Confidence Men: Wall Street, Washington, and the Education of a President

by Ron Suskind

  Maybe for these reasons, maybe not, she was also an object of obsessive interest for Jared Lee Loughner, who witnesses claimed rushed toward the crowd firing an automatic weapon. Six people died, among them a conservative federal judge who had previously received death threats, and another thirteen were injured, including Giffords, who had a bullet tear through her skull. Moments later, Giffords, with her dimpled, girl-next-door smile and long blond hair, became the face of a country that had lost its bearings. Cable channels set up a round-the-clock vigil at the hospital where the congresswoman, the wife of Space Shuttle astronaut Mark Kelly and mother of two young daughters, struggled to stay alive.

  On all sides of the human drama emerged petulant debates about what had set off Loughner, who was a regular consumer of political vitriol from the far right. Soon a Sarah Palin citation—in which Palin targeted districts, including Giffords’s, on her Take Back America Web site with the insignia of a gun sight—was igniting partisan battles. No one doubted that there was a high quotient of anger across the American landscape. Death threats against Obama that were considered credible by law enforcement were running at nearly four times what they had been against Bush or, for that matter, Bill Clinton. Palin responded that she’d never suggested anyone shoot down the congresswoman on a street corner, but then she attacked those who criticized her tactics as being engaged in a “blood libel,” an oddly chosen term, linked exclusively to anti-Semitic charges the Nazis used to justify the Holocaust. A few days later it was clear that Loughner was deeply psychotic, at the very fringe of being able to calculate any premeditation. But everyone, from left to right, was bruised, still shocked and grieving, as regular reports of Gabby’s condition, how parts of her skull were removed to relieve pressure from a swollen brain—and guesses on how much of her ebullient personality would be left—dominated the national consciousness.

  On the twelfth, Obama boarded Air Force One bound for Tucson. This was, of course, what he’d always thought he’d do as president: help bring the country together. It was, in fact, central to his appeal at the end of the divisive Bush era. Though arriving into the field day of fear that marked the economic decline and financial collapse, he had seemed to step back and opt instead for stability at all costs—bending, in a way, toward Bayard Rustin’s old concerns, rather than King’s forceful jeremiads and the actions that might have flowed from them. Pushing policies with a focus on technocratic pragmatism was a formula, the president painfully discovered, for division.

  But now, trying to restart the presidency as he’d long imagined it, Obama saw a type of crisis he knew how to handle, and he set foot in the Southwest like a thirsty man ready to drink deep from healing waters. He met with the families of the victims, visited Gabby Giffords at the hospital, as she opened her eyes for the first time, and then went to meet ten thousand people gathered at the University of Arizona for a memorial service.

  “I have come here tonight as an American who, like all Americans, kneels to pray with you today, and will stand by you tomorrow,” the president opened. “There is nothing I can say that will fill the sudden hole torn in your hearts. But know this: the hopes of a nation are here tonight. We mourn with you for the fallen. We join you in your grief. And we add our faith to yours that Representative Gabrielle Giffords and the other living victims of this tragedy pull through.”

  He quoted scripture, and then—just “as an American,” not due any special status—Obama listed the six who’d been slain, saying they “represented what is best in America.” He offered affectionate, well-researched renderings of each of their lives, from the conservative judge John Roll, appointed by McCain and the “hardest working judge in the Ninth Circuit”; to George Morris, a former Marine on a cross-country RV journey with his wife of fifty years, who dove to save her but could not, and took a bullet himself; to Gabe Zimmerman, Giffords’s young aide, who was struck down just months before he was to be married.

  The citation of some individual and his circumstances, often in a story of triumph or resilience, had been a rhetorical standard since Ronald Reagan effectively tried it at his first State of the Union speech in 1981. Obama took it beyond prop, speaking like a dear friend of each of the victims, and many of those injured, to make his transcendent point about how, in all the essential ways, we remain identical to one another, that it is only our inability to see this that holds us back. And then he went a level deeper, as he arrived at the final victim, nine-year-old Christina Taylor Green, who was born on 9/11. As he spoke about her—a dancer, gymnast, an A student, the only girl on a Little League team, who “wanted to be the first woman to play in the majors”—he was talking, his eyes growing moist, about his own girls, and about the man their father hoped to become.

  This speech, which he wrote himself, was finally a conversation with the marble busts behind his wing chair back in Washington. He finished it with a reach for the high plane where both King and Lincoln actually lived their headlong, crisis-filled days: “What we can’t do is use this tragedy as one more occasion to turn on one another,” Obama said. “Rather than pointing fingers or assigning blame, let us use this occasion to expand our moral imaginations, to listen to each other more carefully, to sharpen our instincts for empathy, and remind ourselves of all the ways our hopes and dreams are bound together. After all, that’s what most of us do when we lose someone in our family—especially if the loss is unexpected. We’re shaken from our routines, and forced to look inward. We reflect on the past. Did we spend enough time with an aging parent? we wonder. Did we express our gratitude for all the sacrifices they made for us? Did we tell a spouse just how desperately we loved them, not just once in a while but every single day? Perhaps we ask ourselves if we’ve shown enough kindness and generosity and compassion to the people in our lives. Perhaps we question whether we are doing right by our children, or our community, and whether our priorities are in order. We recognize our own mortality, and are reminded that in the fleeting time we have on this earth, what matters is not wealth, or status, or power, or fame—but rather, how well we have loved, and what small part we have played in bettering the lives of others.”

  The crowd in the field house stood and wept and clapped its hands red, seeing, as did countless viewers at home and for weeks on YouTube. It was an Obama who had been elusive—invisible, even—since the campaign. Not that there hadn’t been strong speeches since then—the State of the Unions, the health care speech—but they were without a clear framing, based on principles beyond pragmatism: of how America had drifted from its moorings and how it might find a way back. There had been no moral handle for him to hold and lift. Axelrod’s hope, in the days after the Cairo speech, that Obama might tap and direct a similar “moral energy” to reshape the day’s pernicious and defining domestic battles—such as health care, financial reform, and jobs—had never been realized. In fact, it was barely attempted.

  The day after Obama’s speech, on January 13, a warrant was filed under seal in U.S. District Court in Manhattan for the arrest of Vincent McCrudden, the manager of a small investment fund who had threatened Gary Gensler, several dozen other employees of the CFTC, and various regulatory officials in a series of mid-December e-mails and postings—including an “execution list”—on his Web site. McCrudden, a commodities trader and hedge fund manager on Wall Street for twenty years, was facing several CFTC civil enforcement actions lawsuits. He posted threats on his Web site with a $100,000 reward for personal information on Gensler and others.

  When the threatening e-mails hit CFTC in December, Gensler was in full battle mode, negotiating with other members of the commission—two Republicans and, including Gensler, three Democrats—over the controversial issue of how derivatives “bids” could be posted on trading platforms called “swap execution facilities” by a wide array of individuals and firms, and then matched, or answered, by the most attractive offer. Though Wall Street opposed such a change, and their lobbyists had literally been camped in front of CFTC for months, it w
as a feature that, more than any other, would push the shadowy derivatives market into sunlight. Trading derivatives would start to look more like trading stocks on the NYSE. In fact, creating free, open, and transparent access to the platforms is at the heart of the “trading” function Gensler fought fiercely to get into Dodd-Frank and that he said were nonnegotiable. But, that day, he was forced to negotiate, in order to get the votes he needed to have the specifics of the trading rules firmly delineated. Then a deputy passed a printed copy of an e-mail to him: “You can tell that fucking corrupt piece of Goldman Sachs shit (G.G.) I am coming after him as well,” McCrudden had written to a senior attorney at CFTC. Soon, after the FBI was alerted, a security guard appeared at the back door of the CFTC hearing room.

  Gensler got up from his chairman’s seat, walked to the back of the room, shook the hand of the guard—an African American woman—and thanked her for coming.

  A few days before, at the White House Hanukkah party, Gensler—with one of his daughters in tow—shook the president’s hand in the receiving line. Though he had one of the most important jobs in government, they’d scarcely met. But Obama was on cue. “How’s the rule writing?”

  “Great,” Gary said, using the three to five seconds one has to say anything as the line pushed forward. He abruptly added, mostly over his shoulder while moving onward, “But don’t let them go after our funding!”

  Gensler was, indeed, getting it from all sides. Into January, and especially after the Tucson shooting, he thought frequently about the death threats. Regulation, once a sleepy realm of a government that had lost faith in its capacities, had become the stuff of fierce—and even violent—passions.

  So he was happy to find out on January 14, the day after the arrest warrant was filed in Manhattan, that McCrudden had been apprehended by the FBI at Newark International Airport. With the arrest, news of the incident was now finally made public, creating plenty of arch comments on financial Web sites about how regulators had, in this era, managed to make themselves targets.

  But they are largely unprotected ones—at least in terms of the way the intent of legislation can be thoroughly, and often brilliantly, attacked by an army of lobbyists. Washington was still a town where public purpose only rarely managed to outrun private gain.

  Gensler often joked that “gazelles fare better in sunlight,” and CFTC’s response to the onslaught of literally thousands of lobbyists over the past six months from both Wall Street and Fortune 500 companies—the latter not wanting to post collateral at clearinghouses for their hedges—had been to post each lobbyist’s name, their interest, and whom they met with at CFTC. At the same time, he managed to give speeches virtually nonstop and testify to Congress, where the House’s newly charged Republican majority was already planning to cut his funding and that of other regulators.

  Back at CFTC, the security guard, who he said, “was always a comfort to see in the back of the room,” was gone: with the arrest she was no longer needed. Gensler’s mid-January schedule was jammed with meetings and speeches. He knew now that he’d miss a late-January deadline for a crucial provision to set position limits on trading, something that Democratic lawmakers were hoping would prevent the big investment firms from gaming the oil markets. But Gensler, a driven man who’d run fifty-mile marathons, remained sanguine about the messy but basic soundness of democracy. “Look, progress is always slow, and uneven, but if you manage to be moving in the right direction—creating something a little better than what we had before—the pain is worth it. That’s the trick: you’ve got to learn to love the pain, to own it, to make sure it doesn’t kill you. Day by day, year by year, you get stronger.”

  Up at Dartmouth, Jim Weinstein was fine-tuning his latest outrage. Twelve years ago, Dartmouth and two hospitals that Dartmouth’s Atlas identified as leaders in “best practices”—the Mayo Clinic and Utah’s Intermountain Medical Center—began to pool data to rigorously test the effectiveness of various medical procedures, a union that helped create continuous improvements of better care at lower cost for all three institutions. Adding hospitals to the trio, though, had not been easy. Many didn’t want to have to live by the revealing data and the changes in practice that it might portend. By 2009, it was up to six, including the Cleveland Clinic and Geisinger Medical Center in Danville, Pennsylvania. “The concept, of course, is wherever the data leads, we will follow,” Weinstein said, “even if it means forgoing some expensive procedures that are, to be blunt, profitable for our hospitals.”

  But this was not nearly enough. These hospitals were the ones that Obama, Orszag, and others often cite as models for the rest, ones that have managed to lower costs—for themselves and ultimately the government’s insurance programs—while improving care.

  What surprised and now agitated Weinstein was that in the past ten months, since the passage of health care reform, fifteen more hospitals, a diverse array of institutions urban and rural, plush and threadbare, had volunteered to join, with another fifteen lined up behind them.

  To organize and integrate the measurement and data collection procedures for this many hospitals, especially some with subpar capacities, would take money. “We didn’t go after these guys. They knocked on our door, even when they know that some of the conclusions drawn from this much data might mean they’d have to make major changes in the way they practice medicine.”

  So for weeks he’d been on the phone to Washington. The cost of funding a cooperative with this many hospitals, Weinstein estimated, would cost $300 million across five years, or $60 million per year. “It sounds like a lot,” he said, but then he broke down the numbers and the offsetting cost reductions in just a single area, back surgery, where he’s one of the country’s leading experts. The frequency of back surgery at Dartmouth Hitchcock is 2.2 surgeries annually per thousand people; nationally, the frequency is 4.5 per thousand. At Johns Hopkins it’s 4.8, and at the Medical Center in Casper, Wyoming, it is 10.5—more than four times Dartmouth’s level. Annual funding of $60 million, to include major hospitals that cover 30 million people, would be paid for with savings—roughly about $50 million—on this one procedure. Nationally, bringing spine surgeries in line with Dartmouth’s level would save $500 million, annually. “And that’s just one procedure,” Weinstein exhorts. “But I can’t get a call back from Washington.”

  But then he smiled, thinking of Oregon. This was something that always gave him a lift, something he discovered a few years ago that surprised him. Oregon was the first state to pass a “Death with Dignity Act,” in 1994, allowing for physician-assisted suicides in certain limited cases. Since then, the law had been repealed and reinstated, challenged and, ultimately, affirmed in a 2006 Supreme Court ruling.

  Nearly 30 percent of Medicare costs are spent on end-of-life care, a stunning figure considering that most beneficiaries arrive into Medicare at sixty-five and the average life expectancy is seventy-nine. In the last year of life, covered medical costs average nearly $30,000.

  But here’s what made Weinstein smile, thinking about the ferocious debate in Washington. “The Oregon debates, over all these years, helped people see and understand all sides of the issue.” Even if they would never consider physician-assisted suicide, “they began to think more clearly and exercise ‘shared-decision making’ ” in their end-of-life care. “When people learn what they need to know, they often surprise you taking charge of their life. They learn, then they act.” The result: Medicare costs in Oregon are some of the lowest in the country. And it’s largely because of reduced end-of-life costs. “They learned what the doctors didn’t want to tell them,” Jim Weinstein said with a chuckle. “That in medicine, less is often more. And you—patient—are in charge, right until the end.”

  By late January, Alan Krueger had settled back into his office at Princeton. He was sleeping better, seeing more of his wife and two college-age kids—one at Princeton—and getting back full-time to the research.

  The exhaustive study of 6,025 unemployed New Jersey resi
dents was completed. The findings, of which he presented a preliminary glimpse in mid-November at the Federal Reserve Bank of Atlanta, were surprising and, of course, ever more pertinent to a growing national crisis of chronic unemployment.

  For the 13.9 million unemployed as of January, the length of their joblessness, on average, was 36.9 weeks, the highest duration since the government began this measurement in 1948 and nearly twice as high as the most recent, comparably serious recession, in 1983, when it was 21.2 weeks. Understanding this group, and why it was so difficult to reduce their number, was on everyone’s mind, in both parties. Among Krueger’s findings was that the amount of time devoted to job search declined sharply over the spell of unemployment; the exit rate from unemployment was low at all durations of joblessness, and declined gradually as time passed; and also, quite importantly, there was no rise in job search or job finding around the time unemployment insurance benefits expired. This refuted a long-standing study—the centerpiece of public policy actions in handling the jobless and their benefits, for two decades—that recently won its coauthor the Nobel Prize.

  But what struck Krueger, poring over the data in his office in late January, was how sad the unemployed were—sadder than data indicated the jobless had been in previous eras—and how they were particularly depressed during episodes of job search.

  Economists have long been better at measuring misery than they are at measuring happiness, and the issues that push the unemployed into depression tend to be a complex brew, including a sense of whether society is fair, the length of a person’s joblessness, and how they see employment as identity. “Those without a job for an extended period of time seem to lose their identity,” Krueger said, “their sense of who they are, and the path they’ve chosen in life.”