John Hennessy was one of 32 executives invited to Austin in January for an economic forum with president-elect George W. Bush. The invitation had cost Hennessy a considerable amount of fundraising time -- 5 to 10 hours a week, by his own admission -- and $108,000 in donations to the Republican National Committee. But Hennessy, who was being considered for treasury secretary, did not seem to mind the cost.
"I'm the point man for Bush here. I help them organize," Hennessy had said a few weeks before the election, claiming to have coordinated 50 financial executives who backed the GOP candidate. "It's something I have done for the last 20 years. I did it for George Herbert Walker Bush."
During the first Bush administration, Hennessy had been chairman and CEO of Credit Suisse First Boston, one of the world's largest securities firms. He now heads the investment bank's private equity division, with $20 billion under management, including a recent investment in Advantage Schools, a for-profit manager of public schools. Credit Suisse advises or invests in nearly every industry affected by federal regulation, including oil and gas, media, utilities, and telecommunications.
Recently the company made headlines for distributing a memo to investors suggesting that the energy crisis in California has been instigated for political reasons. "The rolling blackouts in California are more likely to soften up the legislature and the voters to the need for a rate increase than they are indicative of a permanent 'when the lights went out in California' scenario," a Credit Suisse analyst wrote. At the same time, according to the Orange County Register, the company had advised or invested in at least three energy producers, and was advising California legislators on solutions to the crisis.
Credit Suisse also has a large stake in the future of the stock markets. Last November, it acquired Donaldson, Lufkin & Jenrette, which owns one of the nation's largest online brokerages with more than 795,000 accounts. The purchase positions Hennessy's firm to take advantage of Bush's proposal to privatize a portion of Social Security, a move that would pump billions of tax dollars through brokerage firms. It could also boost stock ownership among Americans to 80 percent or more, creating millions of potential new customers for Credit Suisse's new online brokerage, which just launched a $50 million advertising campaign to boost business.
As for what Hennessy discussed with Bush at the Austin forum, the public may never know. The session was held behind closed doors, with only pieces of conversations making it out to the press. According to one attendee quoted in the Washington Post, Bush told the assembled brokers that his administration "will do our best to deregulate where we can."
-- Michael Scherer
