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

by Ron Suskind

  “Going forward as president,” Obama said, straightening up his chair, “the symbols and gestures—what people are seeing coming out of this office—are at least as important as the policies we put forward.”

  “I think where the evolution has taken place,” Barack Obama said finally, looking into the middle distance, “is understanding that leadership in this office is not a matter of you being confident. Leadership in this office is a matter of helping the American people feel confident.”

  Acknowledgments

  It is always a privilege to offer of a few pages of gratitude to close a journey of nonfiction. Many people conspire to help a book grow from first idea to a fully realized expression, and with this book there are many people to thank, starting with those who presided over its conception. This is my second book with my friend and trusted guide Tim Duggan, executive editor at HarperCollins, and Jonathan Burnham, the division’s publisher.

  Across more than two and a half years, from the book’s starting point in February 2009, Tim was ever at my side, providing wise counsel and nourishing enthusiasm as the project twisted and spun forward—and sometimes sideways—though many stages. Finally, when it all came together, an able HarperCollins team snapped into action. Assistant Editor Emily Cunningham was a dream, already a seasoned pro, and Tina Andreadis, a publisher’s row promotional whiz, each leapt into battle.

  As with each of the last three books, my agent, Andrew Wylie, was a source of straight talk and sterling advice. He’s one of the sanest madmen I know and just about the best corner man you could want.

  I wrote a book in the late 1990s about a teenager’s heroic rise from a blighted urban high school to the Ivy League, and saw how, along the way, that young man was often seen as both less and more than he really was, and how he was constantly wrestling with “what people wanted to see.”

  Something similar happened, writ large, with Barack Obama. I, like many Americans, felt a surge of pride when an African American was elected president. It took some time for me to see him simply as a man, with the full complement of gifts and faults, occupying the White House. An opposite, though similar, preconception existed in the early reporting about Wall Street. The emotional shock of the meltdown and the natural urge to uncover malice and affix blame became a barrier to cross.

  What helped on both accounts were the many sources who, hour after hour, strove for honesty in helping me understand the complexities of the situation. I can’t thank them all here and many, of course, would rather remain anonymous. But I am in their debt. In my efforts across twenty-five years, I’ve often said that nonfiction writing should dig beneath the alluring, often simplified narratives of heroes and villains in search of a deeper, more resonant rendering of human complexity. If this book has in any way managed that, it is due to hundreds of sources and their faith in being able to understand the times in which we live.

  On this project I was particularly fortunate to have as my young deputy Will Kryder, a clear-eyed product of Boston College who signed on for a span that stretched nearly a year beyond initial projections. He didn’t flinch. In fact, he rose to meet every challenge—as the number of characters, topics, and disclosures built—and acted as one of my key interlocutors in the shaping of the narrative. My dear friend Greg Jackson dove in to assist at a crunch time and offered fresh eyes for a final read.

  The reporting and writing of this book stretched across three summers, and my friends at Dartmouth, where I’ve been a writer-in-residence since 2000, again provided me with a refuge. During this time, it has been at the John Sloan Dicke Center, led by a brilliant and seasoned diplomat, Ken Yalowitz, who has welcomed me into the company of scholars.

  But, in terms of refuge—along with joy and sustenance, I’ve long been the most fortunate of men. During the nearly three years conceiving, reporting, and writing this book, my sons have grown, firmly, into manhood. Walter, just graduated from college, will read this book with critical faculties sharpened to a fine edge. My younger son, Owen, just off to college, speaks frequently of the nature of courage and friendship, and how “all great journeys are about facing your fears.” As with fathers everywhere, I’ve learned from my sons much more than I could teach them, and those lessons have inspired this effort.

  As for my wife, Cornelia, my partner in all things, I simply offer unspeakable gratitude for her support and guidance, with additional acknowledgments remaining firmly off the record.

  Sources

  The pagination of this electronic edition does not match the edition from which it was created. To locate a specific passage, please use the search feature of your e-book reader.

  In a perfect world everyone would speak freely of their thoughts, feelings, and recollections, on the record, and stand with proprietary regard beside those words. It certainly would make for some very interesting journalism.

  Of course, we are far from such a world—maybe farther than ever, with “message,” these days, so often trumping truth, analysis, and even action itself. With the large institutions that populate Washington and New York, this is regularly the case: the face they show to the public is crafted, each day, with fastidious ardor.

  All of which means that many of the sources that cooperated with this project—in both those two cities and elsewhere—are off the record or do not speak for attribution.

  Let me apologize to readers for this. Off-the-record sources are, no doubt, crucial to a journalist’s task of discovering what is knowable—George Washington was an active off-the-record source for reporters during the Revolutionary War; as was Thomas Jefferson, during the early days of the country. But sources who identify themselves and speak openly are almost always preferable. Thankfully, many do in this book. They are to be commended.

  Many others manage to help with the reconstruction of events of recent history—who said what, at a particular place and time; who was in the room; what preceded an event to suggest what people were thinking before an episode or incident, and what they thought afterward; what is visible now, looking back. The major meetings and scenes rendered in this book are drawn from multiple sources, with only a handful of exceptions. That latter tends to be subjects who recall what they themselves did with no one around. Transcripts of some key meetings were provided, as were documents and e-mails that preceded and followed various gatherings.

  Some subjects were interviewed as many at thirty times during the reporting and writing of the book, a period that spanned more than two years. In all, 746 hours of interviews were conducted with more than 200 individuals, including the president of the United States.

  A few final notes on the notes. Many books have been written in the past few years about both Wall Street and Washington. Where possible, I’ve cited instances in which I’ve drawn from those books, especially the ones that broke news. Though it is my practice to confirm quotations that have appeared elsewhere from subjects—and often have cause to alter them—the first public citation is mentioned first. In any era, the biggest stories tend to be told bit by bit, day by day, with journalists balancing on one another’s shoulders to reveal all the public has a right to know. May this group effort continue.

  Chapter 1

  4 unveiled in an article she published in the spring of 2007: Elizabeth Warren, “Unsafe at Any Rate,” Democracy 5 (Summer 2007): available at http://www.democracyjournal.org/5/6528.php.

  6 “This isn’t a job interview”: A phrase often used by the president, mentioned to several sources. In this context, Elizabeth Warren, interview with the author, September 2010.

  6 “Why didn’t you put her up for confirmation?”: “Obama Announces Appointment of Elizabeth Warren,” ABC News, September 17, 2010, video available at abcnews.go.com/Politics/video/obama-announces-appointment-elizabeth-warren–11666764.

  7 Krueger is something of an oddity in the upper reaches of government: Alan Krueger résumé available at http://www.krueger.princeton.edu/Krueger12_15_09.htm.

  7 the Census Bureau had announce
d that poverty had hit a fifteen-year high: Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica Smith, U.S. Census Bureau, Income, Poverty and Health Insurance Coverage in the United States: 2009, September 2010, available at http://www.census.gov/prod/2010pubs/p60-238.pdf.

  7 Even the Wall Street Journal’s: Conor Dougherty and Sara Murray, “Lost Decade for Family Income,” Wall Street Journal, September 17, 2010, available at online.wsj.com/article/SB10001424052748703440604575495670714069694.html.

  8 “Going back to Princeton”: Alan Krueger, interview with the author, October 1, 2010, scene and quotes.

  10 “We have to get folks off the sidelines”: Barack Obama, interview by Jann S. Wenner, Rolling Stone, October 14, 2010, available at http://www.rollingstone.com/politics/news/obama-in-command-br-the-rolling-stone-interview-20100928.

  11 “Did you think I was kidding”: Valerie Jarrett, interview with the author, November 2008.

  Chapter 2

  13 “I stand here knowing that my story is part of the larger American story”: Barack Obama, “Keynote Address,” 2004 Democratic National Convention, Boston, Mass., July 24, 2004.

  14 “We ought not, we will not, travel down that hellish path blindly”: Barack Obama, “Speech Against the Iraq War,” Chicago, Ill., October 2, 2002, transcript available at www.npr.org/templates/story/story.php?storyId=99591469.

  14 Hence the morning’s address, given at Washington’s Woodrow Wilson Center: Barack Obama, Woodrow Wilson International Center, Washington, D.C., August 1, 2007, speech, available at www.cfr.org/us-election–2008/obamas-speech-woodrow-wilson-center/p13974.

  15 An NBC News/Wall Street Journal poll . . . showed Hillary Clinton with a 21-point lead: NBC News/Wall Street Journal poll, July 2007, Hart/Newhouse, study #6074, available at http://online.wsj.com/public/resources/documents/july2007pollv1.pdf.

  16 “Growing Together (1947–1973) vs. Growing Apart (1973–2005)”: Claudia Golden and Lawrence W. Katz, “Long-Run Changes in the U.S. Wage Structure: Narrowing, Widening, Polarizing,” September 2007, available at http://www.economics.harvard.edu/faculty/katz/files/GoldinKatz_NWP_1107.pdf.

  17 household debt, commonly between 30 and 50 percent: Laura Conaway, “Household Debt Vs. GDP,” NPR: Planet Money, February 27, 2009, available at http://www.npr.org/blogs/money/2009/02/household_debt_vs_gdp.html.

  18 “Okay, in year two of my administration”: Interviews by the author with Alan Krueger, Austan Goolsbee, and President Obama, various dates, scene and quotes.

  18 Dreams from My Father, a book in which he deconstructs himself: Barack Obama, Dreams from My Father: A Story of Race and Inheritance (New York: Broadway Books, 2004).

  22 “On my 7 hour drive back from Maine”: Robert Wolf, “Another way to look at the direction of the markets . . .” message to undisclosed, July 23, 2007, e-mail.

  25 “Tonight he can do no wrong”: Robert Wolf, interviews with the author, multiple dates.

  25 “The world’s coming to an end, Wolfie”: Sal Naro and Robert Wolf, interviews with the author, multiple dates.

  28 “market-driven disaster”: Barack Obama, “Oval Office interview,” with Ron Suskind, February 14, 2011; as well as interviews with Robert Wolf, multiple dates, 2010–2011.

  29 “the contemporary tendency in our society is to base our distribution on scarcity”: Martin Luther King, Where Do We Go from Here: Chaos or Community? (Boston: Beacon Press, 1968).

  29 “One day we will have to stand before the God of history”: Delivered at the National Cathedral, Washington, D.C., on March 31, 1968. Congressional Record, April 9, 1968. http://mlk-kpp01.stanford.edu/index.php/kingpapers/article/remaining_awake_through_a_great_revolution/.

  Chapter 3

  31 “Amid a crisis of confidence, Roosevelt called for”: Barack Obama, “NASDAQ speech,” speech at NASDAQ, New York, September 17, 2007, transcript available at www.nytimes.com/2007/09/17/us/politics/16text-obama.html?pagewanted=print.

  32 “I’m really busy with my homework”: Valerie Jarrett, interview with the author, November 2008.

  33 “Hope is what led a band of colonists”: Barack Obama, “Iowa Caucus Victory Speech,” Des Moines, Iowa, January 3, 2008, available at www.washingtonpost.com/wp-dyn/content/article/2008/01/03/AR2008010304994.html.

  34 “who would often express fears of black men and uttered stereotypes that made me cringe”: Barack Obama, “A More Perfect Union,” speech, National Constitution Center, Philadelphia, Pa., March 18, 2008, available at www.npr.org/templates/story/story.php?storyId=88478467.

  35 on March 16, JPMorgan agreed to buy Bear Stearns: Andrew Ross Sorkin and Landon Thomas Jr., “JPMorgan Acts to Buy Ailing Bear Stearns at Huge Discount,” New York Times, March 16, 2008, available at http://www.nytimes.com/2008/03/16/business/16cnd-bear.html.

  37 “As I said last fall at NASDAQ”: Barack Obama, “Renewing the American Economy,” speech at Cooper Union, New York, March 27, 2008, available at www.nytimes.com/2008/03/27/us/politics/27text-obama.html?pagewanted=print.

  37 “Barack Obama’s speech on the financial crisis was a remarkable breakthrough”: Robert Kuttner, “Obama v. Krugman,” American Prospect, March 28, 2008, available at http://prospect.org/cs/articles?article=obama_v_krugman.

  40 “I think, based on the way things have gone”: Greg Fleming, multiple interviews with the author, June 2010, scene and quotes.

  41 Merrill chief Stan O’Neal was abruptly fired after the firm lost $2.3 billion in its third quarter: Thomas Landon Jr. and Jenny Anderson, “Risk-Taker’s Reign at Merrill Ends With Swift Fall,” New York Times, October 29, 2007, available at http://www.nytimes.com/2007/10/29/business/29merrill.html?ref=estanleyoneal.

  41 the Wall Street Journal reported that Merrill had fraudulently handled its derivatives book: Susan Pulliam, “Deals With Hedge Funds May Be Helping Merrill Delay Mortgage Losses,” Wall Street Journal, November 2, 2009, available at http://online.wsj.com/article/SB119401977393180546.html?mod=sphere_ts.

  45 “Greed, leverage, and lax investor standards”: Henry M. Paulson, On the Brink, (New York: Business Plus, 2010).

  46 Two top Treasury officials, Neel Kashkari and Phillip Swagel: Andrew Ross Sorkin, Too Big to Fail (New York: Viking, 2009), p. 90.

  48 “Now, tell me again what $10 million in advertising [in Ohio] got us”: Senior official from Obama campaign, interview with the author, November 3, 2008.

  49 “Tonight, more than ever”: Hillary Clinton’s Pennsylvania victory speech, Philadelphia, Pennsylvania, April 22, 2008, available at http://www.realclearpolitics.com/printpage/?url=http://www.realclearpolitics.com/articles/2008/04/clintons_pennsylvania_victory.html.

  50 “I know what I’m good at”: Richard Wolffe, Renegade: The Making of a President (New York: Three Rivers Press, 2009), p. 39.

  51 “Barack . . . take ownership of this campaign”: Peter Rouse, interviews with the author, multiple dates.

  52 “I distinguish between the campaign and the presidency”: Barack Obama, interview with the author, February 14, 2011.

  55 “He pulled out, plain and simple, because it was his money”: Carmine Visone, interviews with the author, multiple dates, 2009–2011, scene and quotes.

  56 If Stockholm gives Shiller the nod: Robert J. Shiller and Karl E. Case. “Is There a Bubble in the Housing Market?” Cowles Foundation Paper 1089, Cowles Foundation for Research in Economics, Yale University, 2004, available at http://www.econ.yale.edu/~shiller/pubs/p1089.pdf.

  57 Geithner ignored Shiller’s warning: Robert Shiller, interview with the author, September 2009.

  Chapter 4

  69 “Fannie Mae and Freddie Mac are not in crisis”: Barney Frank, Hearing of the House Financial Services Committee, September 10, 2003, quote available at http://online.wsj.com/article/SB122290574391296381.html.

  72 Geithner was getting ready for a wildly busy day: “Geithner’s Calendar at the New York Fed,” p. 462, in New York Times, available at documents.nytimes.com/geithner-schedule-new-york-fed.

  73 “Co
untrywide had no idea what its exposure was”: Timothy Geithner, interview with the author, December 15, 2009.

  74 “Reducing Systemic Risk in a Dynamic Financial System”: Timothy Geithner, “Reducing Systemic Risk in a Dynamic Financial System,” speech at the Economic Club of New York, June 9, 2008, available at www.newyorkfed.org/newsevents/speeches/2008/tfg080609.html.

  75 “has judged it necessary to take actions that extend to the very edge of its lawful and implied power”: Paul Volcker, speech at the Economic Club of New York, April 8, 2008, available at economics.kenyon.edu/melick/Econ391/K-Monetary%20Policy%20During%20and%20After/Volcker_Transcript_April_2008.pdf.

  75 “The Fed made the judgment”: Geithner, “Reducing Systemic Risk in a Dynamic Financial System.”

  76 There was no more mention of clearinghouses: “Statement Regarding June 9 Meeting on Over-the-Counter Derivatives,” Federal Reserve Bank of New York, press release, June 9, 2008, available at http://www.newyorkfed.org/newsevents/news_archive/markets/2008/ma080609.html.

  81 “I haven’t been living in this bubble very long”: Elizabeth Warren, multiple interviews with the author, September 2010, scene and quotes.

  82 “innate gender differences”: Lawrence Summers, from a speech delivered in January 2005, available at http://www.thecrimson.com/article/2005/1/14/summers-comments-on-women-and-science.

  84 The result of this particular overreach . . . when Harvard lost nearly one-third of its endowment: Geraldine Fabrikant, “Harvard and Yale Report Losses in Endowments,” New York Times, September 10, 2009, available at http://www.nytimes.com/2009/09/11/business/11harvard.html.

  84 Despite spending just one day . . . Summers was paid $5.2 million: Louise Story, “A Rich Education for Summers (After Harvard),” New York Times, April 5, 2009, available at http://www.nytimes.com/2009/04/06/business/06summers.html.

  84 They were state-of-the-world renderings: Lawrence Summers, “The pendulum swings towards regulation,” Financial Times: Economists’ Forum, October 26, 2008, available at http://blogs.ft.com/economistsforum/2008/10/the-pendulum-swings-towards-regulation/#axzz1SXE1S3n1.