For a presidential candidate running against Wall Street greed, Sen. John McCain's selection of titans of finance to discuss the ailing economy with this morning did little to underline his message. Gathered around McCain's U-shaped table was Stephen Schwarzman, co-founder of the private equity giant, Blackstone Group. Schwarzman has recently become the poster child in a Washington debate over what many consider to be the mother of all tax dodges, "carried interest." He received a $350.2 million in cash distributions last year. On much of that income, Schwarzman's tax rate was a secretary-level 15 percent, not the 35 percent income tax rate that regular rich folks pay. That is because private equity traders like Schwarzman structure their fees as capital gains and are taxed accordingly. He even sold a stake of his company to an entity controlled by the Chinese government -- not a crowd pleaser on the campaign trail. But it is his lifestyle that has long raised eyebrows. His personal chef "often spends $3,000 for a weekend of food for Mr. Schwarzman and his wife, including stone crabs that cost $400, or $40 per claw," the Journal reported.
Henry Kravis, the takeover artist made famous in "Barbarians At The Gate," Kravis helped engineer the leveraged buyout of R.J.R. Nabisco in 1988 with what was then a staggering sum of mostly borrowed money, $31.4 billion. After a few years, the deal unraveled and the company was dismantled.
John Thain, who took control of Merrill Lynch as it stumbled into the subprime crisis -- and then steered it into the maw of Bank of America during investment banking's darkest week. Thain, who as chairman and chief executive of Merrill Lynch was actually at the helm of one of the venerable institutions felled by the crisis McCain is trying to help address.