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Updated on May 11, 2010

Subprime energy for dummies

Next to Goldman Sachs it is believed and has been written that Lehman Brothers may have been the largest purveyer of subprime mortage instruments. These curiously named financial instruments are ultimately what toppled the insurance giant AIG and in turn that disaster began the ripple effect of collapse that brought the world's financial community to its knees, and all of us along with it. In a word, Lehman was despicable, greedy beyond description. The firm failed, going into bankruptcy in 2008, but not before dozens of its executives, traders and salesmen made fortunes, some in the eight figures. Salaries in the low millions were not uncommon.

Jim Gordon, the boss at Cape Wind, selected Lehman as the investment banker for the Cape Wind project in May of 2005. Only a few Wall street skeptics at that time knew how badly Lehman executives, traders and salesmen were raping the U.S. and global economies with their subprime mortgage products. The credentials of the Lehman managing director who personally sponsored Cape Wind were seemingly as impeccable as his name was prominent. He was Theodore Roosevelt IV, great grandson of our first environmental president, Teddy Roosevelt. T. R. IV himself was a man of accomplishments. He had two Harvard degrees, one for undergraduate studies and an MBA from Harvard business School. Between those two accomplishments he had served as a Navy seal. Interesting guy.

His son, Theodore Roosevelt V, a Princeton graduate who was at the time of Lehman's crash in his late twenties, a high yield bond salesman at Lehman, was also very much in the flow of Lehman people who were engaged in perhaps the worst financial manipulation in this country's history. Lehman's bankruptcy did not end or even stall the careers of the Roosevelts. TR IV became managing director at Barclay's Capital when the mighty English bank, Barclays bought Lehman and TR V went along to Barclay's where he is not a senior vice president for fixed income.

Both Roosevelts are committed environmentalists. T. R. IV served on Lehman's Global Council on Climate Change and is a member of other conservation and environmental groups while his son is a member of Conservation Voters of New York. T. R. V also has another interesting and significant environmental credential we shall discuss later. Here we have two serious envirnmentalists whose membership in the Lehman gang might make a person wonder how good a deal Cape Wind can be for electric customers in view of the dreadful conduct now recorded within Lehman. Why would the Roosevelt name attach itself to Cape Wind? How were they introduced to the project, or the project to them?

When Lehman imploded was it the Roosevelt name and not the Roosevelt conduct that saved these two men from public scrutiny? Have you ever noticed how when big things go wrong it often happens that no one is to blame? Somehow terrible things happen all by themselves. Is the Roosevelt endorsement of Cape Wind a curse or a blessing? It would be interesting, would it not, to know how much money the T. R.s made, say between, 2004 and 2008. And, it would be equally interesting to learn what they knew about what Lehman was doing to the world: how good was there financial judgment, these prominent Cape Wind supporters?

Certainly we might expect the T. R.s to find themselves welcome in a Republican White House, almost any White House. But, there was another man working at Lehman who could perhaps gain even easier access to George W. Bush. His name is George Herbert Walker IV. He was Lehman's managing director of the management section. He is now forty-one years old. When he left Lehman in 2008 during their collapse to become CEO of Neuberger Berman he was thirty-nine. This fellow was either a management genius or his ancestry inspired confidence. And what an ancestry it is.

Lucretia Wear married George Herbert Walker of Missouri in the nineteenth century. Their daughter, Dorothy married Prescott Bush and gave birth to George Herbert Walker Bush. George Herbert Walker IV, son George Herbert Walker III is a first cousin to George Herbert Walker Bush and a second cousin to George W. Bush. And the Bush family, in addition to being very large, is very tight. To them family is a religion. How convenient that Jim Gordon's investment bank had as its youngest ever partner a Bush family member.

So we have now met three men with impressive family histories and storied names. We can see a possible direct connection between Jim Gordon and the George W. Bush White House, but how has the Gordon magic touch worked on the Obama White House? For surely it has. Do you remember that youngest of the Teddy Roosevelts? The one who sold high yield bonds at Lehman and then became a vice president at Barclay's after those bonds bombed? He was an early and ardent supporter of Barack Obama. And, he sat on the Obama campaign's Energy and Environment Committee. Capitol Hill, Beacon Hill, San Juan Hill...once you've taken one hill you've taken them all.


Part 2 of this family story will tell how I believe Jim Gordon was introduced into the halls of power. There is another convenient cousin for us to meet.


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