Jon Corzine, the former CEO of Goldman Sachs, nervously surveys the sea of white hair, white balloons, and red-and-white-checked tablecloths that is the annual Bergen County Senior Picnic. It is not yet 11 a.m. on a stifling hot August day, and already Corzine is soaked in sweat. As his aides wander from table to table passing out red-white-and-blue plastic COMPLIMENTS OF JON CORZINE pens, the tall, bearded, $350 million candidate in the Paul Stuart suit is patting shoulders, shaking hands, complimenting women on their hairdos, and trying to relate to the people. This is the same Corzine who helped engineer the $3.6 billion bailout of the Long-Term Capital Management hedge fund and orchestrated the initial public offering of his notoriously market-shy investment bank. But today, looking out on the crowd, he seems almost overwhelmed, as he confides, “This is the biggest thing I’ve ever done.”One of the picnickers asks the candidate for his position on “notch babies,” those born between 1917 and 1921 who have received reduced Social Security payments as a result of a legislative quirk. “My mother was a notch baby!” exclaims the Illinois-born Corzine. “If I get elected, I’m going to do something about it.” A 3-year-old waiting with his grandmother in front of the Portosans asks Corzine to buy him an apartment. “You’re a little guy to get an apartment!” says the flustered would-be senator.
“I don’t want you to manage my money!” shouts a baseball-capped man as Corzine approaches his table. “I want the IRS to be out of business!” “I think you want a tax cut,” says Corzine. “I’ll work on it.” Finally, an elderly woman who is counseling him to shave his beard accidentally spills a container of milk on the candidate, drenching his cuffed pants and Cole-Haan shoes. “Don’t worry about that!” says Corzine, offering her a tissue. Running for Senate, it turns out, is a lot messier than running a major investment bank.
Not that things weren’t messy at Goldman Sachs. The 52-year-old Corzine was ousted last winter following a rancorous battle with his board. Then, last spring, after almost teaming up with Long-Term founder John Meriwether to do a restructuring of the fund, Corzine, who has never held elective office, surprised nearly everyone by choosing to pursue a far riskier option: running in the Democratic primary against former New Jersey governor Jim Florio in the race to succeed retiring Democratic senator Frank Lautenberg.
Up until two weeks ago, Corzine was a virtual unknown among New Jersey’s voters, and polls were predicting that neither he nor Florio, who is the clear Democratic front-runner, could beat their uncontested Republican rival, Governor Christine Todd Whitman. But her sudden withdrawal from the race – specifically citing concerns about raising money – has thrown the low-profile Goldman exile into the national spotlight. On the day of Whitman’s announcement, Corzine appeared on CNN, NBC, and a host of other news outlets, a political windfall that guarantees extensive media coverage of this Thursday’s official announcement of his candidacy. And while many analysts argue that Whitman’s withdrawal is a bigger positive for Florio – who lost his governorship to her in a nasty race in 1993 – the fact that Republicans are now trying to recruit former Goldman Sachs partner Lew Eisenberg into the race tells a different story. Suddenly, Jon Corzine matters.
Lately, Corzine has had little time for his place in Telluride, Colorado; for his beach house in the Hamptons; or even for a round of golf at one of the two fabled courses where he is a member, the Atlantic in Bridgehampton and Baltusrol in Springfield, New Jersey. In fact, he’s barely had much time for his yellow center-hall colonial in Summit, the suburban Union County town where he and his family have lived for the past 25 years. Corzine has been too busy crisscrossing the Garden State in his Ford Explorer campaign-mobile, marching with unions, praying in black churches, celebrating ethnic festivals, and breaking bread with as many of New Jersey’s local pols as he can.
He has also been busy writing checks and making pledges: $546,000 to his campaign fund, just to get it going. A commitment to raise $100,000 for the fund that helps elect New Jersey Democrats to the State Assembly. And then there is that much bigger number, the one that has set politicos’ jaws dropping all the way from Hackensack to Harvey Cedars: Corzine is committed to spending $10 million on the primary alone.
In politics, being a rich candidate is a double-edged sword, and the fact that people are harping on his money, even as he uses it to gain entrée into the world of elective politics, is driving Corzine nuts. “You know, if I read ’x-million-dollar guy from Wall Street’ one more time … ,” he says disdainfully. “Hopefully, my life has been an example of how you use the advantages of a democratic and open society to get ahead. I hate using the words American Dream, but, you know, that’s what people should aspire to – having good things happen from hard work. I think that’s a story that sells.”
Already, in just a few months, Corzine has become as controversial a figure in the rough-and-tumble world of New Jersey politics as he was in the rarefied milieu of the six-man executive committee at Goldman Sachs. His supporters cast him as a pauper turned people’s prince, a fiscally conservative, socially liberal Democrat whose entry into the race is nothing short of a triumph for the party. “The better people do in life, the less egalitarian they become,” observes State Senator Ray Lesniak, a powerful pol from New York-centric North Jersey, where Corzine is building his base. “Jon is a beacon that there is another way.”
U.S. Senator Bob Torricelli, who is almost as well known for dominating the state’s backroom politics as he is for dating high-profile women like Patricia Duff and Bianca Jagger (in short, he’s the Al D’Amato of New Jersey), is both Corzine’s unofficial sponsor and Lautenberg’s nemesis. He likes to emphasize his would-be junior colleague’s lack of enormous ego. “People’s concept of a chairman of Goldman Sachs is that he’ll enter the room full of himself with a degree of arrogance and an inability to empathize with others,” he says. “Jon Corzine walks into a room dressed in a sweater vest with a genuine interest in other people and a tremendous calm about him.”
Nonetheless, the unmistakable green tinge of Corzine’s aura is sending fund-raisers into a tizzy. “I just came back from the Vineyard, and Frank Biondi says that he wants to do something at his house for Jon,” reports an exuberant Orin Kramer, the hedge-fund manager who is Torricelli’s top fund-raising lieutenant. “Harvey Weinstein says, ‘Greatest guy in the world.’ Tom Lee, the buyout guy, says, ‘He’s the most wonderful guy in the world. What can I do to help?’ Steve Rattner’s going to be helping. These are not people you have to push. They are enthusiastic.”
To Florio and his supporters in southern New Jersey, who have labored six months to raise a little more than the amount of campaign cash that Corzine generated with a stroke of his pen, the former CEO has all the grace of a bull stampeding through the cranberry bogs. Florio has tried to even the score by lambasting his rival with Wall Street-speak, accusing him of trying to engineer a “hostile takeover” of the Democratic Party and trying to “buy an option on an election.” One anonymous band of Florio supporters has even taken to blast-faxing extensive anti-Corzine tracts to politicians and political reporters all over the state. With headings like for sale and fight corporate greed! boycott corzine!, they depict their opponent as a draft-dodging, anti-labor overlord and highlight Goldman Sachs’s role in a host of mergers that resulted in mass layoffs.
“If this is a spending contest, I’ll lose,” says the famously pugnacious Florio, a former Navy boxer. “But this is not a spending contest. We’re planning on conducting a primary election and then a general election. These are not auctions.”
Ed Koch, a Florio friend since their time together in Congress back in the seventies, thinks Corzine is setting his political aspirations just a little too high. “Let him run for some modest position so we can see him as he runs around the track,” he says. “What does he know about the needs of ordinary guys and women?”
The first time we meet, in early July, it is at Ms. D’s, a large Southern-style restaurant with an all-red interior that is the Sylvia’s of Newark. Twenty minutes late and apologetic in a gray wool suit and colorful tie, Corzine arrives with a hearty smile, an outstretched hand, and two young co-campaign managers. He is friendly, though not pushy, and confident, though not brash. Still, before I even have a chance to inform him that I was once one of his 13,000 employees, he beats me to the punch. Have we met before at Goldman? he wants to know, as though I, a just-out-of-college analyst, might have once joined him for a 7 a.m. breakfast in the partners-only dining room or popped my head into his glass-walled office for some off-the-cuff mentoring. No, I tell him, but he did once walk past my desk, and I do recall watching my boss sprint across the trading floor to pick up a phone call from his driver.
Corzine’s campaign managers order fried whiting. Corzine orders the meat loaf and begins to engage in inoculation, the art of airing anything that might be perceived as dirty laundry as a way of gaining control and higher ground. You know that old profile in the Washington Post, the one that mentions he joined the Marine Corps in order to avoid the draft for Vietnam? Not so, he says, but he never bothered to correct it, and now reporters are copying that assertion into their articles without confirming it with him first. “Nobody joins the Marine Corps to avoid military combat,” he says in the slow, deliberate cadence of the Midwest. “It’s just a preposterous concept. I joined the Marine Corps so that I could arrange my personal life and know what the circumstances were gonna be.”
Corzine’s eagerness to bring up hot-button topics such as this – the anti-labor accusations (“I will be a great supporter of labor on almost all of their issues”), the fact that he has not voted in a primary for the past decade (“a mistake, pure and simple”) – seems forced. On occasion, he will interrupt himself to insert, as an aside, the language he is supposed to be using; at other times, on the heels of a clichéd response to one of my questions, he will follow up with “I’m sounding like a politician, but I mean that.”
Early one morning, while we are sitting on the roof of the Robert Treat hotel complex in Newark, where he has rented an entire floor for his campaign headquarters, I ask him why he is running for office. “I have an interest in making a difference,” he tells me. It is a rather flat response, but one that actually seems to be true. And though he, like fellow New Jerseyan Bill Bradley (Corzine is a Gore supporter), has yet to get specific about the issues, this much is on the record: Corzine is a pro-choice gun-control advocate with lofty goals. He wants to revisit universal health insurance, reconstruct the economic base of America’s inner cities, and revamp the national public-education system so it provides equal opportunity for all.
Still, his liberal views are occasionally obscured by the very corporate way in which he expresses his ideas. He likens his campaign plan to a business plan. To explain why he is pro-union, he cites Charge & Ride, the co-op limousine service that Goldman Sachs uses, as an example of the good that unions can do. You know how you get in the car and the driver has no idea where he’s going? If there was a union, it could train him. You know how you get in the car and it’s dirty? The union might enforce cleanliness. I’m not surprised when he tells me that he misses his old firm.
When Jon Corzine became the chairman of Goldman Sachs in the fall of 1994, what had once been the most profitable firm on Wall Street was in the throes of its biggest financial crisis since the Depression. As a result of unforeseen increases in interest rates, bond and currency trading were hemorrhaging cash – $250 million in September alone – and the losses were sending the more conservative partners fleeing into the earliest of early retirements. As they started to cash in their multi-million-dollar stakes, they threatened to diminish the firm’s capital base, scaring creditors, customers, and employees. Then, in the midst of the panic, Steve Friedman – the firm’s sole chairman since his partner, Bob Rubin, left in 1993 to join the Clinton administration – announced he was retiring.
Within a week, Corzine, a star trader and nineteen-year Goldman veteran who had transformed the bond division from “three guys and a telephone” into a global powerhouse, was installed as chairman, and Hank Paulson, a co-head of the investment-banking division, became vice-chairman. For Goldman, it was an unusual pairing. The two men knew each other but had never run a division together, let alone worked side-by-side, and were not even friends. Corzine was a big contributor to the Democratic Party and a leader at his local YMCA; Paulson had served in the Nixon administration and helped run a nonprofit dedicated to saving endangered birds of prey. “The plan of putting them together was ill-conceived,” says a former senior partner, expressing a view that is widely held. The fact that Corzine and Paulson were not given equal titles, as their predecessors had been, would become a source of conflict. “Because Jon wasn’t on the banking side … Hank Paulson was brought along to be his deputy, to look after that end of the business,” says Roy Smith, a retired partner who is now a professor of finance at NYU. “Hank Paulson was temporarily satisfied doing just that.”
Drawing an annual salary of $20 million, Corzine embarked on an aggressive plan to turn around Goldman Sachs. First, he tried to persuade his partners to stay. “Jon had to run around and beg,” says a retired partner. In the year that Corzine took over, 35 partners left, a third more than usual. “Jon got thrown into his lap the leadership role of the firm,” says Mark Winkelman, a legendary trader who co-ran the bond department with Corzine and shared an office with him for eight years. “In many ways, he kept the firm together through sheer strength of personality and leadership.” Almost immediately, Corzine and Paulson initiated a “reengineering” of the firm; that meant layoffs (12 percent of the firm was let go by 1995), a major cost-cutting program (among other things, no more Moscow office, first-class travel, or free lunch), and enhanced risk controls to more closely monitor the wild, swinging-for-the-fences trades that had become so problematic. Then, in exchange for $250 million, part of which went toward paying out the retiring partners, Corzine sold off 5 percent of the firm to the Bishop Estate, a Hawaiian trust. “I don’t think we are stripping out the heart and soul of Goldman Sachs,” Corzine said at the time. By the middle of 1995, with help from a surging bull market, prosperity returned.
In spite of the austerity program he initiated, Corzine was regarded as the firm’s “human face,” a casual, down-to-earth CEO who could relate well to all different sorts of people. He would often wander the halls and trading floors in his trademark sweater vest and, in spite of his seniority, was thought to have remained true to his bond-trading roots. As one managing director puts it: “He’s a good guy and a hard-charging guy. He could go and drink the traders under the table till four o’clock in the morning.” He was also known as very charitable, not only to the prestigious nonprofits that so many Goldman partners favor (yes, he is on the board of the New York Philharmonic and the Kennedy Center) but also to his alma mater, the University of Illinois ($2 million for a basketball practice gym); minority schools ($2 million to the Archdiocese of New York); the New Jersey Performing Arts Center in Newark (the main hall’s chandelier plus a six-figure gift);and the rare down-and-out Goldman employee (he paid for the NYU education of a messenger and paid the balance of a secretary’s mortgage so she could send her son to college). “I respond to things that make sense,” he says. “I wish I could do more. That’s one of the reasons I’m running for office, to get more leverage.”
Over the next few years, as Goldman’s profits soared along with the Dow Jones, Corzine’s tenuous relationship with Paulson began to deteriorate. Corzine was committed to taking the firm public, believing it was necessary to prevent another unraveling of the firm’s capital base, and began lobbying his partners for an IPO. He also began pursuing a bold, expansive agenda, exploring mergers and pursuing acquisitions abroad. As one retired senior partner puts it: “Corzine felt that there were only going to be three or four or five major financial institutions and that, by God, Goldman Sachs was going to be one of them, and therefore you had to be bigger.”
While Corzine kept the executive committee apprised of his moves, the board thought he wasn’t consultative enough and resented being kept out of the loop. Paulson was more conservative and was committed to keeping the firm independent; he was focused on maintaining its close-knit culture and was more cautious about foreign acquisitions. “It was all about who was going to be in charge,” says a retired partner. “Can Jon do what he wants, or is he supposed to run around and check with these guys all the time? Which is it?”
Over time, after months of heated arguments, the balance of power on the executive committee began to shift in Paulson’s favor. “These are big boys in a big-business kind of game, and Corzine was not nearly wily enough for all this stuff,” says a former partner who was close to the proceedings. “People were not scared of him. He’s the nicer guy.” But Friedman, the former chairman, denies that the battle was a personal one, and insists that Corzine’s management style and vision ultimately clashed with that of the majority of senior partners.
In the summer of 1998, after months of divisive debate within the six-man committee as well as the greater partnership, Corzine finally won a mandate to go public, an enormous feat in a firm that prided itself on its privacy and had considered, and handily rejected, the option six times in the preceding 30 years. “I put my tail on the line to get the IPO done,” says Corzine. “I don’t think, for whatever reason, all the others felt that was the right way to approach leadership on that issue.”
Not long after the announcement of the Goldman offering, the unthinkable happened: global financial turmoil. Russia defaulted on its debt, sending world markets into a frenzy and triggering huge bond losses at Goldman – nearly $500 million just in September. The equity markets sank, too, and suddenly, the valuation of Goldman fell by 40 percent. Goldman decided to delay its offering, an embarrassing concession for a company that is paid millions to gauge market sentiment for its clients. While the blame for the debacle was not placed on Corzine – it wasn’t his fault the markets cracked – it weakened his already tenuous position.
That winter, upon his return from Christmas vacation in Telluride, Corzine’s executive-committee colleagues gave him the news: They had unanimously voted to remove him from his post as CEO. Corzine was stunned. What was he going to do next? Bob Menschel, one of his former partners who is a major Democratic Party donor, told him: “It is best to go with your passion.” “I’ve just left my passion,” Corzine replied.
While Jon Corzine was still recovering from the shock of being ousted, Orin Kramer was planning Corzine’s next career move. In mid-February, Frank Lautenberg, who is 75, announced his plans to retire.
For the limelight-loving Torricelli, Lautenberg’s retirement presented an alluring prospect. “If it were up to Bob Torricelli, there would only be one senator from New Jersey,” says one New Jersey Democratic politician, echoing a common sentiment. Abolishment of the seat not being an option, Torricelli, observers say, pursued the next best thing: backing a colleague who he felt would not get in his way. One who was actually very smart and well-connected, and who could, as it is euphemistically termed, self-fund, would be even better. “Bob Torricelli doesn’t want a rival, so to speak,” says the Democrat, who, like many other political leaders in north Jersey, is unofficially backing Corzine. “It’ll take Corzine two weeks to find the men’s room.”
Torricelli knew Corzine through the Democratic Party fund-raising circuit. The former CEO and his wife, Joanne, have been among the most generous political donors in the country (in 1998, they gave $340,000 in soft-money contributions and ranked fifth), and back in 1996, when Torricelli, then a congressman, decided to make a break for the Senate, Corzine hosted a $1,000-a-head fund-raiser to introduce him to the crowd at Goldman Sachs. After Torricelli’s victory, and his rapid ascent to the chairmanship of the powerful Democratic Senatorial Campaign Committee (the national-party fund that helps elect Democratic candidates to the Senate), the two met and spoke often. Kramer liked Corzine, too. They got to know each other as fellow members of the Presidential Commission on Capital Budgeting, an organization of political and economic heavyweights.
“Jon blames me for telling him to run,” says Kramer, whose New Jersey political events are considered a proxy for Torricelli’s. “But I never said that. I never said, ‘You should do it.’ I said, ‘This is much more viable than people perceive it to be, and I think you would add a lot to the process if you should do it.’ ” Corzine found the idea intriguing. “Being the leader of a great organization gives you a lot of ability to have influence and impact on society, and I tried to take advantage of that within the context of being a good businessperson,” he says. “Now, because of the transition of life, I became very open to trying to find another way to express my own desire to serve.” He loved helping people; he also loved challenge and risk. But, he told Kramer, before he could consider the option, he had to consult with a few key people, including his wife and Bob Rubin.
Joanne Corzine tried to discourage him. Rubin was more sanguine. “I’ve always thought there ought to be tremendous room for a candidate who is thoughtful, serious-minded, gets out and talks to people about serious issues in a serious way,” he says. “My guess is that Jon will be quite effective in conveying his views. It won’t be a sharp-edged style. It will be in Jon’s own style: straightforward, thoughtful, probably somewhat lower-key.” In March, after meeting with Torricelli, Lautenberg and a handful of top New Jersey pols, Corzine gave Kramer the go-ahead.
Just back from a week of media training in Iowa and sporting the new frameless little oval glasses that his campaign managers have insisted he wear, Jon Corzine sits with 40 supporters in Seabra’s Rodizio in Newark, fidgeting with his fork and watching his campaign unfold before him. First, Sharpe James, a powerful African-American state senator who doubles as Newark’s mayor, gives Corzine a rousing hero’s welcome. “We don’t need retreads!” he shouts, referring to former governor Florio. “When I was poor, we used to buy old tires and patch them up. It’s still an old tire. It’s still not going to work. You still got a flat!” (He does not extend the metaphor to Corzine; perhaps he is a pair of Pirellis?) James tells the crowd that he is as excited about Corzine’s candidacy as he was about Jesse Jackson’s in ‘88, Bill Clinton’s in ‘92, and Bob Torricelli’s in ‘96. “We do not need to apologize to have a businessperson in the Senate for New Jersey,” he proclaims. “Did we apologize for Frank Lautenberg?” “No!” someone shouts back from the crowd, which includes Kramer and Lesniak as well as a number of black politicians and community leaders. At the end of James’s speech, after a round of applause, he lapses into Portuguese in a tribute to the restaurant’s owners. Then Corzine stands up. “Sometimes you got to wonder who’s running for Senate!” he says, and people laugh.
The stated purpose of the dinner is to energize the campaign, but it is also a coming-out party for Joanne Corzine, who hasn’t met her husband’s new friends. The woman whom Corzine introduces as “the mystery lady of the campaign” bears little resemblance to the typical CEO wife. With long black hair, bangs, and lots of freckles, she is attractive, but in a refreshingly natural sort of way. She is from the same small town as her husband (they met in kindergarten and were married the summer after their junior year in college), and it shows. She is friendly and open, a warm presence. The couple has three children, aged 17 to 27.
Just as Corzine gets up to speak, the waiters start coming around with the rodizio meat, offering to cut slices from their oversize skewers. “If anybody ever needed a reason to elect an investment banker, it is this tax bill going through the Senate right now, which is about as favorable for Goldman Sachs as anyone could ever imagine,” says Corzine, barely speaking loud enough to be heard over the hubbub. “It would be nice for my kids,” he says, referring to the proposed reduction in inheritance taxes, “but bad public policy.”
Later, as the five-tier dessert cart comes around, I sit talking with Kramer and Corzine. While Corzine sips a glass of water and occasionally chews on his ice, Kramer tries to sell me on a Corzine candidacy. “Who is going to be most credible in the Senate arguing that a lower capital-gains rate will not be effective in stimulating greater investment, which is the theory behind why you want to cut the capital gains?” Kramer asks rhetorically. “Bob Rubin,” chimes in Corzine, uncomfortable with the implicit compliment and speaking what he believes to be the truth. “Fine,” snaps Kramer. “But he ain’t running for the Senate.”