Adorable MOUs

Adorable MOUs

by digby

This seems so off-key to me that I am once again left wondering about the different world the 1% seems to inhabit.

That’s very cute. But The Carlyle Group happens to be the poster child for the central problem of our time. Here’s how those adorable fellows actually made their money:

And so The Carlyle Group was born.

After meandering for a couple of years, they hit upon a game plan to build a showcase of Washington insiders who could find deals and draw investors. Former presidents and Cabinet secretaries signed up. Fat profits and growth followed. Pension funds and the governments of countries got in line to give Carlyle money.

Forged not on Wall Street but on Pennsylvania Avenue, Carlyle has grown into a financial powerhouse.

It’s hard to think of an investment company with more juice in DC. It employs ex-presidents and top movers and shakers of both parties to help pave the way to exploitation and huge profits for a very small number of investors.

And you have to love how the fawning Washington Post describes this:

There is one big idea that Rubenstein regrets. To boost Carlyle’s profile and help draw investors, he hired big-name political insiders such as former President George H.W. Bush, former British prime minister John Major and former secretary of state James A. Baker III.

“We had an image issue . . . due to my fault, principally,” he said. “I recruited all the those guys. I wanted to have those ex-government people. I thought these guys can open doors. Nobody ever heard of Rubenstein. Nobody ever heard of Conway.”

But Carlyle’s proximity to the Bushes, its Saudi investors and its defense deals stoked conspiracy theorists. After the Sept. 11, 2001, terrorist attacks, Carlyle returned money that members of the bin Laden family had invested with the firm, a connection that years later would fuel an unflattering portrayal in Michael Moore’s blockbuster documentary film “Fahrenheit 9/11.”

The founders had had enough. Carlyle hired its first public relations person, former SEC spokesman Christopher Ullman, and gave him one mission: Reverse the public perception.

Over the next several years, the firm filled its ranks with august business types like former Wall Street Journal editor Norman Pearlstein, General Electric’s David Calhoun, former SEC chairman Arthur Levitt and former IBM chief Louis V. Gerstner Jr., who would become Carlyle’s chairman.

“By sharing information, meeting with the media, answering the critics and explaining our business, we’ve changed our brand,” Ullman said. “We’re bringing glasnost to Carlyle.”

I think we can all see the irony there, can’t we?

The Carlyle Group is scheduled to go public in 2012 — or at least they’ve filed papers to that end. But that’s probably just to score a last big hit for its small number of investors. (These secretive private investment firms tend to make less money once they go public — for obvious reasons.)