It's the relationship that won't go away, and it comes at a bad moment for billionaire Meg Whitman in her unlikely quest for governor of California. Her vaunted megabucks exercise in branding -- actually an attempt to appropriate the eBay brand -- is turning into something quite different and damaging. She's become GoldMeg Sachs Whitman.
Even before her Republican primary rival, super-rich state Insurance Commissioner Steve Poizner, began airing a tough new TV ad over the weekend hitting Whitman for her deep involvement with Goldman Sachs, Whitman's lead in the GOP primary had slid precipitously. Once ahead by an astonishing 50 points, thanks to her many months of unanswered advertising, her lead over Poizner in private polling had slipped down into the teens prior to the advent of the new ad.
This hard-hitting new attack ad against billionaire Meg Whitman is now airing throughout California.
Then Poizner went on the offensive in his debate with Whitman Sunday night at the Tech Museum in San Jose, repeatedly attacking Whitman for her inside dealing tenure on the Goldman Sachs board, which came to an abrupt end after federal regulators and eBay shareholders sued, her backing for the Goldman Sachs bailout, and her prospering from investments in vulture funds (that's what they're called) to profit from the havoc caused by the near meltdown of the global financial system.
What did Whitman say in response? She didn't do anything wrong. Her only "regret" was that it looked like she had. Cue sighs of delight from the Poizner camp and that of Democrat Jerry Brown, though he might also have to start thinking what a race against Poizner would be like.
Poizner also scored heavily on illegal immigration -- he's a hawk, a popular stance in a Republican primary, and Whitman has had to move to the right to try to counter -- and won the debate. He didn't deliver a knockout punch, though, so we can expect the next five weeks of the Republican primary to be a non-stop slamfest between the two.
Even before the launch of the new attack ad and the Sunday night debate, Whitman was under the gun on GoldMeg Sachs. Last week, she and her campaign tried furiously to spin away the controversy that could consume her massively funded candidacy. Namely, her controversial tenure as a member of the board of Goldman Sachs, which ended with the investment bank settling federal charges against it, and with her disgorging millions she garnered through her trading on inside information granted to her. That's the so-called "spinning" of initial public offerings, in which she took stock granted to her in advance of it being publicly available, as an insider and board member, and sold it for huge profits a few days later when the shares hit the public markets.
So Whitman did an interview with the Associated Press, in which she did not adequately push back against the controversy. Whitman said she'd left the Goldman Sachs board because she "wasn't a good fit." Which she evidently learned as federal regulators and eBay shareholders were closing in, and not a moment before.
However, she did not apologize for her actions, which are now banned.
Instead, Whitman said: "I missed the signposts here."
What does that mean?
"The lesson learned about it is you have to be extra vigilant about seeing any actual or perceived conflict of interest."
Translation: She thinks that she should have realized that her highly lucrative inside stock trades could be perceived as constituting a conflict of interest.
But she does not admit that she had a conflict of interest. Or that she did anything at all that was wrong, even though she suddenly left the board in the wake of the firestorm of controversy her actions helped engender.
Reality check: This issue is never going away for Whitman, especially with this sort of handling.
And all the spuriously spun-up attempts to equate Whitman with Jerry Brown -- whose sister Kathleen works on the public finance side of Goldman Sachs (she sells bonds to help finance local and state governments), and is uninvolved with any controversial activity (and whose one-time city Oakland entered into a routine Goldman-sponsored financing mechanism initiated before he became mayor by the city manager that Brown fired) -- will not work.
Goldman Sachs execs ran into a wall of bipartisan wrath last week before a Senate panel investigating their role in the financial crisis and the Securities and Exchange Commission fraud suit against it. Billionaire Meg Whitman, a very free-spending GOP candidate for governor of California who was forced to resign from the Goldman Sachs board after her inside trading surfaced, is desperately trying to spin her close affiliation.
The same goes for the Whitman camp's efforts to equate her deep Goldman Sachs ties with Poizner having had some investments through Goldman Sachs.
Here's what Poizner's Goldman Sachs attack ad against Whitman does, as I first revealed on my site, New West Notes, early on Friday morning.
This new TV ad is running in rotation statewide with a TV ad launched only a few days ago featuring the California conservative icon, Congressman Tom McClintock, in which the face of Governor Arnold Schwarzenegger morphs into that of Meg Whitman. McClintock validates Poizner as the conservative standardbearer in the gubernatorial primary and rips Whitman for backing Wall Street bailouts and "environmental extremism."
In the Goldman Sachs ad, male and female announcers say that while most Californians suffered during the financial crisis (with a Grapes of Wrath-like foreclosed homeowner onscreen), it was "easy money" for Whitman (shown in the famous Fortune magazine cover shot in riding togs with rented horse). The ad charges that Whitman invested in "vulture funds" profiting from California foreclosures.
Citing news reports, the ad declares that Whitman's entire fortune is today intertwined with Goldman Sachs and that she helped manage the bank, receiving stock deals "so unethical they were outlawed."
Whitman, the ad notes, "campaigned for the Goldman bailout" as Whitman is shown onscreen declaring it "the right thing to do." Which was "no surprise" as the bank's executives contributed heavily to Whitman.
The hard-hitting 30-second spot closes with this tag: "Meg Whitman. Bad judgment. Wrong values."
I got word of the ad late last Wednesday and then watched it via a private media service independent of any gubernatorial campaign.
As I've said before, the Goldman Sachs issue is never going away for Whitman, try though her handlers might to say that she "missed the signposts" or equate her involvement with the far more tangential links to Poizner and Jerry Brown.
In the midst of the Goldman Sachs firestorm, the firm got a surprise defender: Former President Bill Clinton. He says that he thinks Goldman Sachs may not have violated the law, despite charges from the Securities and Exchange Commission. Clinton has a very complicated relationship with the Wall Street crisis. His treasury secretary, Robert Rubin, was once head of Goldman Sachs. And Clinton deregulated financial markets, creating the setting in which rocket science financial products emerged and nearly wrecked the global economy.
Sources tell me that the Whitman camp went into a sort of controlled panic mode as they realized what they were being charged with.
So Whitman's campaign issued a distinctly un-commanding frontrunner-like challenge going into the weekend just past: Release the hounds! Er, make that tapes.
The Whitman juggernaut demanded that Poizner release "tapes" of his debates when he ran for a San Francisco Bay Area state Assembly seat in 2004. And if he doesn't, they will. On this very web site, rollstevetape.com, which came complete with a countdown. But no 24-like ticking clock sound effect.
What will these tapes reveal? Why, what I wrote months ago, that Poizner was a moderate Republican running in a Democratic district.
Which Whitman chief strategist Mike Murphy, the mastermind behind this latest attempt to blunt Whitman's big Goldman Sachs problem, knows very well. Because Murphy, then chief political strategist for Governor Arnold Schwarzenegger, was the mastermind in selecting Poizner as one of a dozen Republican Assembly candidates for the action superstar to back heavily in 2004, running in Democratic districts that Schwarzenegger nonetheless carried when he won his landslide election in the 2003 recall.
It was, as I said at the time, a bad idea. Schwarzenegger's candidates predictably all went down to defeat. Why? Because Schwarzenegger wasn't running. But it was a good way to get Schwarzenegger to raise and spend a ton of money in the process, and hence very good for the consulting business.
And what are these heinous Poizner positions that, mind you, Whitman's chief strategist Murphy encouraged him to take? Why, being pro-choice on abortion. (Which Whitman says she is, too.) And supporting the environment (another supposed Whitman stance), stem cell research (a Silicon Valley staple), open primaries (he's against them now, as is Whitman), and redistricting reform. (Does Whitman want the Legislature to go back to drawing the districts? Really?)
Clearly that makes him a dangerous Democrat. Seriously, folks, we've been through this. Poizner was a moderate Republican who moved further to the right as he began to run for governor. Whitman was, well, you don't really know, because she didn't really participate until she decided -- at the behest of Mitt Romney, GOP frontrunner to take on President Barack Obama in 2012 -- that it would be just swell to be the governor. So she's a cipher. Even if she didn't, you know, vote, or bother to do so much as write an op-ed piece about the many woes of California which she now says she wants so very much to correct.
No matter how Meg Whitman twists and turns, she's GoldMeg Sachs Whitman now. She needs a far better answer than "I was right."