Lanny Davis' Other Career

This post is one that probably belongs in both of my blogs. The larger context is business, but since the focused subject is Lanny Davis, the well-known Democratic political operative, it also belongs here.

A colleague who recently attended an alternative investment conference passed along one of the parting gifts, a copy of David Einhorn's book, "Fooling Some of the People All of the Time." It describes Einhorn's running battle with Allied Capital, a so-called 'business development company' whose business is largely making SBA-backed loans to smallish businesses.

I won't go into the particulars of the book or case, except to note that Einhorn's account, assuming it is true, characterizes Allied as guilty of a number of fairly obvious accounting deceptions. Maybe I'm more of a geek than I realize, because I actually enjoy reading Einhorn's book. I'm not an accountant, but, because of my background, including TA'ing accounting courses in college, and having two business degrees, I can follow Einhorn's work quite easily. It's entertaining reading his account of how Allied's management attempts to parry and hide from Einhorn's consistent, relentless quest for answers to his questions about suspicious accounting and business practices.

So, we come to Lanny Davis.

Sometime in the middle of Einhorn's debacle with Allied, the firm hired Davis as their 'fixer.' Apparently not wanting to know whether Einhorn's charges were true, or not, Davis, according to the book, simply launched into full defense of Allied, meaning, attacking Einhorn and his motives.

According to Einhorn, Davis has represented a fair number of corporations and their CEOs, out of court, who were later found guilty of many of the things for which Davis was retained to fend off.

In effect, Lanny Davis gains access to cable news shows and builds a clientele as a Clintonista with connections, then turns around and presents himself as an objective, disinterested pursuer of suspect 'short sellers' and hedge fund managers. Einhorn even details how Davis, upon representing Allied, suddenly began to form an anti-hedge fund interest group.

I've seen Davis on Fox News quite a bit, and he tries, unfortunately with some apparent success, to come off as an old, semi-retired political hack who is just interested in protecting the little guy. In truth, though, according to Einhorn, Davis has been making his latest fortune protecting precisely the types of corporate so-called greedy executives which his old bosses, and continuing Democratic party friends, used to and still publicly target.

How can Lanny Davis have represented Richard Scrushy and Allied, yet still claim to be a populist?

I understand that our legal system guarantees everyone, even the guilty, a defense. But that's in court.

What Lanny Davis does is represent the guilty before they are charged, and, according to Einhorn, using tactics which avoid the issues, and focus, instead, on the questioners. Is this really what we want in our economic and justice system?

Davis' motive would seem pretty transparent. Represent the corporate wrong-doers, while violating the principles of his own party, because, well, that's where the money is.