Wednesday, August 22, 2007
Senator Forehead Saves the World!
"I expressed the need for both the Fed and Treasury to use all the tools at their disposal to keep our markets working and so that the business and consumers can have the funds to prosper," Mr. Dodd said. "Chairman Bernanke agreed," Mr. Dodd added
—The Wall Street Journal
That’s a story?
A senator—who’s also running for President and wants desperately to get his poll numbers above Dennis Kucinich, the Democrats' answer to Dwight K. Schrute, the whacky, lovable character in "The Office"—meets with the Chairman of the Federal Reserve, tells him to do his job, to which the Fed Chairman agrees…and that’s news?
What else was Ben Bernanke going say to the Chairman of the Senate Banking Committee—“No, we think it would be cool to have a crash”?
That Senator Forehead—er, Dodd—would get such press coverage is more a testament to how nervous markets really are than to how much Senator Dodd has going for him.
I know. I once helped his campaign.
Christopher J. Dodd has been a Senator from Connecticut for 27 years, during which time he accomplished just enough to get re-elected and absolutely nothing at all where it really counts—in the state’s inner cities, where separate-and-unequal education has ruled during all of Dodd’s 27 year tenure, and the resulting poverty hasn’t changed a bit.
Yet he is very popular in his state and unbeatable every six years. Mainly, I think, because Don Imus liked having Dodd on his radio show, which is not saying much.
Also, Dodd has terrific hair—a big Kennedyesque shock that has turned a mature white, giving him the look of the prototypical Senator Forehead.
Lest you think I approach the good Senator with a closed mind, I first met him thirty years ago when he was still a Congressman—a young, popular Congressman with a great head of hair that was not yet white.
It was during the Carter Presidency, and a lot was happening in Washington: Jimmy Carter was attempting to decontrol oil and gas prices, which was terrific economic policy and, therefore, extremely unpopular at the time, especially among young populists like Dodd.
Dodd was discussing his “position” on oil and gas decontrol with a group of worshipful high school seniors, and what he said was something about as bland and off-hand as, “I think the oil companies make enough money—they don’t need to make more.”
That was it—the entire sum of his analysis of probably the greatest legacy of the much-maligned Carter Administration: the dismantling of Nixon’s price controls.
And, naturally, it went over very well with the 17-year olds.
Of course, what Dodd and the 17-year olds didn’t grasp was that a big part of the “stagflation” hindering the American economy during the late 1970’s was the fact that oil and gas prices in the United States were still rising to world levels, thanks to Nixon's price controls.
Unlike Japan, which imports virtually all its oil and yet had recovered from the Arab oil embargo in record time, politicians like Dodd were so afraid of angering their constituencies that they refused to do what the Japanese had done: let prices rise and force the economy to adjust.
For all his mistakes on international policy, Jimmy Carter did the country one very big long-term favor: he decontrolled oil and gas prices, no thanks to Chris Dodd and the other Congressmen and Senator Foreheads of the world.
Carter, naturally, lost re-election. Dodd, naturally, won election to the Senate and has been re-elected ever since.
Now, when I mentioned that I once helped Chris Dodd’s re-election campaign, I was not making that up.
It happened in 1992. His opponent was a wealthy Greenwich polo player named Brook Johnson, who had made a good chunk of money doing an old-fashioned leverage buyout of Collins & Aikman, by which I mean piling debt on the balance sheet and taking money out of the business, which was not great for the business but was great for Brook Johnson.
Johnson’s campaign theme was that he had created “thousands” of jobs in his tenure at C&A, which I believed was absolutely not true, and could do the same for the country.
Being one who, even then, distrusted individuals who ‘make it up,’ yours truly dug into the public documents and provided Dodd’s campaign with a basic analysis of where the C&A money came from, and where it went. Whether they actually used the data in any way, was never clear.
Dodd, of course, won the election and continued warming his chair in the Senate long enough to get to the top of the Banking Committee, which is why he is on television demanding meetings with Ben Bernanke even though:
1. The U.S. sub-prime crisis happened during Chris Dodd’s own watch as Chairman of the Senate Banking Committee.
2. The Fed is going to do whatever it has to do to keep the world afloat, no matter what Chris Dodd thinks.
3. Chris Dodd wouldn’t know a CDO from a Dr. Seuss character.
Which is why I think it’s all the more remarkable than anybody could possibly care what Chris Dodd did or didn’t say to Ben Bernanke.
In fact, here’s what we at NotMakingThisUp think was really said when Dodd met Bernanke:
Dodd: “Hi there!” (Reaching out his hand and leaning in, speaking quietly.) “Let’s shake hands while I look into your eyes. You nod as if I’m saying something meaningful.”
Bernanke Aide: “But I’m—”
Dodd: “I know, I know—you’re busy, I’m busy. We’ll get this over with in a second. Just nod and look at me thoughtfully. I’ll keep talking while you nod thoughtfully. When the camera clicking starts do die down, that’s when we can stop shaking hands.”
Aide: “But, Mr. Bernanke is—”
Dodd: “So you talk about yourself in the third person? Me too! ‘Chris Dodd wouldn’t agree with that!’ ‘Chris Dodd thinks a grave injustice has been committed.’ ‘Chris Dodd will have another, but without so much vermouth this time—’”
Aide: “No, no, no, Senator—”
Dodd: “Hey, pal, don’t tell me ‘no.’ Nobody tells Chris Dodd ‘no.’ You just shake hands with Chris Dodd until the CNN guy over there gets a good shot in and we’ll be fine.”
Aide: “But I’m not who you think I am!”
Dodd: “‘That’s what she said!’”
Aide: “But I’m not Chairman Bernanke!”
Dodd: (Dropping the handshake.) “What?”
Aide: “I’m not Chairman Bernanke! He is on an emergency conference call with the heads of six major Wall Street firms and is running several minutes late. He asked me to tell you he'd be late.”
Dodd: (Considering this news.) “Well, then let me ask you something.”
Dodd: “What exactly is a CDO?”
I Am Not Making This Up
© 2007 NotMakingThisUp, LLC
The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.
Posted by Jeff Matthews at 8:45 AM