Happy travel day, everyone; may you have much to be thankful for tomorrow — and stay out of the left lane on Interstate 95 northbound between northern Virginia and the Philadelphia suburbs. On the menu today: Two new articles lay out how Sam Bankman-Fried and his firms bought a lot of friends in Washington, and mention his family’s ties to prominent Democrats; a moment of thanks; and an observation about how everyone wants to believe in revolution, instead of accepting the gradual pace of evolution.
‘He Played D.C. Like a Fiddle’
If you’re reading this, you likely long ago gave up the sense that political ideology is a useful tool for sorting out the world’s good human beings from the bad ones. We may be much more likely to see the world from the political right, but we’ve likely all run into our own share of Republican jerks, insufferably self-righteous or preachy conservatives, libertarians who are unexpectedly pushy in their personal lives, likeable or even lovable Democrats, and well-meaning, big-hearted liberals who . . . just don’t like thinking about how their ideas don’t work out the way they hoped. And of course, we’ve run into lovable conservatives, as well as some liberals whom we would love to put on a rocket ship and blast into the sun. That’s just the way life is; people will surprise you, in good ways and bad.
Alas, a lot of people in this world do use politics as a shorthand for working out who’s good and who’s worth trusting. A few days ago, this newsletter looked at the epic downfall of Sam Bankman-Fried and his cryptocurrency exchange FTX. As with Bernie Madoff, Enron, and Elizabeth Holmes and Theranos, people are asking, “How could so many people be fooled?” In retrospect, the fraud and the con look so obvious, so how did otherwise smart people think it was a good idea to trust Sam Bankman-Fried with so much of their hard-earned money?
This morning, two publications offer a more in-depth look at how Bankman-Fried won friends and influenced people, although maybe it’s more accurate to say he bought friends and influenced people. Vice writes that Bankman-Fried “created the new playbook for manipulating Washington, D.C.”:
A self-admitted crypto skeptic, [Lee Reiners, a former financial regulator] had made his displeasure with the proposal known, calling it a “bad idea” weeks earlier. So had others. But before FTX dramatically blew up this month, that skepticism was hard to find in D.C., as Bankman-Fried was in the midst of a masterclass in bending Washington, D.C. to his will by way of every trick in the political playbook: not only by donating more than $40 million dollars to various political causes and characters, but also by ingratiating himself with a favorite regulator, hiring insiders with influence, cribbing plays from Blackstone and BlackRock, snapping pictures and otherwise hobnobbing, and pitching himself as a humble and demure billionaire, less interested in the traditional trappings of fame and fortune than in helping make the world a better place.
“Sam Bankman-Fried influenced Washington across basically every mechanism available,” said Jeff Hauser, who runs the Revolving Door Project at the Center for Economic and Policy Research. “I’m not sure I can think of anyone who developed such a sophisticated approach so quickly upon ascending to the levels of the elite.”
“He played D.C. like a fiddle. No doubt about it,” agreed Reiners.
I notice that Bankman-Fried is another example of an enormously rich person who insisted he didn’t really care about money or building wealth. Note: His jobs were running a hedge fund and a trading exchange.
Perhaps we should be instinctively wary of super-wealthy people who act as if their whole fortune just appeared one day by accident. In a 2019 interview, Patagonia founder Yvon Chouinard lamented that, “We’re a billion-dollar company, and I don’t want to be a billion-dollar company. The day they announced it to me, I hung my head and said, ‘Oh God, I knew it would come to this.’ I’m trying to figure out how to make Patagonia act like a small company again.” Chelsea Clinton infamously told the magazine Fast Company, “I was curious if I could care about [money] on some fundamental level, and I couldn’t.” You know who’s incapable of caring about money? Really rich people. Your mileage may vary, but I think saying you don’t or can’t care about money strikes me as a more ostentatious display of privilege than being driven around in a Rolls-Royce.
No doubt, certain folks on the left still hold onto this notion that they are the little guy, the proletariat, and that the problems of the world are primarily driven by the greed of the rich. Bankman-Fried’s public insistence that his growing fortune was just a tool for making the world a better place made him one of the “good” billionaires that progressives could embrace in good conscience.
That Vice article includes some details that feel particularly under-discussed in the coverage so far:
It was no surprise, considering his own family’s familiarity with the ins and outs of Washington. His mother, Barbara, had founded a left-wing super political action committee, or PAC, focused on donations from Silicon Valley executives, and his father, Joseph, has testified before Congress about tax compliance issues, even helping Massachusetts Sen. Elizabeth Warren to draft tax legislation in the past. (Warren is now going after FTX.) Bankman-Fried’s brother, Gabe, had worked in Washington as a congressional staffer.
Oh.
Then, there is the second new report, in which the New York Times explains how Bankman-Fried “built a massive operation to woo politicians, regulators and nonprofits to support his crypto goals.” The Times’ story includes some details that are likely to embarrass one particularly high-profile incoming senator:
About two months after the email, Web3 Forward began airing an ad casting Mr. Fetterman as a working class champion who was not “gonna get schmoozed by lobbyists.” The super PAC spent nearly $4.7 million boosting Democratic candidates in the midterm elections, mostly in their primary campaigns, including more than $212,000 supporting Mr. Fetterman, who won his race and is set to begin his term Jan. 3.
Joe Calvello, a spokesman for Mr. Fetterman, sought to distance the newly elected senator from the disgraced crypto entrepreneur. “Sam Bankman-Fried must be held fully accountable,” Mr. Calvello wrote in an email.
Notice that it’s a de facto lobbyist financing an ad which declared that John Fetterman isn’t “gonna get schmoozed by lobbyists.”
Bankman-Fried’s getting more attention, in part because he was on more magazine covers, but let’s not forget another FTX executive, Ryan Salame. FTX made sure to cover its bases, in case of any change in partisan control of Washington:
Republicans also had high hopes for Mr. Salame, who donated nearly $24 million in the 2022 campaign, mostly to Republicans and groups that support them, including $15 million to a super PAC he launched called American Dream Federal Action. It spent nearly $517,000 supporting the successful Senate campaign of Representative Ted Budd of North Carolina. . . .
A week before Election Day, a group funded by Mr. Bankman-Fried and formerly run by his brother, Gabe Bankman-Fried, Guarding Against Pandemics, hosted separate cocktail receptions for Democrats and Republicans at a townhouse near the Capitol. The group, which focused on pandemic preparedness, paid nearly $3.3 million in April for the house, where it hosted events. An invitation to the Republican reception hailed Mr. Salame as a “budding Republican megadonor.”
You must wonder if Bankman-Fried and Salame arrived in Washington and saw before them a town full of easy marks. Just about everyone in Washington needs money, and they had money to throw around. They were leaders in a new industry that was strange and mysterious to most people in Washington. Bankman-Fried kept insisting he wasn’t opposed to regulation, and as you likely know, regulation can often help established firms keep their advantages over new competitors. And in a vaguely Trump-like burst of bombast in May, Bankman-Fried casually suggested he might spend $1 billion on donations in the 2024 election cycle. That’s basically saying, “I’ve got a billion dollars to give away, who would like some?”
I also regret to inform you that Washington — heck, the whole country — is full of people who judge a book by its cover. If John Fetterman looked like just another guy, it’s unlikely he would have become a remarkably famous small-town mayor in a short period of time. Almost every profile written about him offered some version of, “This guy might look like an ex-con or a biker, but he’s really a small-town mayor who went to Harvard!” Vice notes of Bankman-Fried:
Political journalists and politicians alike ate up evidence of his “monk-like aesthetic,” like stories that he drove a Toyota Corolla, used his parents’ Netflix account, crashed on his brother’s couch when he visited D.C., and slept on a bean bag chair. (Less often stated was that he owned a multi-million dollar property in the Bahamas.)
Bankman-Fried was a story “too good to check,” as journalists sometimes put it. Every good con artist knows that the mark has to want to believe the con; he needs a good reason to ignore any nagging sense of doubt in the back of his mind. Wondering who this disheveled 30-year-old MIT grad from California really was, or what he really wanted, or whether his vast financial empire was built on a genuinely solid foundation would disrupt the illusion that Silicon Valley had delivered a wunderkind who was going to generously finance the Democrats and progressive causes for the next 50 years.
I suspect many people are watching this with a little bit of schadenfreude. Chances are, you’ve never met Sam Bankman-Fried, and probably didn’t know or hear much about FTX until recently. We may have our own untrustworthy or unreliable figures in our lives, but the stakes are comparatively small.
Perhaps it’s age, or cynicism, but I’ve found myself reflexively wary of any figure that comes down the pike and is rapidly touted as the Next Big Thing. Wisdom is hard-earned, few people ever get rich overnight, and if it sounds too good to be true, it probably is. It’s always a good idea to read the fine print, and if you don’t understand it, you probably shouldn’t be investing money in it, or at least not money you can’t afford to lose.
And hey, if we never trusted our money to Sam Bankman-Fried, that’s one more thing to be thankful for tomorrow.
ADDENDA: Speaking of thanks, our most recent webathon has raised more than $112,000 for National Review, for which we are grateful. Our Maddy Kearns asks for your support today.
I notice that the “Yes, Trump is a unique threat to democracy, but now that there’s another serious option for Republicans, Ron DeSantis is just as bad, too,” arguments continue.
There are seemingly rational voices on the left who think they can argue, “Both Trump and DeSantis are unacceptable threats to American democracy, so the only way Republicans will not be a threat to democracy is if they nominate one of the few GOP figures we like, such as Governor Larry Hogan of Maryland.” They just can’t grasp that this is like us arguing, “Joe Biden, Kamala Harris, and most other alternatives like Gavin Newsom are unacceptable threats to the American constitutional order, so the only way Democrats will not be a threat to the Constitution is if they nominate one of the few Democratic figures we like, like Senator Joe Manchin of West Virginia.” I mean, you can say it, but no one in the opposition party is going to listen to you. They barely care what you think at all; they’re really not going to heed your stern warning that they get a veto over whom your party nominates for president.
I tried telling liberals that they’re going to hate DeSantis, but they would hate him within normal parameters, not the all-consuming, paranoia-inducing, identity-defining obsessive hatred that has filled their lives since Trump became the GOP nominee in 2016. By and large, liberals didn’t want to hear it. Almost no one wants baby steps or small improvements anymore; everyone believes that utopia or dystopia lies just past the next election.