Grubstakers - Episode 23: Stephen A. Schwarzman

Episode Date: July 9, 2018

This week we got a real humdinger of a billionaire. We cover Stephen Allen Schwarzman, former Chairman of the Strategic and Policy Forum for Donald Trump, Co founder of Blackstone Group, and all around unfeeling psychopath. He may be the highest paid CEO in the world and landlord to over 100,000 American families but don't think that has caused him to lose touch with reality. He still thinks that asking him to pay higher taxes is like when Hitler invaded Poland, something any rational person would say in public

Hey there, welcome to Grubstakers, the podcast about billionaires. This week we're talking about Steve Schwartzman, the billionaire who has been called Donald Trump's China whisperer and one of the co-founders of the Blackstone Group, one of the largest private equity firms in the world. Hear all about the inspiring true story of how he went from humble origins as a member of the Yale Skull and Bones Society to today being one of the largest single landlords in the United States of America. And hear all about his thoughts on both birthday parties and Bernie Sanders.

All that and more coming up on Grubstickers. I think we disproportionately stop whites too much. I taught those kids lessons on product development and marketing and they taught me what it was like growing up feeling targeted for your race i am proud to be gay i am proud to be a republican you know i went to a tough school in queens and they used to beat up the little jewish boys you know I love having the support of real billionaires. Five, four, three. Hello and welcome to another wonderful episode of Grubstakers. I'm Sean P. McCarthy, joined as always by...

Steve Jeffers. Yogi Poliwal. Andy Palmer is out this week. He is celebrating the fourth. He will hopefully be back next week. If you're a fan of his social media, he's been on a lot of trains. He's been enjoying the train life.

If you're a fan of three likes, check out his Instagram. But no, Andy Palmer's out this week, but we've got a very wonderful episode for you about one gentleman named Steve Schwartzman. Steve Schwartzman is worth about $13.3 billion as of July 2018, according to Forbes magazine. And he's particularly relevant if you've been reading any of the stories about Trump's new trade war with China.

That's right. So as of Friday, July 6th, Trump slapped about $34 billion worth of tariffs on Chinese goods. China has retaliated with their own $34 billion worth of tariffs. They've appealed to the WTO. And then Trump has actually said that he's going to maybe do another $16 billion in tariffs in two weeks and has even threatened to go all the way up to $500 billion, which would be the total value of Chinese imports in 2017.

So essentially, Trump is really escalating the trade war. And Steve Schwartzman is a, well, he's one of the co-founders and the current CEO of Blackstone, which is one of the largest private equity groups in the world. But he's also kind of, there was one Washington Post article calling him Trump's China whisperer. What? Yeah.

And just for context on that, he has done billions of dollars worth of business in China. At one point, when Blackstone went public, a Chinese state-owned firm bought about 10% of the company. They've since sold it. But, you know, this is, again, billion-dollar investment made by the Chinese government into his company, which would, of course, require approval of the Chinese premier and these kinds of things. And then, like, there's just another story from Washington Post where in January 2017,

President Xi Jinping of China took him aside at the Davos summit and he took Steve Schwartzman aside and asked him about Donald Trump. So this is essentially a Wall Street crook in bed with the politicians that are controlling our society, huh? Right. And so, yes, at Davos, January 2017, President Xi Jinping of China took Steve Schwartzman aside and asked him to, you know, help try to explain Trump's mindset, you know. And then there's been like a few different articles written about how Steve Schwartzman has been like a back and forth between, you know, Chinese officials and American government officials.

He even like sat in for a bit in a meeting between Trump and Xi Jinping. But Schwartzman has been a guy who's very consistently been against these tariffs. So it's interesting that Trump is doing this, that will, well, if we're lucky, fuck up Steve Schwartzman's bottom line. Hopefully. I think he'll be fine regardless. I just love that he had an answer like, hey, what's Trump's brain like? I mean, what is the answer to that question?

Idiot. I mean, erratic at times I think is a good answer. Steve Schwartzman had to be like, have you ever watched the Naughty America pornography series? If you watch some of those, you'll really get into the trump mindset um but yes so uh steve schwartzman is uh trump's china whisper um and he's had various degrees of influence um we'll get to his uh role in the trump tax cut as well and his role in you know protecting the what's called the carried interest loophole that benefits you know private equity firms like the one that he runs but um before all that we should just kind of go through his biography in mostly chronological

order. Steve Schwarzman was born in 1947 in Philadelphia. His grandfather and his father owned a dry goods store called Schwarzman's in Philadelphia. And basically, according to the New Yorker, it mainly sold bed and bath linens, housewares. They tell a story about Schwartzman approached his father when he was 15 and was trying to get him to expand into a national chain or even just open another store, like Sears.

He wanted his father to expand, and his dad was like, no, I'm rich. I've got enough to pay for your college and your brother's college, and I don't need the extra work. Right, right. And so, and then...

He said, dad, you should expand into a national chain, or at least have a second bathroom. He was trying to convince his dad to do a leveraged buyout. It's already... Even at a young age, the mind of a financial engineer was at work. Right, right. Dad, have you looked at how much you're paying in health insurance and pension benefits to these people who work in your stores? There are literally nines of employees out there who are just living it up on your dole dad have you considered loading up uh several

billion dollars in debt financing onto your company and then going through bankruptcy court to try and get it uh get the pensions wiped out um but so yes he tried to get his dad to expand and his dad was like no i like owning one store. And then eventually his dad retires at the age of 70 and he sells the store. But the store later goes out of business 10 years later, according to the New Yorker, because of mounting competition from national chains like Bed Bath & Beyond. Right. But the point of all this is he had at least an upper middle class upbringing. You know, his both father and grandfather owned a very successful store in the Philadelphia area. And because of this, he was able to go to Yale, where he graduated Yale with a BA in 1969.

He studied, and I've never heard of this, he studied intensive culture and behavior, which was an interdisciplinary subject. Interculture and behavior? Intensive. Okay. All right. Well, I didn't realize it was such a difficult course. It's called intensive because they hit you with a ruler every time you do cultural appropriation. No wearing a kimono to this class.

Steven, is that soy sauce? You know what that means. Yeah. They give you an F if you eat faux noodles or teriyaki. You're fed up. But so he studies intensive culture and behavior, according to The New Yorker. And it was interesting because he didn't, in his BA program course he didn't take a single economics or accounting course but he also joined the skull and bones Society in his senior year and apparently George W Bush graduated one year ahead of him so they might have both in the skull and bones society so

sick we can't talk about you know ran into each other in the course of skull and bones he later went on to become you know a Bush fundraiser and stuff but they might have you know got a drink shook hands you know in the course of Skull and Bones. He later went on to become, you know, a Bush fundraiser and stuff. Yeah, they might have, you know, gotten a drink, shook hands, you know, sucked the dick of the same devil. You never know what they did, you know. Kill a goat together, you know. You just never know.

They might have drank the blood of the same sacrifice. But yeah, Yogi, you were telling me a little bit about Skull and Bones. Well, here's the thing. The Skull and Bones groups are basically like the country's original frats. It's a group of powerful people banding together to make decisions to make themselves more wealthier. And with the Skull and Bones, they've got a whole bunch of members that are politicians. So a handful of them became presidents.

I mean, essentially, it's a group of people that say, hey, we decide what the world's going to do next. And honestly, that's very terrifying. It's, you know, 50 plus white people in a room going, hey, aren't we great? The inspiration for Blackstone was 50 plus white people in a room going, aren't we great? I do like the idea of him joining Skull and Bones in 1969, and then the initiation ritual is he gets to fire the rifle that they used to kill President Kennedy. So he graduates Yale with a BA in 1969, Intensive Culture and Behavior.

He briefly works, or briefly is in the U S army reserves. Um, but so then he kind of cuts his teeth on wall street. Let me just, yeah. So according to this New Yorker article, he, um, uh, takes a job at the Yale alumni office briefly where he meets this guy, Larry Noble. Uh, Larry Noble introduces him to a, um, uh, a guy named bill donaldson who was at the time running an investment bank called donaldson lufkin and jan rett uh john donaldson went on to be the ceo of the new york stock exchange chairman of the sec sec um and then so according to this new yorker profile schwartzman waited in the reception area for half an hour watching as young bankers hurried past in shirt sleeves, followed by secretaries wearing short skirts and big gold earrings. It seemed fast moving and intense. Schwartzman recalled everyone seemed happy.

When Donaldson asked him why he wanted to work at the firm, Schwartzman replied, Mr. Donaldson, I don't even know what you do, but you have such great looking girls and intense guys that I want to do it. Schwartzman was hired at the salary of $10,500, which by his account was $500 more than anyone else in his class at Yale, and then he realized he was unqualified and left after six months. But that was when he cut his teeth on Wall Street. Man, isn't it great when you're at a job and you realize you're unqualified and you leave six months later?

You guys know when that happens? When you don't get fired and you realize you're unqualified and you leave six months later. You guys know when that happens? When you don't get fired and you just hang out for six months and you go, you know what? He's talking about how happy everyone looked. Right, right. You see, does Schwarzman have a disease where he can't, he assumes the opposite of how people are actually feeling on Wall Street? Right, everyone's miserable, but to him it's like,

wow, look at all these great people having a fun time it was like right before coke hit wall street so they weren't happy yet um but uh yeah so like he gets this kind of like first experience and then um he goes back to harvard to get an mba uh because like he knows that you know he wants to uh essentially he wants to become rich like originally he wanted to go into politics and then he wants to become rich. Originally, he wanted to go into politics, and then he talked to some guy who told him that the reason he was able to go into politics is because his father was rich. So if you want to go into political power, you just need to get independent wealth.

So it was like, I don't have enough money was basically where he was at. It was fucking terrible that even 30 plus years ago, a guy was like, hey, I'm thinking about maybe going to politics. And someone was like, well, you just need a dickload of money. I mean, I don't know if you know this Donald Trump guy, but he might be president one day. Yeah. Yeah, no, he's like, yeah, well, you know, like the people that you will eventually become, the vested interests who control the political process through money, you're going to need to butter up to them. Hey, fuck being elected.

How about you just pay the people that are going to be elected eventually? But so, yeah, during his second year at Harvard Business School, again, according to The New Yorker, he meets his first wife, Ellen Phillips. She was a researcher, but she was also the daughter of a guy named Jesse Phillips, who was a wealthy Ohio industrialist. They were married in 71. They had two children. And so then he graduates Harvard Business School, MBA, and he gets job offers from both Lehman Brothers and Morgan Stanley. And then he decides to work at Lehman Brothers.

And then this is like kind of a... Where everyone's happy. This was the moment before the storm finally hit. And then things got weird. So he gets this job at Lehman Brothers. And then he starts... So basically, he starts kind of working on what are called mergers and acquisitions, and then it's really...

He gets his first real experiences with Tropicana. Great juice. The juice? Yes. A Tropicana executive had been impressed by a bond presentation Schwartzman made and felt that despite his inexperience, he could explain complicated aspects of the merger to a relatively unsophisticated board. So he's put in charge of this $488 million deal in 1978,

and that was kind of his, according to the New Yorker again, this was his emergence as the lead banker in mergers and acquisitions for leman brothers and uh because of a presentation he did not like hey your resume is good and i don't know you got good references just hey when you talked about that thing that was complicated you made dumb people understand it you're hired but so he arrives at leman in 1972 and apparently he's like a workaholic, uh, you know, a characteristic that he like apparently maintains to this day.

Like there's one anecdote with his first wife that's, uh, that him and his wife and then another guy and their wife went to, I believe the opera. And then like, as soon as like the lights went down and the performance started, he pulled out a bunch of papers and started going through them and reviewing them. And then his wife complained at him during the intermission.

And then he just went right back to doing it as soon as the intermission was over. And for some reason, they were divorced in 1990. Aw. But he's a workaholic. And then he gets this reputation as a mergers and acquisitions guy. And then the late 70s, early 80s is when this business really takes off. So he joins Lehman Brothers in 1972. And then just six years later, he's made a partner at Lehman Brothers. And it's at Lehman Brothers that he meets a guy named Peter

G. Peterson. And Pete Peterson is dead now, thankfully. but he was from 73 to 1984. He was the CEO of Lehman Brothers. He was previous. This is Pete Peterson, the perennial deficit scold. Right. Who runs the Pete Peterson Foundation. Yeah. Yes.

Well, he used to run it. And then Father Time intervened. He lost a board vote with Father Time intervened. He lost a board vote with Father Time. And also the inspiration for the Nickelodeon show Pete and Pete. But so basically, he becomes kind of a favorite son of Pete Peterson. And then there's like this whole story about Pete Peterson's time at Lehman Brothers. Again, he was a former Richard Nixon Commerce Secretary. So he had like a lot of of contacts both inside and outside of government

and this kind of experience. And he's generally credited for the turnaround that Lehman Brothers makes throughout the 70s and early 80s. But then in 84, he is betrayed and forced out, Pete Peterson is, by one of the traders that he actually kept on um this according to the new yorker profile again like one of the traders that he kept on even though that trader was having like a terrible year and lost millions of dollars uh that trader you know turned around and started making money again but then that trader uses the board to get his own savior

pete peterson thrown out of the company. And so at this point... What a snake. Yeah. Pete Peterson, he wants revenge the way only the most boring deficit scolds can want revenge. And basically, Schwarzman is kind of in his ear at this point. Because Schwarzman was, as we mentioned, a rising star at the firm. And Pete Peterson later said he was one of like the top two or three guys at Lehman Brothers. He was a guy you could count on.

And so Schwarzman was telling him like, you know, hey, you got to fight this board push out. But Pete Peterson doesn't want a civil war. So instead, what they want to do is found their own company. But interestingly, before they found their own company, again, this is all from the New Yorker profile. I'll put it on the Tumblr. But before they found their own company, Schwartzman basically sets up a buyout of Lehman Brothers by American Express. He pitches the then CEO of American Express, Peter Cohen. And, you know, he like, you know, in 1984, just nine months after Peterson's departure,

Lehman Brothers is sold for $360 million to American Express. And because at this point, Schwarzman is a partner, he is a millionaire in 1984. So essentially what makes him a multimillionaire is becoming a partner at Lehman Brothers and then engineering the sale. That got him the money. Yeah, to American Express. And then, of course, as a partner, he gets a big chunk of this $360 million sale.

And it also allows him to leave Lehman Brothers and go into business with Pete Peterson. And then this is where Blackstone comes in. And we mentioned Blackstone is one of the largest private equity firms in the world, has more than 412,000 employees throughout its dozens of different companies that it controls. But I guess we should just kind of... Oh, and the name Blackstone comes from their names. It's a combination of Schwartz, which means black in German and Yiddish, and Peter, which means stone in Greek.

What a dumb way to create Blackstone. Blackstone, really respected the name, and then McCarthy told me about this naming nonsense, and I went, you know what? I don't know if I like that name anymore. I think that's pretty stupid. They wanted to call it, like, Schwarz and Peterson, but apparently they realized that, like, if they took other partners in, they would want to start, like, adding their names to it, and it would get to start adding their names to it.

And it would get too long and complicated. Swartz and Peterson and Leibowitz and McCarthy. But so they get into business together. They found Blackstone in 1985. And what happens here is, according to one banker, he explains that Blackstone's early success is because of Pete Peterson's Rolodex, basically. We mentioned he was Nixon's commerce secretary. He has a lot of contacts. He, again, according to New Yorker, launched a direct mail campaign targeting 100 chief executives.

Only men. Yes. The effort resulted in retainer agreements with um firestone bristol myers sony apparently sony's chairman knew peterson from his white house years uh peterson in turn uh joined the sony board you know which solidified his links with japan but um the point of all this is that like uh it's it's just an interesting thing with Steve Schwartzman's story where, you know, obviously there's hard work. But it's like, A, he gets into this business because of his connections at Yale, which not everyone can go to Yale. And B, he is successful in this business because of his connections with a former White House official who had connection with all these different businesses internationally who were able to give them the startup capital in addition to the 400 000 in seed capital that they launched blackstone with uh from

friends and family llc and he's white not saying that's gonna help him but it doesn't hurt him you know what i mean well did you know that he was apparently one of the first two jews to receive a job offer from morgan stanley according to his own account. He's his own reference in how accomplished he is? I like the idea of him sitting in the Morgan Stanley library and going through all of the religions of every single job applicant. I noticed you haven't hired any other Jews. Yeah, it's just you and one other Jew. I'm going to put that in my legacy.

But so basically, they're able to use this kind of Rolodex to get off the ground, and then they want to get out of mergers and acquisitions, and this is where they become private equity. And, you know, like without belaboring the point too much, private equity is one of the more interesting projects that has come out of American capitalism since the 80s where, you know, they use leveraged buyouts, which is basically they raise a shit ton of debt and then they buy out or, you know, they buy out a company or something like this, and then they, using this borrowed money, and then they, like if it's a publicly traded company, they restructure it to add all this debt onto it and then cut costs, usually in the form of workers' pay, workers' pensions, workers' health benefits. Oh, you mean they engage in financial wizardry and exercise the expertise they gained in an MBA school? Yes. Yeah.

And then usually after five to seven years, they resell the company. Or if it's private, they relaunch it as a public IPO. And then they make an enormous profit. But it's also because they're able to, once they control the company, move all of their debts onto its books, and then of course they charge it management fees just for, you know, sometimes they settled

with the SEC for charging management fees where they weren't even providing services, but they just say, hey, we will take X million or 100 million in management fees, and we're going to guarantee a profit from what we have done here. Put in the drop. You're not doing anything.

From the Simpsons. Yeah, yeah, yeah. I don't know if I'm going to keep this in, but public IPO is my favorite craft brew. Ah, fuck. Let's move on. Public IPO is too hoppy for me. But so, yeah.

So they bring in the business. They expand with... Blackstone IPA. These is only the finest hops and also crushed dreams of the working class. The only beer for the bourgeoisie by the bourgeoisie. But so yeah, and I guess we can kind of skip ahead here. But throughout the 80s, it really gets its niche in private equity.

And then again, another thing that is to be remembered about private equity is they benefit from the capital gains tax rate, which under Reagan, Clinton, and Bush was essentially lowered to the point where it's lower than the wages. The actual taxes you pay on either wages or corporate profits is almost double what you pay on so-called capital gains. And because these private equities or hedge funds usually take what's called a 2 in 20, where they take a 2% management fee and a 20% performance fee, 2% of all assets under management, 20% of all the profits they make, they are able to book these profits as a carried interest or capital gains.

So essentially, they pay a lower tax rate on what are clearly fees and should be booked as just regular corporate profits. But because of this, they're able to... Essentially the government has set them up to succeed in a way they would not actually do so in a

real competitive free market. Right, right, right. And it was lowered, you said, by Reagan, Clinton, and Bush yeah like um uh reagan was the because like back in you know new deal uh capital gains were taxed at the same rate as wages and you know corporate profits and then reagan lowered it bill clinton lowered it bush got it like way down and then um under obama the max rate now is 20 thanks obama yeah but it was at a time 10 and it's usually between 15 and 20 today um but so basically i guess we can just kind of jump around uh so like the whole strategy of uh private equity you know is it has been in the past devastating to local firms, local workers. They're often called vultures, corporate raiders, strippers and flippers.

Strippers and flippers? Yeah. A lot of what private equity does now is kind of like they're sort of like the new kids on the block from the days of corporate raiding oh really yeah it's been kind of refined into sort of gaming tax uh law in order to like funnel a lot of investment up front into rescuing quotation marks uh companies like a hostess or travel port or yeah a lot of examples strippers and flippers was also the name of the club where he met his second wife

but so yeah so uh we'll just talk about a couple of these companies and again like uh blackstone has been through this with a lot of companies we don't have time to get to all of them but uh just uh one example is a company called momentive this was originally leon black and his hedge fund apollo global which global management and we'll talk about leon black in a future episode uh they bought out um general electric sold its advanced materials division um to uh apollo global management um i believe in 2006 and then according according to Hedge Clippers, Apollo loaded the company with $2.8 billion in debt in one month. So as we mentioned, they raise capital, in some cases from wealthy investors, even from public and private pension investors,

and these kinds of things. So it's just fucked up that if you happen to be one of the few Americans with a pension, you're helping this disastrous process take place because your pension investors are investing in these vultures who destroy pensions for other workers, healthcare for other workers, et cetera. But essentially, they loaded the company with $2.8 billion in debt because they raise all this leverage, and then they immediately transfer the leverage onto its books and then they took it into bankruptcy court at which point blackstone group comes in and then again according to uh times union these uh various it was the blackstone group and four other hedge fund investors oh yeah no it's six altogether apollo the blackstone group and four others uh took more than 642 million in fees out of the company after they bought it.

So again, they just slap however much management or consulting fees onto it. And then in 2016 to 2017, Momentive workers went on strike because basically now that they owned the company, they ordered the CEO to, according to Hedge Clippers, eliminate health and life insurance coverage for retirees, slash pensions for workers and their families. They cut payroll 25 to 50 percent for production workers. They slashed health care benefits. This is, of course, after paying themselves hundreds of millions, you know, 600 plus million in management fees and throwing $2.8 billion in debt onto the books to make it unsustainable and then dragging it through bankruptcy court. And then these workers go on strike. And according to Hedge Clippers, there's a 100 percent. They bring in scabs to do the work at this chemical plant in upstate New York. And according to Hedge Clippers, there is a 100 100 increase in the rate of chemical spills during the strike so it's like you know not only are they fucking over the workers

but they're fucking over the people in upstate new york who live near these plants um and then eventually uh governor cuomo uh intercedes and the workers go back on uh early 2017 17 um but of course like uh they're uh what fucking cheap fucks yeah hey those people that handle dangerous chemicals want more money because they handle dangerous chemicals fuck that noise let's just hire a couple of yahoos oh and also according to hedge clippers they fired 27 of the striking workers uh accusing them of, like, violating company policy on the picket line or sabotage inside the plants. And, you know, and then as part of the deal that Cuomo helped broach,

these workers had to go through arbitration to figure out if they can get their jobs back. But, of course, the scabs were able to keep their jobs. Oh, really? Yeah. The people that caused 100% more more increase in yes wow that's that's fucking hey uh i'm willing to pay it's just fucking stupid well would you believe that a 100 increase in chemical spills translates to a 50% reduction in payroll.

Like, yeah, I'll spill a few more chemicals, but I will do the job for half the price and none of the healthcare. But so, you know, that's just kind of like one example of private equity. But, you know, Stephen, if you want to talk a bit about Hostess or the other company. Before that, I feel like that should be an option. I feel like you should be able to tell your employer,

hey, I'm willing to take less money if you allow me to fuck up more at my job in 2007 on like the eve of the financial crisis in july uh blackstone took a position with along with another company called travel port which is like a data processing, like a server farm sort of for the travel industry. And as usual, they ended up laying off 841 people. Hell yes. Yep. They ended up getting most of their money back for themselves and the participant investors within a year, which is an extremely fast turnover for private equity. Yeah, that's really fast.

And that experience was kind of... They said they let off 8,400 workers. I kind of like the idea when you're getting your MBA at Harvard, they have, like, classes on, like, how to deal with the people leaving your factory crying. Now make sure to look behind their backs, because if you do it in front of them, they might start a riot. How to make sure security protects you from people who can no longer provide for their children. Luckily, Swartzman stayed for all four of the class warfare seminars. They have classes on how to transfer pension funds into your $10 million birthday party. I mean, it was his minor, so he was working it. He had a lot of shit to work out with this deal.

But so they laid off like 8,400 travel port workers. Well, it was 841. Oh, 841. Don't forget that last guy. Yeah. And they cut, I assume, pensions and pay and roll and health care. They cut pensions and they ended up enacting what they call dividend recapitalizations, which amounted to about 25... Well, theirs amounted to about a billion

of the roughly 25 billion worth for the private equity industry in that year alone. But essentially, they show up, gut the system, take their profits, and go, hey, it's all good, right? Yep.

And then they pay a lower tax rate on those profits than basically any other sector of profitable. Yeah, because it's like working capital in process. Oh, great. I don't know. I said it off mic, but it's not money laundering, but it kind of is because it's like, hey, let's take our wealth and then buy something and then strip it of what it's worth and then re-put it back into our wealth and then leave it for what it is. Well, they're the smartest criminals because they're the ones who do the legal crimes that uh government corruption has enabled through the tax code and everything else

and of course the bankruptcy courts are another big factor in this um but so i can talk about they settled with the sec for some of their management uh fees practices uh in 2015 and then steve you can also just talk about hostess real quick and then we'll kind of move on to some of Schwarzman's personal life and things he's been involved with. But so Blackstone settled in 2015 with the SEC. They paid a $10 million fine, and they refunded $29 million. And so just from Fortune magazine here, basically for years, Blackstone and many other private equity firms, to be fair, have charged something called accelerated monitoring fees. And again, quoting from Fortune, what it basically means is that after buying a company, Blackstone would set an annual fee that the company would pay for various often undisclosed and unverified services,

for example, $5 million a year for 10 years. But the bonus here is that if Blackstone exits the company, that you know sells its position or whatever else uh prior to the 10 years being up uh it gets the everything all the extra years a lump sum payment so essentially they're just going into corporate books and then saying you and now that they control the corporation they're saying okay you pay us x amount of money for nothing and we're just going to take this money so it is corporate rating um and then of course uh blackstone has pledged to not do this anymore but they still have what are called generic monitoring fees generic monitoring fees so is it like we will like i'm confused yeah so it's again from the fortune article private equity firms are paid handsomely by investors on an annual basis by the management fee, which seemingly should cover the portfolio management.

But they tackle on these extra fees to portfolio management. Basically, the only reform they made is if we sell the company, we won't take the lump sum payment anymore. Right, right. But they're still, I mean. We're going to fuck you over. Right. But not as hard this time. It's just the tip.

But yeah, I mean, the whole thing is just such a weird joke and abuse of corporate law where it's like, how does it benefit the economy or a company or anything to essentially say that as soon as I take over this company with all this debt that I've raised, I'm going to transfer that debt onto your books. And then I'm going to tack on hundreds of millions in management fees for nothing at all. And then I'm going to strip worker pensions and use the bankruptcy courts or do whatever I can to make this profitable or at least appear profitable and then sell it or IPO it and then get the fuck out with paying half of the taxes that I would if I was in any other business.

It's a lot like the old school snake oil traveling salesman, but instead of selling snake oil, it's just buying the saloon, stealing all the liquor, and then just leaving town with said liquor. The snake oil salesman lost his pension and his health care because Steve Schwartzman took over their traveling cart and loaded it up with 100 silver dollars worth of debt, the equivalent of $3.8 billion worth of debt. Right, right, right.

But yeah, no, it... What a fucking schmuck. And that Steve, I know they were involved in hostess there's a great new york times article on this um are you able to talk about that at all well i mean i don't want to be the dead horse about the process of private equities no please take a mistake but i just i i do want to bring up one of the stories of the workers from the Hostess factory. A guy who lost his job, sorry. He ended up afterwards working jobs that were only about $10 an hour, which is like half of what he was making at Hostess.

This is in 2012. So he was paid one one-millionth of a Steve Schwartzman birthday party? Yeah, he could have attended a Steve Schwartzman party for a couple of seconds. But anyway, this guy is a lifelong Democrat and devoted union man. And he supported Democrats for a dozen elections prior. Right. But he said that after his experience of dealing with private equity and the restructuring, he ended up voting for Trump. Yeah. And this was in Ohio. And I just wanted to bring up that singular story that's not connected to any wider phenomenon in our country's history. Just as an interesting anecdote and not tie it to any it should be

that steve schwartzman is a republican who is uh fundraised for uh various republicans including mitt romney um jeb bush now donald trump um so you know a lot of losers including trump in that sentiment but you know maybe steve schwartzman was playing 12 dimensional chess where he was like you know giving money to politicians is one thing, but if I can just destroy workers' health care and pensions and slash their pay in half and get them to blame it on Democrats, partly deservedly, yeah. So he just knew how to create a new generation of Republican voters. Get into that, Sean.

Why partly? Get into it. Oh, I mean, just like we've mentioned the capital gains uh the carried interest loophole the capital gains tax rate the capital gains tax rate was lowered under bill clinton um the carried interest loophole has been something that uh basically everyone who knows about it says this is ridiculous and should be undone right but every time it goes up to the senate it disappears senate uh now minority leader chuck Schumer has been big and behind the scenes keeping the carried interest loophole alive. And in fact, David Sirota, the journalist, did a great piece, again, beyond the Tumblr.

But basically, the Trump tax cut, of course, he campaigned, Trump did did on ending the carried interest loophole the trump tax cut while it was being negotiated uh steve schwartzman was holding a 100 000 a plate fundraiser for uh donald trump at his triplex apartment at 740 park avenue there's more than 17 000 square feet he paid 37 million for it john d rockefeller jr used to live there um he literally lives in a former rockefeller's first of all triplex is a word that i didn't know until mccarthy said just now part of me was like yeah because most people aren't living in triplexes let alone duplexes i just love like i mean look i know we're like a hate the rich podcast or whatever, but living in, let's say, 600 square feet. When I read 17,000 square feet, I'm just like, you know, maybe I should fuck over more workers.

Like maybe if I could just like give more people chemical waste poisoning by hiring scabs. I could have, you know, extra room for my PlayStation. But so, yes, while the tax bill is being negotiated, Trump goes to Steve Schwartzman's Park Avenue apartment, and then it was about two dozen of them paid $100,000 each to hear Trump talk for 20 minutes, or about $5,000 a minute. About what? He was basically, they just talked about, it is funny,

like various articles on it are just him like being like. Magic the Gathering. Exactly. Various articles on it are just him being Trump, where he's just like, you know, nobody said I could win in Wisconsin. Yeah, right, right, right. Nobody said I could win in Michigan, but I did. I'm so great, you know.

But they got to, like, ask him about this. And then, of course, even though Trump had campaigned on removing this carried interest loophole, it was not mentioned in the tax cut bill that Trump passed actually means that future presidents may not be able to remove it by executive action. Like, it's a little complicated, but basically the way the carried interest loophole is written is that the Treasury Secretary has discretion. So David Sirota's argument is that Obama or Trump's Treasury Secretary could have just said, okay, we're going to treat this as regular income and tax it at the higher rate. But now that it's been legislated on, it would be harder for a president to do that because the courts usually defer to legislation. So, you know, that's what you get when you do a $100,000 a plate fundraiser for the guy. And so I guess we can also just talk about his strategic and policy forum chairmanship.

So Steve Schwartzman, throughout the election, he did not actually donate to Donald Trump during the election. He donated to Jeb Bush. Again, this is the investment wizard. Right, right, right. He donated to Rubio as well. Oh, good. Yeah.

Couple of winners right there. He wanted to diversify his portfolio. Jeb and Marco, my favorite team players. He wanted to make sure that all of the closeted politicians got at least 100,000. Is that a rumor? Jeb andco are closeted well it was trump played it up about marco but i don't think they are i'm just being homophobic well you saw the picture of mark the marco rubio hydrating when he was giving the republican

response to the to one of obama's last um state of the union right he's like he's a smart smart man he's conserving himself but so uh uh you gotta hydrate uh but basically after trump wins schwartzman goes all in on him because he you know recognizes that he can make money doing this and so uh they're talking uh trump and schwartzman are talking during the transition and trump wants him to head head up a group of business ce that will give him economic and policy advice for job creation. It gets called the Strategic and Policy Forum, which I don't even know what the hell that means. But it was a 16-member group. It included CEO of General Motors, JPMorgan Chase, CEO Jamie Dimon, the Boeing CEO, the IBM

CEO, the Walt Disney CEO, and Steve Schwartzman chairs this. But interesting thing is that while he is chairing this group that gives financial and policy advice to the president, he of course has not divested himself of any of his business so he is making policy recommendations that financially benefit his bottom line and uh and i do just love that um so uh steve schwartzman set up a uh scholarship fund like the road scholarship uh to send people to study uh in graduate school in china like 100 students every year, I believe. And so he was criticized for sitting on this commission with the rather controversial president and, you know, making advice that benefits his bottom line.

And he wrote a letter to the Schwarzman scholars, as they're called, saying that, quote, having influence and providing sound advice is a good thing, even if it attracts criticism or requires some sacrifice. And, you know, that kind of sacrifice, like making sure the carried interest loophole stays law for at least another decade, saving you tens of millions, if not hundreds of millions of dollars. But so sadly, the Strategic and Policy Forum ends when Donald Trump says that white nationalism is good after Charlottesville.

Sacrifice right there. Right, right, right. It is like the CEOs were like, look, we'll, you know, engage in insider trading and government corruption. But once people start yelling at us for uh associating with nazis listen he might have grabbed pussy he might have said all mexicans are rapists and drug addicts but listen you know nazism we gotta we gotta we gotta bounce out he might have been accused of rape by his ex-wife and by a child but uh you know not enough people know about those things. I just love that there is like a, I mean, we could excuse everything, but his comments on Charlottesville, that's where we had to draw the line. Well, the problem is Trump did them in front of TV cameras.

Yeah, yeah. It's difficult. See, it's like none of these people. Hey, I agree with Trump. I just don't say in front of the media. But so Schwartzman actually wanted to keep this group alive. Apparently, I believe Jack Welsh, the CEO of General Electric, also wanted to keep it alive. But so just according to this New York Post story, Schwarzman said at the time, I was accused of by people of being a Nazi.

I mean, I'm Jewish. Um, and he said virtually anyone running a public company could not deal with the pressure of their constituents. And then just a fun little anecdote is that the decision to disband, uh, according to the New York post, which ended up getting first announced by Trump who claimed the breakup was his decision occurred after each member in alphabetical order voiced their

concerns on a conference call. it's, I know it says in alphabetical order voiced their concerns on a conference call it's i know it says in alphabetical order i find that so fascinating that they're like well let's go by a through z let's not just all say how much we hate this let's do it in order everyone say how they're feeling at the same time they did it in order of how many layoffs. But yes, so sadly, the Trump support of neo-Nazis ended that little financial bonanza for Mr. Steve Schwarzman. But, and I guess we can kind of jump around in the time we have left, but I would like to circle back to Pete Peterson real quick. So he was, as we mentioned, the co-CEO of Blackstone for a time, the co-founder. And initially, Steve Schwartzman and Pete Peterson had a split equity stake, you know, 50-50. But essentially, through different dealings, Schwman um diluted his shares to the point where when they went public in 2007 which is what made steve schwartzman a billionaire

schwartzman owned uh about 30 of the company whereas peterson had gone down to 11 percent wow and uh it was basically um So he just fucked his partner over? Yes. So it was interesting. According to the New York Times, when Pete Peterson died in March of this year at the memorial, numerous attendees took note that Steve Schwartzman was not selected as a speaker at the memorial. Yeah, I'm not shocked. Yeah.

So basically they had like a huge falling out, mainly over Peter Peterson's retirement package. But it's just funny. The guy, Steve Schwartzman, seems like a completely amoral scumbag who has no loyalties whatsoever. Again, in his own telling, he did all the hard work of building up blackstone but of course it would not exist without pete peterson's rolodex without his

contacts and then he just like fucks him out of again this is a guy worth more than 13 billion dollars this is pennies for him now or even if it's like a little more than pennies it's like don't you want to help the person who got you where you are yeah and it's like that's how bad greed is for some of these people that they can't even like i mean it seems cheesy but the the way they value friendship is they don't right uh uh you're my friend but also in the heat of the business i might kill you imagine if like like people in the army were like that. Friendly fire would be rampant. It's insane to think how cynical and fucking egotistic these billionaires are.

It's kind of interesting how Swartzman and Peterson form a really one-two punch against the American workers. At a higher level, they're a really, really effective class war fighting unit right right right because one of them is like the chief sort of private equity arm of like removing pensions firing tens of thousands of people in the midwest and then the peter found peterson and his foundation are arguing for less and less government spending and a reduction in the community sphere in a way that it just combines to basically assure a decent chance at fascism now. Right, right, right. It's funny, you were talking about the army,

so I just had this image in my head of Steve Schwartzman fragging Pete Peterson. They're kind of frenemies. Neither one would probably let on to how well they actually work together. Pete Peterson was standing outside the building and Schwarzman called out to the security guards, Union members at the wire!

There are union members at the wire! Open fire! But yeah, so you mentioned Pete Peterson's foundation uh i don't know we might go back and do a future episode but we've mentioned it briefly pete peterson has signed the giving pledge before he died which was to give away half of his assets vast majority of that he gave to his own foundation which doesn't do anything except for tell people we need to lower the debt and he's just like such a scumbag where it's,

if you go to his Wikipedia, he wrote four or five books throughout his life. It might be five or six, but basically all of his books have titles like The Coming Social Security Crisis, We Need to Pay Our Debt Down Now, The Coming Debt Apocalypse, you know, et cetera, et cetera.

And then his last one right before he dies is like some generic biography, like My American Story. You know, when you're like running out of time debt fear-mongering and you're like oh i should like try to tell a story that somebody gives a shit about but but it's just funny to me because it's like uh if you're a guy like our co-host steve uh and you're familiar with modern monetary theory you know that debt when denominated in a country's own currency is almost irrelevant but these people's idea of like the deficit and debt scare and pete peterson was extremely influential in government he helped set up the simpson bowls uh commission which was gonna slash social security and medicare to reduce the debt

but but you know so it's already irrelevant. But their idea for reducing debt is never, oh, hey, let's just tax billionaires at 100% of income and let's seize 95% of their assets. Like, you know, maybe if debt is such a problem, we shouldn't have fucking billionaires running around. It's always like, oh, let's just, like, kill all of the poor people. Like, debt is such a problem that we have to just go full Third Reich and have people starve to death in the streets. His foundation, you didn't have to be a true believer in the government

as a household metaphor in order to buy into it. Because there's a lot of people who really cynically paid lip services to the Pete. Peterson Foundation as just like a really effective tool of class warfare against workers. Here are his books in order. In 93 he wrote Facing Up, How to Rescue the Economy from Crushing Debt and Restore the American Dream. In 96 he wrote Will America Grow Up Before It Grows Old? How the Coming Social Security Crisis dream in 96 he wrote will america grow up before it grows old how the coming social security crisis

threatens you your family and your country i like the idea of these books getting like progressively more pissed where he's like listen you motherfuckers we have to cut social security now that would be like listen you little shit this book took over a million dollars to produce you better buy this in 2000 he wrote gray dawn how the coming age wave will transform america and the world the retirement explosion 2004 there's two more on borrowed time how the growth in entitlement spending threatens america's future with ne Howe. I like how when he wrote that book, he was actually on borrowed time. In 2005, Running on

Empty. How the Democratic and Republican parties are bankrupting our future and what Americans can do about it. Lastly, 2009, The Education of an American Dreamer. How a son of Greek immigrants learned his way from a Nebraska diner to Washington, Wall Street, and beyond.

Okay, kind of. Yeah, it ends on a nice note. I like the idea of how they're bankrupting our future by spending all that money that they also create with a printing press. So, just a quick story about him being uh steve schwartzman being an asshole to his employees uh basically according to wall street journal 2007 um employees in the 11 000 square foot palm beach mansion that he owns must wear rubber must avoid rubber sold shoes because the squeaking sounds they make uh impede upon his poolside bliss.

And then according to that same story, his personal chef often spends $3,000 for a weekend of food, which includes stone crabs that cost $400 or $40 per claw. And then Steve Schwartzman told The New Yorker that he was wounded by this article, which he said didn't mention that he sent his chef's daughter to summer school at yale and harvard and kept the chef on his payroll while he was going treatment for cancer and so that's just like that's just so benevolent of him to uh not illegally fire a sick worker i don't know if it's illegal but you know i mean it should be um but so yeah like just a couple other like jump around anecdotes about uh steve schwartzman and apologies if we go long on this but i do just

want to kind of get some of these in here uh steve schwartzman uh we we mentioned the carried gains loophole earlier obama briefly talked about ending it eventually came to nothing but at the time uh schwartzman according to newsweek said quote it's a war and then he said uh obama's increasing on taxes of private equity firms is quote it's like when hitler invaded poland in 1939 he later apologized for that but uh we we all know that when hitler invaded poland the first thing the ss SS did was charge 15 more percent to all of the intellectuals and the dissidents. It charged a management fee for government. The SS loaded up the Jewish councils with billions of dollars in debt financing.

Whoa, whoa, whoa. Let's not say loaded up. Can we change that phrasing? Yes. I like the idea of Obama rolling Panzer tanks on Steve Schwartzman's $150 million properties. We're going to need your triplex. We got a lot of work to do here. Now, Steve, if you will just start digging this mass grave.

And once you're finished, put yourself in it, and you can do whatever you want. Now, Steve, we're going to need to make sure you don't have any lice. So if you'll just give your belongings to this gentleman here, and you'll be taking a shower. Some of you asked if we'll have blankets you know blankets in the winter time the answer is no um but so yes he apologized for saying it was like when uh hitler invaded poland but he uh did not apologize for um so blackstone if you've watched the docker only blackfish it's about sea world and it basically makes the arguments that orcas or killer whales why Why's it gotta be black? When they're in captivity...

You make that joke every other episode. When they're in captivity it argues that orcas can get crazed or violent, especially if they're separated from their parents or children, which most orcas in captivity are. And that's the argument that's made in the documentary Blackfish, if you haven't seen it.

And so they also tell this story about this one trainer named Dawn Branchow, who was she worked at SeaWorld in Florida, and she was killed by a killer whale named Tilikum, who's semi-famous. And so Steve Schwartzman was on CNBC, and he was asked about it. And he said this. Your take on this Blackfish documentary documentary which showed a very horrifying picture of what goes on in this world well i actually haven't seen that and uh it had a had a run uh you know sea world is a remarkable uh business and and people who go there love it they had one safety lapse interestingly with a situation where the person involved violated all of the safety rules that we have you talked about what happened to the fish did you not see the documentary

was it was pretty bad I mean what the fish are mistreated or what will happen whether the fish in this tradition I mean I don't you call me fish because some of them are mammals I'mammals and things like that. All right. Okay. What did you, is this a Mother Jones documentary? No, I, I. So basically what he said is, quote, he, that SeaWorld, oh, yeah.

And so we should mention that Blackstone at this point owned SeaWorld. And so what he said was SeaWorld had one safety lapse, interestingly, with a situation where the person involved violated all of the safety rules that we had. So basically, he's blaming the trainer who was killed by this killer whale for her own death. Wow. And it should be noted that though SeaWorld actually initially hired, they got into a situation with OSHAHA the Occupational

Safety and Health Administration over this they hired an expert witness who also blamed the trainer for her own death but later SeaWorld said under oath in the court case that the trainer did nothing wrong this was totally unpredictable this was entirely not the fault of the

trainer who was killed by this orca but it's just interesting where his first instinct is, of course, to blame this person murdered by the company he owns for her own death. And just a quick story on Blackstone. They bought SeaWorld from Anheuser-Busch in 2009 for about $2.5 billion. This is according to the Orlando Sentinel. They used about a billion of their own cash, financing the rest with corporate debt they took it public in april of that year um and then they sold off most of their shares in december and then eventually uh they sold everything in 2017 their c world stake entirely and i guess

right before he left he he renamed it C-Word. What if, like, right before he sold it off. You can cut that. No, no, I like that. Right before Steve Schwartzman sold it off, he's like, wait, I just want to watch the separation of one last orca from her mother. Oh, my God. It's just like in C-World listening to the screams of the orca. Listen, I love separating people from their home.

Give me this one last joy. Oh, God. There's so much in this episode. I'm sorry we go long, but we can talk about his birthday party and then the rent-back securities, and then we can wrap up. But so basically we've kind of alluded to Steveve schwartzman's birthday parties uh he had a very controversial one in 2007 which cost at least 10 million dollars according to slate uh it was they uh took out the park they rented out the park avenue armory and they transformed it

into a large-scale replica of the Manhattan apartment that he lives in. Whoa, whoa, whoa, whoa. They just remade his apartment for a party? Yeah, which it's like, I guess you just don't want people in your apartment. But you want people in your apartment. I love where I live. I don't like when people come, though. How do I... I guess I could have two places.

I don't want two places places but one that's temporary uh what do i do um but so again according to slate uh they there's a huge portrait of steve schwartzman which hangs in his living room and they moved it there for the birthday party so you know that's uh you know some next level vanity when you're having a 10 million dollar party with your fucking living room self portrait in there. I mean he didn't paint it. No, no, no, yeah. So

the diners, dinner was served in a fake nightclub setting with orchids and palm trees. They dined on lobster, filet mignon, baked Alaska. They were offered a variety of expensive wines even though Schwartzman doesn't drink. Comedian Martin Short was the mc and then uh apparently rod stewart was paid a million dollars to sing for half an hour and i just like the idea of just like how many workers lost their health

care so that rod stewart could sing for half an hour hour. But so that was his 60th birthday in 2017 and then in 2007, which was, of course, right before the market collapsed. So it was kind of very controversial and infamous. So he decided to have a smaller birthday 10 years later. You know, a really, really small internal affair. A couple of people. Right, Sean? Yes. Yes.

It was, you know know i'm just gonna quote this whole paragraph from avenue magazine it was in florida and so according to avenue magazine the evening's theme was the silk road silk road a salute to steve's love of discovery and of his business in china uh geisha geisha girls geisha geisha girls in red greeted the guests with flutes of champagne it unfolded in a series of exotically carved three-story high golden temples trapeze artists twirled from the dining pavilions uh red ceiling uh red uh staircases flanked by gigantic blooming trees led to a grand tier for additional seating hand embroidered napkins were folded on a teal satin tablecloths the edges revealed shades of green and blue every surface

was festooned with exotic red and orange flowers at each place a single golden egg topped by an enamel dragon crap god cracked open to reveal a delicate lobster salad oriental ribbon dancers and an acrobat with a 30 foot high uh pot balanced on his head amused the diners as they nibbled on short ribs and noodles and sipped peerless wines at each table everyone received a chocolate surprise hidden in a masterfully carved 10 inch dragon and uh again um that he had to create so many trump voters to put this party on um but so uh jared and ivanka were there uh but donald trump didn't come because he was in florida at the time but he was working yeah well he said the security costs would have been too high like having to get the secret Service to go through there.

But... The acrobat is fine. Yeah, right, right, right. They were also led to a tiered stadium for fireworks, then into a three-story temple for dinner with a performance from stars

from the Jersey Boys and Gwen Stefani. Oh, Gwen Stefani was there? I hope you played Don't Speak. Apparently she did her Happy Birthday song. Wait, her Happy Birthday song? I don't know. Maybe her take on Happy Birthday. It's her impression of the Marilyn Monroe.

Happy Birthday! And again, according to the New York Times, Gwen Stefani was paid $500,000 thing but uh and again according to i believe the new york post uh no new york times gwen stefani was paid 500 000 for her work so it's very sad that even in the uh evil multi-billionaire uh entertainment world there is a wage gap right right right right um you think the money would go up with inflation but the gender gap prevails. Anyways, if you're looking for comedians at your 80th, do Schwartz Bank.

But so, and again, apologies, we're going long, but Blackstone and real estate is another fascinating story. They've set up what are called rental-backed securities. Blackstone primarily does this through their subsidy called Invitation Homes. According to Mother Jones, Blackstone is the largest owner of single-family rental homes in the nation. According to Blackstone themselves, they own more than 100,000 either multifamily or single-family homes for rent. And basically, they just bought up all of these rental properties or these single family properties after the foreclosure crisis, the 2008 financial crisis and foreclosure collapse. And then they bought up all these properties and then converted them into single family rentals. And according to this report, Blackstone, Atlanta's newest landlord in Atlanta,

78% of the Blackstone tenants they surveyed do not have consistent and reliable access to a landlord or property manager. And then they generally receive minimum 5% annual rent increases because all of these leases are packaged into similar to mortgage-backed securities or rent-backed securities and then sold on to investors. And then part of what they do is they tack on all these different fees and they guarantee regular rent increases. And, of course, when your landlord is the largest landlord in the country with Wall Street offices,

they're not really going to give a shit that your fucking heating in Atlanta doesn't work anymore. There's not even a property manager there at all or super anyone um oh yes and uh just from this same mother jones article in uh sharp they they bought up uh particularly in like phoenix arizona atlanta georgia charlotte north carolina various places hit very hard by the foreclosure and housing collapse um but according to this mother jones article uh invitation homes in Charlotte, North Carolina, raised rents by as much as a third

and filed eviction proceedings against nearly 10% of its renters, according to the Charlotte Observer. And it's just like, another fact is from the book Eviction, about 10% of the residents of Milwaukee are evicted every year. So it's just like this kind of epidemic

of eviction and high rent we're seeing is very much tied into the Wall Street takeover of the rental market. And yeah, you had something else? It's a good follow-up on the Wall Street takeover of the mortgage market. So now instead of people who at least nominally own a home, they have only nominally, at least nominally own a home right only nominally at

least nominally own a lease right it's just going to go on and on on down until well they have like uh start pulling together people's airbnb payments but so yeah and it's just another kind of ridiculous thing according to the same report Blackstone Atlanta's newest landlord in November 2013 51% of all home sales in the state of Georgia were made to cash buyers so they go to these foreclosure auctions and they just have this like huge line of credit and they just buy all these things up so it's it's also can be tied into like some of the price increases you've seen in real estate where you know these institutional investors are going up and buying up all these property and it's just like kind of um i would say a fault of the uh supply and demand free market model of housing people where um uh vested

capital interests who of course have you know far more to spend than a single person or couple trying to buy their starter home are just buying up everything on the market and turning them into rental units though it should be noted that according to one youtube video i watched blackstone has started selling some of these properties as of 2016 so maybe they think the bottom is going to fall out of this market um but yes anything else on the rental back securities all right well um i uh i just want to mention one quick thing uh you know on steven a schwartzman's wikipedia it says he's the chairman of the strategic and policy forum like we mentioned but one thing that's great it says uh you know he's in office january 20th to august 16th of 2017 right and it said preceded

by position established. Succeeded by position abolished. It's a very, very fun, succinct thing. And when we first started doing research on Stephen Schwartzman, his middle name is Alan. And it's been very fun to do Stephen A. Schwartzman impressions. What are you talking about?

That was all my research. That was... No, I think you don't realize. Now, Skip, one thing I love... I don't know if we're doing this. You want to do this? Yeah, yeah, yeah. Let's do it.

You've got to commit to the bit, youngie. I don't know if we wanted to do it or not. No, let's do it. Let's get into this. Now, what you don't know is that I'm the 113th ranked billionaire in the world. Forbes ranked me at 113. Now, Skip, slow it down. LeBron could never match the amount of intensity that I have.

Now, Skip, nobody likes union workers more than I do. But when I brought in those scabs, accidents in upstate New York went up by 100%. 100% increase in chemical spills, Skip. Skip, Skip, when I was at Yale, I got my B.A. At Harvard, I got my M.B.A. I went to Skull and Bones right after George W. Bush. Now you're telling me that I can't be the number one billionaire

in the world. I started Blackstone. I stabbed my partner in the back. Now, Skip, nobody likes child sacrifice more than I do, Skip. Name one other billionaire who has the rare disease you get when you consume human flesh that's fun all right but uh yeah so uh uh uh he's also steve Schwartzman has donated millions on the condition things be named after him. Again, running theme with kind of vain billionaires. He gave Yale University $150 million for a new student hub called the Schwartzman Center.

Because, you know, if there is one college that desperately needs money, it is Yale University. Right, right. needs money it is yale university right right but i just like the idea it's like thanks to uh this guy destroying the american labor and union force now students at yale will have an extra place to finger each other um and uh schwartzman oh one other anecdote from that new yorker story quote schwartzman told me that in 1993 at 46 he was found to have a rare blood protein deficiency that put him at risk of a blood clot or embolism,

a condition that had killed his grandfather at the same age. He is tested every few weeks and takes a pill each day which he says should help guarantee him a normal lifespan. So if you're listening and you're in a position

to replace Steve Schwartzman's pills with placebos, we will give you a free year of patreon i think that's why his housekeeper got pushed in the subway though oh yeah you should tell that story real quick uh they had a housekeeper who uh was murdered she got pushed in the subway by uh craze gets schizophrenic according to this article by the new york post um the thing is that like like, you know, the daughter, Zibby Schwarzman, talks about how heartbroken she is about this housekeeper, Connie Watton, who was killed. And it's like, you know, this person was genuinely murdered.

But then the second paragraph quote of Zibby is, I guess, intellectually, you know things like this happen. But to someone so close, who is part of the fabric of every single day of your life, and for something so senseless and so random, it makes me want to pack my bags and get out of New York, she said. Yeah, you know, maybe if your father wasn't, I don't know, making the world worse for millions upon millions of people, I'd have a bit more sympathy for your murdered housekeeper.

But later on in this article, you talk about how your stepdad and mom gave her away at this woman's wedding because they couldn't fly in her family from the Philippines. And it's like, I don't know. They couldn't use her father's private jet. Right, right. You mean that billionaire that you come from

couldn't afford six plane tickets, even if it was coach? Even if it was coach? So, unfortunately, Connie Watt it was Coach. So, unfortunately, Connie Watton was murdered. So, Teddy Schwartzman needed to hire another person to clean the house. And, of course,

Steve Schwartzman's son has a movie production company, and he produced the movie The Imitation Game, the Alan Turing movie with Benedict Cumberbatch in 2014. It's just so nice that he provides a model of how we can all make it in the film industry.

Right, right, right. Hey, 30 Hollywood producers want to buy this? Well, my dad's a billionaire, so I think I'm going to win this fight. I just like how his daughter was like, I just want to get out of New York and go upstate where there's chemical spills caused by all those scabs my father hired right blackstone

according to the new yorker as of 20 2007 blackstone does not own a corporate jet instead it uses schwartzman's private jet and in 2016 the company paid him 1.54 million for the privilege and uh you know and also he's like as of 2017 he made million annual, which is more than the largest lottery payout in history. Wow. So again, this guy has just so much fucking money. That's why he's a billionaire. Stephen Schwartzman, a real piece of work. All right, and so one other thing about Steve Schwartzman

was in January 2016, when the Donald Trump presidential campaign was underway, he was asked about the rise of Donald Trump by Bloomberg Television. And he had this to say. Steve, before I let you go, I have to ask you about what's going on in domestic politics back home. Are you getting used to the idea that Donald Trump could win the Republican nomination? I find the whole thing sort of astonishing. And what's remarkable is the amount of anger, whether it's on the Republican side or the Democratic side.

Bernie Sanders, to me, is almost more stunning than some of the stuff going on on the Republican side. How is that happening? Why is that happening? What is the vein in America that is being tapped into across parties that's made people so unhappy? Now, that's something you should spend some time on how is that happening why is that happening this is the guy that thinks that thought that when he first walked into morgan stanley people look so happy yes how is that happening why is that happening a man who does not know what he has been doing for the last 30 years. What a fucking mook. It's like, you know, how come when we get rid of people's pensions and health care

and then use bankruptcy courts to destroy their working conditions and then sell it off for a profit that's been etched into corporate law by the government. And, you know, how come they get angry? I don't know. I don't know. And I also love the other part of that is, of course, Bernie Sanders is even more concerning to him, almost more stunning than Trump's to him, because Bernie Sanders is talking about, you know, Donald Trump is talking about, you know, Mexicans and blacks and these kinds of things whereas bernie sanders is talking about steve schwartz yeah right so it's it's almost more shocking that somebody might point the finger that way instead of downward how dare bernie

sanders blame us the 18 people that have controlled all the decisions for the last two centuries and not everyone else who's done nothing about it. Yeah, I love the idea. This Skull and Bones Society member being like, you know, where's all this anger against secret societies coming from? Like, what exactly has happened in this country where people are angry at us for things that we do that affect their lives?

You know, when I was growing up, people looked at Skull & Bones and thought to themselves, those are the problem solvers. You know, they're the saviors of society. You know, I just don't understand how when I cut 10,000 workers' pays in half so that I could pay Rod Stewart a million dollars to sing at my birthday party, I don't understand why people are mad and voting for Bernie Sanders. And now, Skip, you think LeBron could have candles at his birthday?

Skip, do you think Gwen Stefani performs for Kyrie Irving? Now, Skip, you know nobody is more stunned by the rise of Donald Trump than I am. But Bernie Sanders' rise is almost more stunning. So, in summary, Steve Schwartzman,

brilliant, hard worker, who, you know, he put in the hours with his wife at the opera that was needed to reshape the entire American economy and build a whole new coalition of Republican voters.

And, you know, and protect the carried interest loophole, which would cost him the annual sum of one birthday party if it was implemented. Yeah. But, you know, he protected his flank and he should be really a model to the Polish resistance because he staved off his own personal killer, Barack Obama. And so, Steve Schwartzman's 60th and 70th birthday parties enjoyed their lobster roll and their chocolate dragons that were handcrafted and you know, all the other proceeds that happen when you hollow out the American working class. And with that, this has been Grub Stakers. If you enjoy us, check us out everywhere.

Tell your friends, subscribe, comment, all that nonsense, all that and more. My name is Yogi Poliwal. Steve Jeffers. And I'm Sean P. McCarthy. Thank us out everywhere. Tell your friends. Subscribe. Comment. All that nonsense. All that and more. My name is Yogi Poliwal. Steve Jeffers. And I'm Sean P. McCarthy. Thank you for listening.