which benefits the world.
My focus at Treasury is on the U.S.-China economic relationship, which is a core element of our overall bilateral ties. Yet, the tectonic plates of the U.S.-China economic relationship are shifting. This demands new visions from our leaders and new mechanisms from our governments.
First, U.S.-China economic interdependence is deepening. We need each other more and on a broader number of economic and economically consequential issues. Over the past five years, U.S. exports to China have grown at five times the pace of U.S. exports to the rest of the world, and China has become our fourth largest export market.
Exports to China benefit American businesses by providing new market opportunities for American products and services. Imports from China continue to benefit the American economy and the American consumer by providing an increased diversity of products at lower prices. Imports from China also raise challenges, as I will discuss in a moment. Just as competition from trade with China pushes our industries to stay on the cutting edge, competition will also speed China's development as a more market-oriented and balanced economy.
Moreover, the United States and China are shaping, and being shaped by, global energy and environmental trends, which have strong economic consequences. Our countries are the world's largest energy consumers and the largest emitters of greenhouse gases. What happens with China's environment impacts all nations; air and water know no boundaries.
These trends create challenges that can not be resolved by the United States or China alone. They certainly can not be solved without China at the table.
Second, whereas trade and investment were once largely a source of stability in bilateral relations, they are now increasingly also a source of tension. Such tensions are straining our domestic consensus on the benefits of economic engagement.
America's large corporations – the longtime proponents of bilateral engagement – as well as America's smaller businesses – who are finding new markets in China – increasingly are concerned about the openness of China's economy, and Chinese counterfeiting of trademarks and pirating of intellectual property. Some American workers believe the field of competition is uneven and unfair. Also, American consumers have very real concerns about the safety of food and product imports from China.
These anxieties manifest themselves in several ways, which leads me to the third dynamic confronting us: the rise of economic nationalism and protectionism in both our nations. These sentiments may constrain leaders from adopting policies that are in the long-term interests of the citizens and economies of the United States and China. Such views also obscure each nation's ability to assess the others' long-term intentions.
In responding to globalization, policymakers in both countries must resist the impulse to discard the hard-fought and long-term gains of open economies by pursuing short-term and misguided policy responses. I am committed to working to maintain an open trade and investment climate in America and to working to open markets in China to greater competition from American goods and services.
These three emerging dynamics to our economic relationship – deepening interdependence, a strained policy consensus, and the rise of economic protectionism – are mutual and require cooperative solutions.
Managing Complexity and Establishing New Habits of Cooperation
These dynamics informed the creation of the Strategic Economic Dialogue (SED) by President Bush and President Hu Jintao in 2006. They envisioned a forum to allow both governments to communicate at the highest levels and with one voice on issues of long-term and strategic importance to ensure bilateral economic stability and prosperity.
By definition, this is a complex relationship and managing complexity is daunting. It begins with speaking to the right people – at the right time – on the right issues – and in the right way.
The Strategic Economic Dialogue – as a new and leading institution in U.S.-China relations – has created these useful channels among policymakers in Washington and Beijing. Through this framework we have advanced the U.S.-China economic relationship by establishing new habits of bilateral cooperation and re-setting the foundation for stable and prosperous economic interactions.
We have embraced a broad agenda that covers cross-cutting economic and economically consequential issues, including regulatory transparency, energy conservation, environmental protection, food and product safety, as well as the important economic issues of exchange rate policy, market access, financial sector liberalization, and macroeconomic policy.
Our approach engages multiple and diverse government officials in both countries to facilitate more inclusive interactions. It breaks down classic bureaucratic stove-pipes that hinder effective communication and impede results. At the same time, we have continual, high-level interactions to set priorities and ensure their full implementation. I talk regularly on the phone with my counterpart Vice Premier Wu Yi, and our staffs are in constant contact.
That said – process is not result.
Dialogue among senior Chinese and American officials, while useful, needs to be more than talking for the sake of talking and can not give leaders "a pass" on issues of disagreement. It is about setting priorities, specifying consequences and fashioning practical solutions.
And that's what direct engagement does: it keeps the relationship on an even keel by lessening miscommunication and dispelling misperceptions so common in the history of the U.S.-China relationship.
Moreover, solidifying these habits of cooperation is critical to sustaining America's broader China policy, both at home and abroad. It further signals to China that we welcome the rise of a confident, peaceful and prosperous China, while also helping America to hedge against an uncertain Chinese future. A weak and insecure China is not in America's economic or security interests.
In addition to establishing new ways of working together, it is vitally important that our policies accelerate and deepen China's ongoing economic transition.
We applaud China's efforts to transition to an economy that is more market-oriented, less reliant on low-cost manufacturing exports, one that depends more on the skills and resourcefulness of the Chinese people and less on material inputs and natural resource consumption.
The pace of China's growth has clearly been remarkable, but it carries both opportunity and risk.
I liken it to some of America's fastest growing entrepreneurial companies, who see sales rise exponentially in a short time and then must earnestly work to build the infrastructure to sustain those sales. This is the challenge that China's leaders now face – to make the jump in strategy and policy needed for an economy that is no longer in the first stages of growth.
A major risk China faces is that its government won't act quickly enough to take the policy steps necessary to deal with the economic and social imbalances created by its growth model. Without strong policy underpinnings and implementation, China's economic performance becomes unsustainable. We are encouraging key reforms that will help China manage the blistering pace of its economic growth; these include financial market liberalization and a plan for rebalancing growth. China has proven to the world that it can grow fast, but can it grow differently and, ultimately, grow smarter?
Bold structural policies are needed to shift China's growth away from heavy industry, high energy use, and dependence on exports – towards greater reliance on domestic demand, greater production of services, and greater provision of material well-being to China's population.
As I have said before, this will be much easier, and the prospects for achieving sustained, balanced growth in China and in the world economy much greater, if the Chinese increase the pace of RMB appreciation in the short term and implement a fully market-determined currency in the medium term. Currency appreciation to date has not slowed the Chinese economy.
Accelerating the rate of appreciation and introduction of flexibility will help China deal with the imbalances that have grown in the economy and make monetary policy much more effective in responding to inflation.
We must also recognize that currency is not the only driver of China's economic imbalances. Even more fundamental and important are internal structural issues, such as why Chinese households save so much and consume so little. Rebalancing China's growth is necessary for China to grow without generating large external imbalances.
A key to China's success here will be its willingness to accelerate the pace of its market-based economic reforms. Going beyond its WTO commitments, resisting protectionist sentiment, and opening up its economy to greater international competition for goods and services will help rebalance the Chinese economy and spread prosperity more broadly among the Chinese people.
These reforms are – and will continue to be – resisted by increasingly influential Chinese businesses. In my judgment, the greatest risk to China's long-term economic security is that protectionists prevail, and Chinese reforms proceed too slowly.
And finally, we are also encouraging China to act responsibly as a global economic power. China is influencing capital and resource markets all over the world; its economic influence is being felt from Chicago, to Sao Paolo, to Kinshasa.
We welcome China into key international financial institutions and are giving China a greater voice in them as well. Increased participation will allow China to advance its interests in those institutions, but it is also important that Beijing recognize the responsibilities of greater participation.
China has become a major source of foreign aid for many of the poorest countries. We look forward to working with China to assure that foreign aid and lending practices promote sustainable development.
This new era in U.S.-China economic relations requires new and dynamic ways of doing business. We are meeting these challenges through the creation of the political space and the institutional capacity for long-term stability in our bilateral economic relations.
Signposts and Benchmarks
While dialogue and negotiations are important, they are far from sufficient to ensure that we keep the bilateral relationship future-oriented and on an even keel. The SED is both long-term and strategic, but tangible progress in the form of sign posts and benchmarks is critically important to demonstrating that we are making progress in achieving our long term objectives.
I believe that we are making progress and we are able to point to steps that are enhancing and transforming our economic relationship in mutually beneficial ways. Three brief examples illustrate my point: civil aviation, energy and the environment, and financial services.
In May, we announced a new air services agreement that will make it easier, cheaper, and more convenient to fly people and to ship goods across the Pacific. Not only will this agreement stimulate an estimated $5 billion in new business over the next several years, the new routes will double passenger traffic by 2012 and allow full air cargo services by 2011. Perhaps as early as April 2008, there will be the first non-stop flight between Atlanta and Shanghai, the first from America's southeast for a U.S. airline.
The benefits of the civil aviation accord are many, including more commerce, greater cultural exchanges, and enhanced understanding.
We have also collaborated with China on a series of policies to help promote energy conservation and environmental protection. Those specific agreements foster demand for the development and deployment of clean and efficient, next-generation energy technology. This, in turn, will create a future in which two of the largest economies in the world become examples of bilateral cooperation towards sustainable development.
The SED has made consistent strides to further develop China's capital markets. As a result of our deliberations, the New York Stock Exchange and NASDAQ will open offices in China. China has also removed a barrier to the entry of new foreign securities firms, and will expand the scope of business open to foreign-invested securities firms.
These actions do not only expand the opportunities for international financial services firms. By allowing greater financial flows, they will help China move more quickly to a fully market-determined exchange rate. Competitive and efficient capital markets are also key to balanced, sustainable and higher quality economic growth – a critical Chinese goal over the next two decades.
In addition to the areas of positive cooperation, our enhanced dialogue means we must confront problems frankly and honestly – and often rapidly. Recent and repeated reports of tainted food and product imports are causing fear and uncertainty in American consumers and harming the "Made in China" brand here in the United States.
The effectiveness with which China manages these safety issues will have long term implications for U.S.-China trade relations, the integration of China into the global trading system, and the sustainability of China's economic growth trajectory. We are actively working together to enhance the safety of products coming from China and to protect the American consumer. We also need to make sure that policymakers in both countries are focused on science-based safety decisions, not protectionism or retaliation.
Towards a New Future for Bilateral Economic Relations
President Bush and President Hu have set a positive agenda for strengthening our economic relationship. The SED is a core part of that agenda because it is long-term in its vision, comprehensive in its scope, and immediate in its ability to deal with the most sensitive bilateral economic tensions.
I congratulate the Chinese on the successful conclusion of their 17th Party Congress and related events. My colleagues and I look forward to developing constructive and productive relationships with the new members of Chinese leadership team. In his political report to the 17th Party Congress last week, President Hu emphasized the dual goals of continuing market reform and global integration, while simultaneously working to alleviate the negative domestic consequences of rapid economic growth.
Our next meeting of the SED in December will discuss a number of these objectives. Specifically, we will focus on the integrity of trade, balanced economic development, energy conservation, financial sector reform, environmental sustainability, and advancing bilateral investment.
The economic and geopolitical landscape of the 21st century will be greatly influenced by the way in which the United States and China work together. That emerging future requires a distinct vision and effective mechanisms to achieve it. The SED has allowed both the United States and China to begin to write the next chapter of our strategic economic relationship.
McCain has experience,,,Keating FIVE!
Hammering Home the Keating Five Message
By David Sirota
Campaign for America's Future, 9/23/08
I went on Fox News on Monday to discuss the financial meltdown. After taking a sober look at the bipartisan nature of Wall Street deregulation, I forced the discussion to focus on John McCain's Keating Five past. It was actually a pretty incredible debate. You can watch it here:
http://www.youtube.com/watch?v=l9tHEUJOyn4
Both the Fox News anchor and the GOP spokesman basically freaked out in a desperate attempt to hide the undebatable fact that McCain was rebuked by the Senate Ethics Committee for intimidating regulators on behalf of one of his biggest campaign donors, Charles Keating.
Just for historical reference, here is the CBS News on 3/23/08:
"In his early days as a freshman senator, McCain was known for accepting contributions from Charles Keating Jr., flying to the banker's home in the Bahamas on company planes and taking up Keating's cause with U.S. financial regulators as they investigated him...Keating and his associates raised $1.3 million combined for the campaigns and political causes of all five. McCain's campaigns received $112,000. The investigation ended in early 1991 with a rebuke that McCain 'exercised poor judgment in intervening with the regulators.'"
Now it's true, the Ethics committee didn't go farther than that. But to try to deny that McCain's formative economic experience was intimidating banking regulators - and that he was rebuked for doing that - is trying to perpetrate a fraud on the American people.
Judging by the reaction of both the Fox News anchor and the GOP spokesperson, the conservative Establishment sees the Keating Five issue as a major weak point, which is one of the reasons I hammered it home (the other being that McCain's behavior during the S&L crisis is very important considering the current crisis is very similar). As you can see, I didn't relent on making sure that the facts got out in this interview, and I've been pounding away at the issue everywhere I can I hope every branch of the progressive movement similarly forces the issue into the presidential debate.
By David Sirota
Campaign for America's Future, 9/23/08
I went on Fox News on Monday to discuss the financial meltdown. After taking a sober look at the bipartisan nature of Wall Street deregulation, I forced the discussion to focus on John McCain's Keating Five past. It was actually a pretty incredible debate. You can watch it here:
http://www.youtube.com/watch?v=l9tHEUJOyn4
Both the Fox News anchor and the GOP spokesman basically freaked out in a desperate attempt to hide the undebatable fact that McCain was rebuked by the Senate Ethics Committee for intimidating regulators on behalf of one of his biggest campaign donors, Charles Keating.
Just for historical reference, here is the CBS News on 3/23/08:
"In his early days as a freshman senator, McCain was known for accepting contributions from Charles Keating Jr., flying to the banker's home in the Bahamas on company planes and taking up Keating's cause with U.S. financial regulators as they investigated him...Keating and his associates raised $1.3 million combined for the campaigns and political causes of all five. McCain's campaigns received $112,000. The investigation ended in early 1991 with a rebuke that McCain 'exercised poor judgment in intervening with the regulators.'"
Now it's true, the Ethics committee didn't go farther than that. But to try to deny that McCain's formative economic experience was intimidating banking regulators - and that he was rebuked for doing that - is trying to perpetrate a fraud on the American people.
Judging by the reaction of both the Fox News anchor and the GOP spokesperson, the conservative Establishment sees the Keating Five issue as a major weak point, which is one of the reasons I hammered it home (the other being that McCain's behavior during the S&L crisis is very important considering the current crisis is very similar). As you can see, I didn't relent on making sure that the facts got out in this interview, and I've been pounding away at the issue everywhere I can I hope every branch of the progressive movement similarly forces the issue into the presidential debate.
Monday, September 22, 2008
ENRON,NCFE, Richard Rainwater & Darla Moore
Forgot to mention his DUMPING of HCA/TN HOME HEALTHCARE to NCFE, the PONZI scheme dubbed by Federal Prosecutors in Ohio as BIGGER THAN ENRON!
Next up, at No. 163 with $2.5 billion in the bank, is Fort Worth, Texas-based investor Richard Rainwater, husband of Lake City native and part-time Charleston resident Darla Moore. The past year hasn't been as good to the 64-year-old spouse of the Palmetto Institute founder. He skidded from the 91st spot a year ago, when his net worth was $1 billion higher. What happened? Forbes said Rainwater unloaded "extensive oil holdings" earlier this year and got dinged by capital gains taxes. Also, an ill-timed investment in a mortgage business resulted in an estimated loss of $100 million. "The worst investment I've ever made," the magazine quoted Rainwater as saying.
List of 400 richest has a few with ties to S.C.
Monday, September 22, 2008
Forbes magazine's annual tally of the 400 wealthiest Americans shows that no full-time South Carolina residents had the minimum $1.3 billion required for admission to this exclusive club.
But the list once again included a handful of Forbes 400 perennials with close ties to the Charleston region.
Among them, Charleston-born Martha Rivers Ingram and her family — they own Tennessee-based book distributor Ingram Industries — was ranked 147th with $2.8 billion. That's an improvement from last year, when their $2.4 billion fortune earned them the 188th spot. Ingram's father was local TV broadcasting pioneer John M. Rivers, who started WCSC-Channel 5. The Nashville resident still owns a home on lower Meeting Street.
Next up, at No. 163 with $2.5 billion in the bank, is Fort Worth, Texas-based investor Richard Rainwater, husband of Lake City native and part-time Charleston resident Darla Moore. The past year hasn't been as good to the 64-year-old spouse of the Palmetto Institute founder. He skidded from the 91st spot a year ago, when his net worth was $1 billion higher. What happened? Forbes said Rainwater unloaded "extensive oil holdings" earlier this year and got dinged by capital gains taxes. Also, an ill-timed investment in a mortgage business resulted in an estimated loss of $100 million. "The worst investment I've ever made," the magazine quoted Rainwater as saying.
Media mogul and CNN founder Ted Turner, a big property owner in these parts with holdings that include Hope Plantation in the ACE Basin, was No. 190 among the Forbes U.S. wealth elite with $2.3 billion. Last year, that same amount placed Captain Outrageous at No. 195.
Then comes the low-key Michael E. Heisley at No. 215 with $2.1 billion, according to Forbes' accounting. Though he claims Jupiter Island, Fla., as his primary residence, the 71-year-old self-made industrialist and investor — he's also majority owner of the NBA's Memphis Grizzlies — is a longtime property owner on Kiawah Island. He vaulted from the 380th spot last year, when he was worth an estimated $1.3 billion.
Finally, more or less holding steady at the 321st position with $1.5 billion since last year, is former energy honcho Robert McNair, who with wife Janice owns a 13,000-square-foot oceanfront getaway on Kiawah. He's a University of South Carolina graduate, and she's an Orangeburg native and Columbia College alumnus.
Known in the horse-racing world for their world-class thoroughbred holdings, the McNairs are scaling back their equestrian pursuits to focus on his ownership of the NFL's Houston Texans. Last year, the philanthropic couple sold their 106-acre Saratoga Springs farm in upstate New York for about $19 million. A few weeks ago, they sold their Stonerside Stables in Paris, Ky., to the crown prince of Dubai, Sheikh Mohammed bin Rashid al Maktoum. The deal included the 2,000 acres of Kentucky farm land, a South Carolina training center in Aiken, about 80 horses in training, and 170 broodmares, yearlings and weanlings, according to a statement. The sale price was not disclosed.
Cup coup
The U.S and European Ryder Cup players who did battle in Kentucky this weekend were able to take a load off after their matches in a Charleston company's chairs and other furnishings.
Six truckloads of imported mahogany furniture and accessories recently made the trip from Bauer International Inc. 's Island House showroom on Clements Ferry Road to the venue at Valhalla Golf Club. The company outfitted the hospitality chalet, VIP areas and various players' areas, including their dining room, locker rooms and team lounges, said Ken Bauer, co-founder, president and chief executive.
Bauer International is the official supplier of furnishings and clubhouse fixtures for the PGA of America. It recently picked up a four-year extension of its licensing agreement with the association.
Get carded
The president and CEO of North Charleston-based Bulldog Hiway Express testified before a House subcommittee last week about the Transportation Worker Identification Credential, a federal ID that will be required of all workers at the nation's seaports.
Philip Byrd Sr. , speaking on behalf of the American Trucking Associations, asked that TWIC be accepted as a universal security program to trump all others. As it stands, drivers often need a different credential for access to every secure location they visit.
Byrd told the Subcommittee on Border, Maritime and Global Counterterrorism of the House Committee on Homeland Security that these multiple checks hurt drivers' morale.
He also asked that Congress require the Transportation Security Administration to recognize commercial drivers who have TWICs as also being compliant with the Hazardous Materials Endorsement Security Threat Assessment program, which is required to obtain, renew or transfer a hazardous materials endorsement.
Charleston's compliance deadline for the TWIC program will is Dec. 1. For more information, visit www.tsa.gov/twic.
Capital idea
Interest rates on Santee Cooper mini-bonds being offered through Oct. 15 will range from 3 percent to 4.8 percent, depending on their maturity dates.
Bonds in $200 and $500 denominations are available for purchase by state residents, Santee Cooper customers, electric cooperative members in South Carolina and electric customers of Bamberg Board of Public Works and the city of Georgetown.
Bonds can be bought in person or by mail by contacting Nan Cline, Debt Administrator, Santee Cooper Headquarters, One Riverwood Drive, Moncks Corner, SC 29461. For more information, call toll-free 877-246-3338, go to www.santeecooper.com/minibonds or e-mail questions to scbonds@santeecooper.com.
Next up, at No. 163 with $2.5 billion in the bank, is Fort Worth, Texas-based investor Richard Rainwater, husband of Lake City native and part-time Charleston resident Darla Moore. The past year hasn't been as good to the 64-year-old spouse of the Palmetto Institute founder. He skidded from the 91st spot a year ago, when his net worth was $1 billion higher. What happened? Forbes said Rainwater unloaded "extensive oil holdings" earlier this year and got dinged by capital gains taxes. Also, an ill-timed investment in a mortgage business resulted in an estimated loss of $100 million. "The worst investment I've ever made," the magazine quoted Rainwater as saying.
List of 400 richest has a few with ties to S.C.
Monday, September 22, 2008
Forbes magazine's annual tally of the 400 wealthiest Americans shows that no full-time South Carolina residents had the minimum $1.3 billion required for admission to this exclusive club.
But the list once again included a handful of Forbes 400 perennials with close ties to the Charleston region.
Among them, Charleston-born Martha Rivers Ingram and her family — they own Tennessee-based book distributor Ingram Industries — was ranked 147th with $2.8 billion. That's an improvement from last year, when their $2.4 billion fortune earned them the 188th spot. Ingram's father was local TV broadcasting pioneer John M. Rivers, who started WCSC-Channel 5. The Nashville resident still owns a home on lower Meeting Street.
Next up, at No. 163 with $2.5 billion in the bank, is Fort Worth, Texas-based investor Richard Rainwater, husband of Lake City native and part-time Charleston resident Darla Moore. The past year hasn't been as good to the 64-year-old spouse of the Palmetto Institute founder. He skidded from the 91st spot a year ago, when his net worth was $1 billion higher. What happened? Forbes said Rainwater unloaded "extensive oil holdings" earlier this year and got dinged by capital gains taxes. Also, an ill-timed investment in a mortgage business resulted in an estimated loss of $100 million. "The worst investment I've ever made," the magazine quoted Rainwater as saying.
Media mogul and CNN founder Ted Turner, a big property owner in these parts with holdings that include Hope Plantation in the ACE Basin, was No. 190 among the Forbes U.S. wealth elite with $2.3 billion. Last year, that same amount placed Captain Outrageous at No. 195.
Then comes the low-key Michael E. Heisley at No. 215 with $2.1 billion, according to Forbes' accounting. Though he claims Jupiter Island, Fla., as his primary residence, the 71-year-old self-made industrialist and investor — he's also majority owner of the NBA's Memphis Grizzlies — is a longtime property owner on Kiawah Island. He vaulted from the 380th spot last year, when he was worth an estimated $1.3 billion.
Finally, more or less holding steady at the 321st position with $1.5 billion since last year, is former energy honcho Robert McNair, who with wife Janice owns a 13,000-square-foot oceanfront getaway on Kiawah. He's a University of South Carolina graduate, and she's an Orangeburg native and Columbia College alumnus.
Known in the horse-racing world for their world-class thoroughbred holdings, the McNairs are scaling back their equestrian pursuits to focus on his ownership of the NFL's Houston Texans. Last year, the philanthropic couple sold their 106-acre Saratoga Springs farm in upstate New York for about $19 million. A few weeks ago, they sold their Stonerside Stables in Paris, Ky., to the crown prince of Dubai, Sheikh Mohammed bin Rashid al Maktoum. The deal included the 2,000 acres of Kentucky farm land, a South Carolina training center in Aiken, about 80 horses in training, and 170 broodmares, yearlings and weanlings, according to a statement. The sale price was not disclosed.
Cup coup
The U.S and European Ryder Cup players who did battle in Kentucky this weekend were able to take a load off after their matches in a Charleston company's chairs and other furnishings.
Six truckloads of imported mahogany furniture and accessories recently made the trip from Bauer International Inc. 's Island House showroom on Clements Ferry Road to the venue at Valhalla Golf Club. The company outfitted the hospitality chalet, VIP areas and various players' areas, including their dining room, locker rooms and team lounges, said Ken Bauer, co-founder, president and chief executive.
Bauer International is the official supplier of furnishings and clubhouse fixtures for the PGA of America. It recently picked up a four-year extension of its licensing agreement with the association.
Get carded
The president and CEO of North Charleston-based Bulldog Hiway Express testified before a House subcommittee last week about the Transportation Worker Identification Credential, a federal ID that will be required of all workers at the nation's seaports.
Philip Byrd Sr. , speaking on behalf of the American Trucking Associations, asked that TWIC be accepted as a universal security program to trump all others. As it stands, drivers often need a different credential for access to every secure location they visit.
Byrd told the Subcommittee on Border, Maritime and Global Counterterrorism of the House Committee on Homeland Security that these multiple checks hurt drivers' morale.
He also asked that Congress require the Transportation Security Administration to recognize commercial drivers who have TWICs as also being compliant with the Hazardous Materials Endorsement Security Threat Assessment program, which is required to obtain, renew or transfer a hazardous materials endorsement.
Charleston's compliance deadline for the TWIC program will is Dec. 1. For more information, visit www.tsa.gov/twic.
Capital idea
Interest rates on Santee Cooper mini-bonds being offered through Oct. 15 will range from 3 percent to 4.8 percent, depending on their maturity dates.
Bonds in $200 and $500 denominations are available for purchase by state residents, Santee Cooper customers, electric cooperative members in South Carolina and electric customers of Bamberg Board of Public Works and the city of Georgetown.
Bonds can be bought in person or by mail by contacting Nan Cline, Debt Administrator, Santee Cooper Headquarters, One Riverwood Drive, Moncks Corner, SC 29461. For more information, call toll-free 877-246-3338, go to www.santeecooper.com/minibonds or e-mail questions to scbonds@santeecooper.com.
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