The Unwinding: An Inner History of the New America (5 page)

Back in Tuscaloosa, he started the Alabama Political Union, and for its first event
in the fall he invited Biden and Senator Jake Garn, a Republican from Utah, to debate
the SALT II arms control treaty. Both senators accepted (in 1979 there was no ban
on accepting the five-hundred-dollar honorarium the university was offering—just a
restriction limiting outside income to 15 percent of a senator’s $57,500 salary, which
had taken effect on January 1), but then Garn backed out. The debate threatened to
be reduced to a mere speech.

Connaughton got in his Chevy Nova with a friend who was visiting from Brigham Young
University and who, like Garn, was a Mormon. They drove fourteen hours to the nation’s
capital to change Senator Garn’s mind. Connaughton had never been to Washington, and
the Beltway offered no obvious exits into the city—it was more of a moat than a conduit—and
the Capitol dome kept appearing in the distance and then disappearing. Finally they
found their way onto backstreets that led toward Capitol Hill. This was poor, black
Washington, blighted Washington, the Washington of the district’s 80 percent, neighborhoods
that Connaughton would rarely see again in the two decades he would live and work
in the city.

In the morning, they found Garn’s office in the Russell Senate Office Building, along
one of the lofty and immensely long corridors, behind one of the high, forbidding
mahogany doors. Because he had brought a Utah Mormon with him, Connaughton was granted
an unscheduled audience right there in the waiting room with the senator himself,
but he was unable to change Garn’s mind—he had another commitment the day of the debate.
So Connaughton and the Mormon friend left and wandered around Russell—two young out-of-towners
dwarfed by the white Vermont marble and Concord granite and dark mahogany and the
clubby, bipartisan institutional dignity that was still intact, though it would soon
begin to crack and then crumble—looking for a Republican senator to sign up. But the
halls were nearly empty, in an undemocratic hush, and Connaughton barely knew what
any senators looked like. He might have glimpsed Howard Baker, Jacob Javits, Chuck
Percy, or Barry Goldwater. Among the Democrats, Hubert Humphrey had died recently,
but Edmund Muskie was still there, and Frank Church, Birch Bayh, Gaylord Nelson, George
McGovern. All of them soon to be swept away.

Suddenly a buzzer went off, and out of nowhere the corridor filled with tall, gray-haired,
distinguished-looking men. Connaughton and his friend followed them into an elevator
(wasn’t that little Japanese man in the tam-o’-shanter S. I. Hayakawa?), down to the
basement and the subterranean electric cars that shuttled back and forth along a thirty-second
track between Russell and the Capitol. Among the senators striding toward the next
car was Ted Kennedy, who smiled at being recognized and shook hands with the friend,
who had stepped forward. As for Connaughton, he was too awestruck to move. (The public
didn’t know it, but Kennedy was preparing to challenge President Carter for the 1980
Democratic nomination: it was Biden who had first alerted Carter, in early 1978, that
Kennedy was coming after him.)

Connaughton returned to Tuscaloosa without a Republican to debate SALT II. It didn’t
matter. Biden arrived that September wearing one of his tailored suits and power ties,
trim and flashing his white-toothed smile, and he charmed the hell out of the lovely
coeds over dinner at Phi Mu on Sorority Row (Connaughton’s girlfriend was a member),
with Jeff attached to the senator’s elbow as his adjutant for the evening and now
seriously considering a political career. Two hundred people filled the student center
for Biden’s speech. Connaughton made the introduction, then took his seat in the front
row as Biden came to the lectern.

“I know you’re all here tonight because you’ve heard what a great man I am,” Biden
began. “Yep, I’m widely known as what they call ‘presidential timber.’” The crowd
laughed nervously, thrown by his sense of humor. “Why, just earlier tonight I spoke
to a group of students who had put up a great big sign, ‘Welcome Senator Biden.’ And
then when I walked under the sign I heard someone say, ‘That must be Senator Bidden.’”
The laughter rose. Now Biden had the crowd, and he turned to his subject and spent
ninety minutes arguing lucidly and without notes for the importance of reducing the
American and Soviet nuclear arsenals, while he dismantled the arguments of SALT II’s
opponents in the Senate. The day before, the treaty had suffered a blow with the supposed
revelation of a brigade of Soviet troops in Cuba. “Folks, I’m going to let you in
on a little secret,” Biden whispered, and he took the microphone and walked toward
his audience, gesturing for the crowd to lean in and listen. “Those troops have been
in Cuba all along!” he shouted. “And everyone knows it!” At the end of the lecture,
the applause was loud and long. When Connaughton got up to approach Biden and thank
him, he accidentally started a standing ovation.

A campus security guard drove Biden back to the Birmingham airport, and Connaughton
went along. Biden looked tired from his speech, but he answered every beginner’s question
from the guard (“What’s the difference between a Democrat and a Republican?”) as thoughtfully
as if it had come from David Brinkley. When Connaughton asked Biden why he rode the
train from Wilmington to Washington every day, the senator calmly told the story of
the car accident that had nearly wiped out his young family in December 1972, just
a month after his election to the Senate. “My wife and baby girl were killed,” Biden
said, “and my sons were badly injured. So I stayed with my sons at the hospital. I
really didn’t want to be a senator. But eventually I was sworn in at my son’s bedside.
And I served, but I went home every night to be with my sons. And over the years,
Delaware just got used to having me home every day. And so I really can’t ever move
to Washington.”

That was the moment Jeff Connaughton was hooked by Joe Biden. Here was tragedy, here
was energy, here was oratory—just like the Kennedys. Biden turned his charisma on
everyone who crossed his path and didn’t move on until he had made a connection—the
sorority girls, the audience at the speech (many of the students attending for course
credit), the security guard, the junior business major who had invited him to Tuscaloosa
in the first place. This was the need and drive of a man who wanted to be president,
and as they got out at the airport, Connaughton produced a spiral notebook that Biden
signed, “To Jeff and the APU, Please stay involved in politics. We need you all,”
and he knew that he would end up following this man to the White House. What he would
do once he got there wasn’t clear, and didn’t really matter. The point was to be in
the room, at the summit of American life.

Before graduating from Alabama, Connaughton brought Biden (along with dozens of other
elected officials) down twice more on paid speaking gigs, and Biden told the same
jokes each time before giving his speech, which, by the third visit, was worth a thousand
dollars. The last time he dropped Biden off at the Birmingham airport, Connaughton
told the senator, “If you ever run for president, I’m going to be there.”

*   *   *

He didn’t immediately head to Washington. First he went to the University of Chicago
Business School, with a letter of recommendation from Biden himself. It was 1981,
and
Time
ran a cover story called “The Money Chase,” about the vogue for MBAs; the cover image
showed a graduating student whose mortarboard had a tassel made of dollars. Connaughton
had never had any money, and Wall Street’s magnetic pull was almost as strong as the
allure of the White House. The whole point of an MBA was Wall Street. Just as it would
be absurd to go to Washington and end up at the Interior Department, there was no
appeal in getting a prestigious business degree only to work for a company like Procter
& Gamble or IBM. Among his classmates, a job with a company that actually made things
meant you were being left behind. Toward the end of his second year, Connaughton flew
to Miami to interview with Ryder Truck, and the whole time he was thinking that if
it weren’t Miami and a day at the beach he wouldn’t know why he was bothering. He’d
had a summer job at Conoco Oil in Houston between his first and second years, and
they wanted him to come back and make a career there, but the thought of starting
out at thirty-two grand and moving laterally every six months from Lake Charles, Louisiana,
to Ponca City, Oklahoma, was at least as dismal as working for a trucking company.
Connaughton
came
from flyover country—he didn’t want to work there. If he didn’t get a position at
an investment bank like Salomon Brothers or Goldman Sachs, or else a management consulting
firm like McKinsey, he would feel like a failure.

Connaughton didn’t forget about Joe Biden. Working till midnight in the university
library, he would put aside his finance books and dig up old issues of
Time
from the sixties and read again about the assassinations, Jack’s presidency, Bobby’s
rise. He still wanted to find himself in those black-and-white photos. Even as he
applied to Wall Street, he followed Biden’s career closely and wrote several letters
asking for a job—not to the senator’s office, or to the staff guy there whom he’d
gotten to know a little, who might have actually written back, but to Biden himself:
“Dear Senator Biden, I’m coming up on graduating from Chicago and…” He didn’t understand
that the office answered mail only from Delaware—that his letters went straight into
a wastebasket.

Connaughton was hired by Smith Barney’s public finance department, beginning at forty-eight
thousand dollars, and he moved to New York in the summer of 1983. It was just the
right moment to start out on Wall Street, and if Connaughton had stayed, like some
of his Chicago classmates, he might have made a small fortune. Public finance meant
tax-exempt bonds for state and local governments, which was not the place to make
a pile, but it suited Connaughton, who had written in his business school application
that he wanted to understand the intersection between business and government and
have a career in which he moved back and forth between them. Smith Barney was underwriting
water and sewer bonds in Florida, where the cities and towns were doubling their populations
every few years and needed help raising fifty or a hundred million dollars for infrastructure
projects.

The firm would throw lavish thirty-thousand-dollar closing dinners at Lutèce in Manhattan,
with limos provided, and assure clients that it wouldn’t cost their home state a thing:
they could recoup the underwriting fees (including the dinner) by investing funds
that they’d raised in the tax-exempt market and make 3 percent more on interest rates
than they were paying on their public bonds. Connaughton would tell officials, “I
can give you front-row seats to
Cats
, just let me know, it won’t cost your taxpayers a dime.” They would hesitate, but
almost every time he’d have a message on his answering machine the next morning: “We
changed our mind—we
would
like to go to
Cats
.” Once, another banker went down to Jackson County, Tennessee, and explained to the
board of commissioners that the higher the bank’s fees, the more money the county
would eventually save. From the back of the room a man drawled out a reply: “Bullll-shit…”
As a southerner, Connaughton believed that whenever an investment banker from New
York came down saying “We can save you money,” there needed to be someone in the room
saying “Bullll-shit.”

Connaughton shared an apartment (rented by the firm) on the Upper East Side. He would
roll into Smith Barney’s midtown headquarters around 9:30 in the morning, work all
day, step out with colleagues for dinner, and go back to the office till midnight.
He wasn’t as smart as some of the geeks running numbers on bond scenarios at the computers
around him, but as a southerner he was more fun, and he had connections to Alabama
women in Manhattan. He never did drugs, not once (years later, when he was hired to
work at the Clinton White House and was asked about drug use as part of his security
clearance, Connaughton said, “I’ve been waiting my entire life to answer that question”).
But he drank plenty of bourbon and once danced all night at Studio 54. From November
on, the only topic among his coworkers was the size of their year-end bonus.

After a year, he was transferred to Chicago. Hating the cold and missing the South,
he passed up a twenty-thousand-dollar bonus and, at the start of 1985, jumped over
to E. F. Hutton’s office in Atlanta. Several months after his arrival, the firm pleaded
guilty to two thousand counts of wire and mail fraud in a massive check-kiting scandal.
Throughout the eighties E. F. Hutton had been writing checks for sums it couldn’t
cover and transferring the money between accounts, using the funds for a day or two
as interest-free loans and making millions of dollars on the float. Up in Washington,
Joe Biden of the Senate Judiciary Committee was on the case. He began going on TV
talking about the growing epidemic of white-collar crime on Wall Street and the failure
of the Reagan Justice Department to police it. In a speech at NYU he said, “People
believe that our system of law and those who manage it have failed, and may not even
have tried, to deal effectively with unethical and possibly illegal misconduct in
high places.” Reagan was in his senescent second term, his administration riddled
with corruption, and Biden was setting himself up to go after the big prize.

The guilty plea cost E. F. Hutton clients and began to hollow out the firm, but Connaughton
survived. As he learned the business, he would fly down to Florida by himself and
meet with city treasurers. He even came up with a marketable idea: The towns and counties
had huge pension liabilities—why not arbitrage them? Issue a hundred-million-dollar
pension bond tax-free at 4 percent, then invest the money for a few years at 6 or
7 percent? It was a kind of scam on the U.S. taxpayer. But a bond firm gave a favorable
opinion (it was legal if you could get a law firm to tell you it was legal—lawyers
were becoming more creative as the action got exponentially more profitable), and
his boss, a former bond lawyer himself, was pleased. Connaughton was figuring out
how to do investment banking in the 1980s. Playing the tax rules was a racket.