There May Be Someone At The White House With More Contempt For A Colleague Than John Kelly Has For His Boss

Imagine sitting across the Cabinet table from someone who could have saved you from a $100 million loss.
By Gage Skidmore from Peoria, AZ, United States of America (Betsy DeVos) [CC BY-SA 2.0], via Wikimedia Commons

Not amused. By Gage Skidmore from Peoria, AZ, United States of America (Betsy DeVos) [CC BY-SA 2.0], via Wikimedia Commons

There are lots of reasons why meetings of the United States Cabinet might be awkward. For one, Donald Trump speaks at them. Steve Mnuchin and Wilbur Ross, too. Also Ben Carson. When Scott Pruitt pulls up to the White House in cars he can’t possibly afford, it has to elicit a few groans. Everyone is swimming in a sea of incompetence, this combination of factors must make for some seriously unpleasant hours on the calendar of the oligopoly currently mismanaging the hell out of America, U.S.A.

And those are just the general factors. Then there are the interpersonal issues, such as the one between the president and his chief of staff, who apparently hate each other’s guts. But that’s not the only intramural squabble. For while Education Secretary Betsy DeVos and her family didn’t lose the most money on blood-testing bloodbath Theranos (that would be Theranos founder Elizabeth Holmes) or the most actual money on the thing (that would be the Walton family), she and her kin are nine figures lighter from the experience. And sitting across the Cabinet table from her is a guy who had a unique insight into how and why they lost that money. A guy with an arguably fiduciary duty to the DeVoses and Coxes and Rupert Murdoch and Carlos Slim and Bob Kraft and every other poor bastard who gave Holmes a nickel. And now, thanks to this lawsuit, we know the extent of this particular Cabinet-level blood feud.

High on the list is Education Secretary Betsy DeVos, whose family invested $100 million in the Silicon Valley blood-testing company, the documents show. Mrs. DeVos had previously disclosed that her family was a Theranos investor in a government filing, but the size of the investment wasn’t known.

“The investment was made by many members of the DeVos family,” not just Mrs. DeVos, says Greg McNeilly, chief operating officer of Windquest Group, Mrs. DeVos and her husband’s family holding company. “To say they’re highly disappointed in Theranos as a company and an investment is an understatement.”

As if to make matters worse, while DeVos can only seem to generate bad and embarrassing headlines, Jim Mattis—Jim FUCKING Mattis, renowned warmonger and lunatic and, worst of all, guy who screwed Betsy DeVos out of millions of dollars—gets to do all that while accepting plaudits as the only person in between the world and annihilative disaster.

Theranos Cost Business and Government Leaders More Than $600 Million [WSJ]


One More Thing For Governance Day

Felix Salmon put up a great note from a reader about investment banking conflicts; it's fantastic so go read it. But this is a tiny bit unfair: You and many other commentators seem to have some misconceptions about what exactly large, sophisticated clients such as El Paso’s board hire investment bankers to do. Its always funny how, in the minds of pundits everywhere, those conniving and all-powerful one-percenters who sit on corporate boards become impotent and completely incapable of independent decision-making once an investment banker walks into the room. The basic argument is that repeat-player investment bankers provide value not by telling brainless executives whether to accept or reject a merger, but by providing intelligent decisionmakers with access and relationships, and relationships come with conflicts. As he says: When sophisticated clients (management teams, company boards, PE funds, etc) hire M&A bankers, they typically hire them for two main reasons (in addition to the legally required shams referred to as “fairness opinions”): Execution and Connections. Of those things, connections are higher-value and inextricable from conflicts. If you're hiring someone to sell you to Company X, a bank who has done work for Company X - heck, who owns 20% of Company X - is the bank you want. And sure maybe their "conflict" will cause them to advise you to sell for a lowball price so that Company X appreciates them more but, hey, nobody's forcing you to take their advice. So, yes, this is all true. But he's maybe a little too harsh on the commentators and their misconceptions.