Currently browsing posts filed under "Bethany McLean '92"
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Bethany McLean on Hedge Funds
Bethany McLean ‘92 has an article in this month’s Vanity Fair on the rise and fall of a hedge fund. You can also see her discuss the same topic via video here:
Not Williams-related, but I also recommend the Michael Lewis article on Iceland in the same issue.
Bethany McLean on the Daily Show Last Night
A couple of good lines in this interview by McLean, including:
“There’s something almost reassuring about Bernie Madoff.”
“Here’s the thing about the free market: it’s only a free market when the market is going in your favor.”
I agree that there is something reassuring about the Madoff story, because it shows that the times we are living in aren’t all that unprecedented. It would almost be more surprising to not uncover a massive fraud during the throes of a financial crisis.
To be honest, the whole subprime mortgage discussion feels like old hat. Subprime is no longer where the main story is. We’ve moved beyond a financial crisis by now.
bethany mclean is beautiful
Always fun to see what brings people to EphBlog. Turns out that we are the number 2 hit on Google for “bethany mclean is beautiful”. Indeed. McLean is also an amazing writer, recently moving from Fortune to Vanity Fair. Read her latest article here.
Henry Nicholas isn’t just another tech-boom billionaire charged with backdating stock options. All the drive, arrogance, and aggression he poured into building microchip-maker Broadcom—one of the major success stories of the Internet Age—morphed into an increasing obsession with sex and drugs, according to federal prosecutors. The author investigates the allegations about Nicholas’s out-of-control world: the parade of prostitutes, the spiking of clients’ drinks with Ecstasy, and the secret lair he built underneath the Orange County mansion he shared with his wife and kids.
Read the whole thing. Or at least the ending.
You could argue that it was all necessary, that if Nicholas wasn’t such an extremist he also wouldn’t have built such a successful company. Or maybe not. Says one former executive, “Could he have done what he did without the insanity? I think he could have. He had a wife and kids and a wonderful company, and he let a piece of him take over.”
A few years ago, Nicholas, in a moment of self-reflection, said, “All I’ve done is make money. I’ve achieved none of my goals.” Now there’s a chance he never will.
Maybe the cartoon characters Calvin and Hobbes sum it up best: “Do you believe in the Devil?” Calvin asks. “You know, a supreme evil being dedicated to the temptation, corruption, and destruction of man?”
Replies Hobbes, “I’m not sure that man needs the help.”
Beautiful and a Calvin and Hobbes fan. All hail the Williams Math/Stat Department and its amazing majors!
Bethany McLean ‘92 on Colbert
Not one of Stephen’s better interviews. Bethany seems at times to be speaking to a kindergartener.
Surplus of Optimism
Interesting interview with Bethany McLean ‘92.
Great scarf and insightful comments.
McLean notes the responsibility of a journalist to “Say what you think.” Indeed. Same applies to bloggers.
Book For The Ages
No hubris here.
Is it time yet to start pulling together books about last week’s catastrophe on Wall Street? Publishers are uneasy about making plans too soon, but the city’s finest financial journalists—and their literary agents—are eager to get moving.
…
“There’s a lot to be said for a timely book, but we don’t know what the book is yet,” said Simon & Schuster publisher David Rosenthal, noting that there are nevertheless writers out there whom he would agree to publish immediately just because he knows they’d do a good job with whatever ends up happening.
At any rate, proposals have started making the rounds.
One comes from Times business columnist Joe Nocera and former Fortune reporter Bethany McLean, who decided to write a book together the day Lehman Brothers declared bankruptcy and Merrill Lynch sold itself to Bank of America. Mr. Nocera was visiting Ms. McLean (co-writer of the Enron book The Smartest Guys in the Room) in Chicago at the time—he was there to attend a science conference, what kind he wouldn’t say—and over some white wine, the two of them decided that a definitive chronicle of the stunning financial crisis was in order, and that they were the team best equipped to produce it.
“We want to write the big book, and I’m not afraid of saying that,” Mr. Nocera said. “It will be a book for the ages and—I know this is going to sound egomaniacal, but—between our contacts and our reporting skills and our writing skills, I think we’ll be pretty tough to beat.”
The agency representing the Nocera-McLean book to publishers, Darhansoff, Verrill and Feldman is said to be asking more than $1 million (No one there picked up the phone when Pub Crawl sought comment).
McLean’s Smartest Guys in the Room is a great read but $1 million seems like a big advance. How many copies would need to be sold for this to make sense to a publisher?
Business Books
New York Times columnists lists the best business books ever.
“The Smartest Guys in the Room,” by Peter Elkind and Bethany McLean. (O.K., O.K., they are former colleagues of mine, and I was deeply involved in editing this book — but I have to say, I think it turned out pretty well!)
Indeed. Below the fold is my list of the best finance books, given to my 3 Williams interns last week. Comments welcome.
Read more
Capture Me
Looking for 60+ pages of pure lunacy on a long holiday week-end?
Deep Capture
Bethany McLean ‘92 is moving from Fortune to Vanity Fair. Congratulations! One of her last columns for Fortune may have been this one on the trials and tribulations of we beleaguered short sellers.
Think the life of a famous financial journalist like Bethany is all glamor? Consider the madness she has to deal with on a regular basis.
As will be explored in a subsequent piece, it would be fair to describe my relationship with Bethany McLean of Fortune as “strained”. However, it is not unusual for her to write or call me seeking comment, generally regarding allegations fed her by crony hedge funds which she dutifully regurgitates on command, and sometimes regarding other things, too. I make it a point to respond promptly. On rare occasion when I have contacted her, she has responded promptly as well.
Thus I was a bit surprised at the turn taken by the following correspondence:
Think that is just the rantings of some Internetty crackpot? Think again! That is Patrick Byrne, CEO of Overstock. Only read the whole thing if you have a lot of time on your hands . . .
Barbie Loves Math
Our readers love stories about Bethany McLean ‘92 and her central role in uncovering suspect accounting at Enron. Consider this 2002 op-ed column from Maureen Dowd.
Hollywood is trying to figure out how to turn Enron into a TV movie.
How do they take all the stuff about ”the contingent nature of existing restricted forward contracts” and ‘’share-settled costless collar arrangements,” jettison it like the math in ”A Beautiful Mind,” and juice it up?
Enron is such a mind-numbing black hole, even for financial analysts, that if you tried to explain all the perfidious permutations, you’d never come out the other end.A movie executive asked Lowell Bergman, the former ”60 Minutes” producer who is now an investigative reporter for The Times and ”Frontline,” for the most cinematic way to frame the story. (Mr. Bergman had the ultimate Hollywood experience of being played by Al Pacino in another corporate greed-and-corruption saga, ”The Insider.”)
”It’s about the women up against the men,” he replied.
Before you know it, Enron will be Erined, as in Brockovich. Texas good ol’ girl, fast-talking, salt-of-the-earth whistle-blower Sherron Watkins will be Renee Zellweger in a Shoshanna Lonstein bustier. The adorable and intrepid Fortune reporter Bethany McLean, the first journalist to sound an alarm about Enron’s accounting practices, will be look-alike Alicia Silverstone.
…
Some [Enron executives?] privately trashed Ms. Lynch as ”an idiot” and coveted Ms. McLean, calling her ”a looker who doesn’t know anything.” But when they realized the women were on to them, the company that intimidated competitors, suppliers and utilities tried to oust Ms. Lynch from her job and discredit Ms. McLean and kill her article.
Which Enron insider said that? Or is Dowd talking about her vision for the movie?
Journalistic Sex Symbol
This 2002 story on Bethany McLean’s ‘92 Enron reporting contains the sort of insider-backbiting that EphBlog readers love.
If journalism were in the Olympics, the Enron story might well be pairs figure skating. Bethany McLean, the young Fortune writer who first wrote about Enron’s shady finances a year ago, has, of course, already been awarded the gold. And with that have come the requisite endorsements: In the past two months, she was hired as a consultant by NBC News and shared in a $1.4 million deal to co-author a book on the scandal.
But another team is also vying for top honors — amid complaints about shoddy judging. Reporters and editors at the Wall Street Journal believe their work has been unjustly ignored, with some wondering whether Pulitzer rivals like the Washington Post and the New York Times have gone out of their way to praise McLean.
…
That’s the competition. Now for the judging. In January, Howard Kurtz, the Washington Post’s media writer, highlighted McLean as the first journalist to ask questions about Enron. Ten days later, the Times’ Felicity Barringer wrote her profile of “the financial reporter everyone loves to lionize.”
While McLean was being anointed as a journalistic sex symbol in a story hitherto dominated by a balding Kenneth Lay, folks at the Journal felt they were being robbed: “People are trying to queer the Pulitzer pitch for the Journal,” says one editor there. That’s sour grapes, counters Kurtz: “In this case, a 31-year-old reporter beat them and the rest of the world by a considerable margin.”
Read the whole thing.
Rip Your Throat Out
Fortune editor Bethany McLean ‘92 writes on Goldman Sachs and CEO Lloyd Blankfein
Over the past few months Fortune had the chance to learn of Blankfein’s worries and visions for Goldman firsthand, giving us an unusually personal view of the man who has the daunting job of sustaining Goldman’s winning streak in an increasingly treacherous market. What we saw was partly what you’d expect – a stunningly smart, demanding, and competitive executive at the top of his game – but also a surprisingly thoughtful, self-reflective leader with a wicked sense of humor. “Anything I haven’t asked about?” I say at one point in our conversations. “Virgo, blue,” he shoots back. (It took me a moment to figure that out, which probably explains why I left Goldman Sachs in 1995, after working as an analyst for three years.) Of course, the joke goes only so far. As a former Goldman executive puts it, Blankfein is “funny and self-deprecating and can reach across the table and rip your throat out when it’s warranted.”
Fun stuff. Alas, no mention of the critical role played by Mike Swenson ‘89 in allowing Goldman to make so much money in 2007. Note the high quality of McLean’s prose and the way she ties the start and finish of the article together so nicely. Associated interview with McLean here.
Ronit wants more Bethany. We give him more Bethany.
EphCOI:Finance – Bethany McLean on Enron
Here’s an old Daily Show interview, from 2002, featuring Bethany McLean ‘92, mostly notable for Jon Stewart’s hilariously bad understanding of short-selling.
I hereby nominate Bethany McLean to displace Erin Burnett ‘98 as EphBlog’s favorite financial reporter.
McLean ‘92 on CSPAN
Bethany McLean ‘92, co-author of The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, is on CSPAN right now. Go watch her and stop surfing the web.
Calling Bethany McLean ‘92
Although I hesitate to start a new thread on topic of Schapiro/Roseman board service, there is much fun material here. Today the New York Times reports that
Board members and senior executives of Marsh & McLennan, the giant insurance broker that has been accused of cheating customers, put millions of dollars into a partnership that profited by buying companies from Marsh and investing in companies that work with Marsh.
Shades of The Smartest Guys in the Room, Bethany McLean’s ‘92 marvelous book about Enron. I would wager the scandal here, if there is one, will involve the executive directors and not the independent ones like Morty. He is way too smart to get involved with anything that even looks like self-dealing.
The article also notes that
Experts on corporate governance have complained that Marsh’s board, which has 6 insiders and 10 independent directors, is extremely weak and has not taken leadership as the insurance broker’s legal problems worsen. Only two independent directors are employed by public companies: Lord Lang, a former British politician who is chairman of Thistle Mining, and Stephen Hardis, chairman of Axcelis Technologies.
Allow me to parse this. When people say that Marsh’s board is “weak,” they mean that the independent directors (the ones unconnected to the company) are not serious business people with useful experience and reputations to protect. When people say the board is weak, they are really saying that Morty, among others, is weak.
I am not sure that I believe this, and Morty is just 1 of 9 or 10 independent directors. But many people do believe that the board handled the Putnam mess poorly, and in a way that was excessively kind to company management.
Senior executives with low morals like weak boards because it allows them to get away with nefarious deeds more easily.
Meanwhile, the Wall Street Journal reports ($ req.) that
Meanwhile, some of the 10 outside directors on Marsh’s 16-member board, who received little notice before Mr. Spitzer filed his civil lawsuit against the company, have been in contact with Mr. Spitzer’s office, according to a person familiar with the situation. In announcing the suit, Mr. Spitzer said he wouldn’t negotiate with Marsh’s top management, headed by Chairman and Chief Executive Jeffrey W. Greenberg.
Hmmm. There is (another) Fortune article here for Bethany McLean.
McLean ‘92 on Enron
Ken Lay, former chairman on Enron, has been indicted. This isn’t something that we would normally care about at EphBlog. But, in this particular controversy, Bethany McLean ‘92, author of The Smartest Guys in the Room, is one of the experts.
If you only have time to read one book about the excesses and scandals of the business world during the bubble years, you should read McLean’s.
Although I can’t find any comments by McLean on Lay’s indictment (most of her articles for Fortune are not accessible), she does note that:
Enron’s board of directors was infatuated with executives they hired.
“The board fell in love with the management at Eron,” she told the forum. “Enron’s board forgot who they worked for – the shareholders.”
She said the abuses occurred even though Enron’s corporate structure had a separate chairman and CEO in place. “There was a belief that these (management) people were just so incredibly smart,” she said.
You can read McLean’s original article on Enron here.
One of the reasons that I spend so much time on compensation issues at the College is that is seems obvious that the same forces that drove pay to such extremes in the business world are starting to have an effect at Williams.
As I always, we at EphBlog stand second to none is praising the job that Morty is doing. Yet is that really enough of a reason to pay him twice what we paid Frank Oakley just 10 years ago? I don’t think so.
Recommended by Buffet
Bethany McLean’s ‘92 new book, The Smartest Guys in the Room, about the rise and fall of Enron was recommended by Warren Buffet in his annual shareholder letter. There is an excerpt from the book here.
Buffet is the most successful investor of the last 50 years, so praise from him is high praise indeed.
Besides being an ace fortune reporter, McLean was one of the first to question the apparent success of Enron. She notes:
Enron didn’t stop claiming they were not a trading company. In Enron’s view, its core business, where the company says it made most of its money, is delivering a physical commodity. However, look at Goldman Sachs, one of the best trading outfits in the world — its stock rarely sells for more than 20 times earnings, vs. the 70 or so multiple that Enron shares commanded. Publicly admitting so would have been catastrophic to the stock. Enron’s valuation completely was based on its ability to generate predictable earnings, something not even Goldman Sachs could predict. However, when I went to the 10Ks, I found diminishing cash flows, smooth net income increases and exploding debt levels. Even worse, the return on capital invested was only 7%, lower than their cost of capital.
Of course, since Williams refuses to take accounting seriously, there are probably few if any current students who have a clue what McLean is talking about.
The whole story is quite interesting. McLean’s career path may have some lessons for current students.
McLean has been feted by cable talk show and late-night television hosts for her work in highlighting those. Her experience with Enron highlights the weaknesses of financial journalism, which tends to be sucked into ‘the gravitational pull of the stock market.” However, she was not a conventional journalist. She graduated from Williams College with a double major in math and English. For three years after graduating from college, she worked for Goldman Sachs’s research division, reviewing the books of companies being offered for sale and writing memorandums describing their virtues and faults. After three years, she joined Fortune’s corps of fact-checkers. Regularly, she corresponds with managers of hedge fund and short-seller companies, which sometimes leads her to investigate more certain companies.
I have no idea what “short-seller companies” are, but I have all sorts of opinions on companies whose bookkeeping is less than wholesome. Alas, the SEC wouldn’t want to see that in EphBlog.
Currently browsing posts filed under "Bethany McLean '92"
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