I got the chance to sit down with Representative Ed Perlmutter this afternoon for what was one of the most interesting interviews I have conducted. Ed Perlmutter is a very impressive individual – and in a number of different ways. I now understand why he is so highly respected.
He had run out to get lunch when I arrived and comes in 5 minutes later with a McDonalds bag (clearly he does not have lobbyists buying him lunch). I was discussing the economy with his press secretary and he just joined the conversation. And we were then into a 10 minute conversation about the auto companies (details in a sec).
And we then hit a pause about 10 minutes in and he suddenly goes "hi, I'm Ed Perlmutter" and shakes my hand. This is a guy that hears a substantive conversation about what is going on in the economy and what we need to do and he just jumps in. Ed clearly is an individual who clearly puts addressing issues way before politicking. I think this is key to his productivity and effectiveness.
So back to the car companies. First he thinks GM will make it, but as a very different company.
Ed's background before Congress was as an attorney handling bankruptcies. So for 20+ years he handled companies that were in a world of hurt. And then he got elected to Congress leaving that behind him. And now he's… Working through what to do with companies that are bankrupt, even if they aren't filing for Chapter 11.
This is the House of Representatives using the power of a citizen legislature. Ed Perlmutter is placed on Finance and Barney Frank makes use of his background and puts him on working to figure out how to handle these companies (banks & auto) that are in psuedo-bankruptcy. Yes there are also a ton of legislative aides with boatloads of experience on this. But having someone who runs for election and sits on the committee and votes in the house who also has this experience is a giant plus.
He first talked about the initial time the auto executives came to Washington and how utterly clueless they were. Both clueless in the impression they made arriving by private plane and clueless in that they had nothing with them to detail out what they needed and why. And he was amazed that no one had told the execs beforehand that they needed to take a different approach.
When they returned he said they were much better prepared and that GM had done the best job of detailing what their condition is and what they needed to do. But even so, that they were not set to make the terribly difficult decisions necessary to survive.
He sees Rick Waggoner's firing as necessary both because the American people need to see someone face some consequences for the mess GM is in and because Waggoner still was working within the GM system rather than remaking the system as needed.
And then he was diving into the details of the problems the companies face. He sees GM as having some very good cars working their way through the design process. And he correctly identifies the major union problem not as the present day union contracts which aren't that bad, but the old contracts which saddle the companies with horrendous costs for their retired workers.
And the significant costs of having way too many dealers plus franchise laws in 40+ states that make it virtually impossible to drop a dealer. (Business owners sure hate government interference in the market – except when it benefits them.)
And with all that he dropped back to the need to take the companies through bankruptcy. By doing so the pensions can be reworked, the excess dealers can be dropped, the stockholders can be told sorry but you're gone, and the bond holders get converted to stock holders. He very clearly laid out the best approach to resolve this.
So will it happen? Not yet. There were not the votes for it – yet. But many were willing to consider it next. And he sees the Obama administration already going down this road. So we will end up there but people need to see that the alternatives don't work first because a lot of people are going to scream over this (this is my theory for the 2 step process, not Ed's).
So then we were on to the banks. This was covered in a bit less detail but again it is clear that he understands the details of their valuations and how that impacts their viability and lending. I asked him about mark to market and that led him into a long detailed discussion about why mark to market is a bad idea.
What impressed me here is that the banks are not Mr. Popular right now and yet he is ardently supporting eliminating mark to market and does so by diving in to the arguments for and against the three main ways of valuing assets, and why mark to market is the least sensible of the three for a bank that holds assets long term.
And he finished his long treatise with the statement that he will work to fully undo mark to market as the recent change only partially undid it. I think first off that he makes a very compelling argument (some say that if mark to market was in place in the '80s all of our banks would have been declared insolvent). But even more impressive, he volunteered, in great detail, a position that is not that popular right now. Ed Perlmutter is focused on what he thinks is best for the country, not what is best for Ed Perlmutter's reelection.
Interesting side note, he comes home every weekend but stayed in D.C. recently one weekend because the economy is so critical. He spent Saturday in the Supreme Court law library (where they apparently rarely see a Congressman) researching how bankruptcy law can be used now and the possibility of a specific law for auto manufacturer bankruptcy.
Then Sunday he went to where a group of House and Senate staff were discussing how to legislate for this. And he sat down in the cheap seats and listened. Again, he is a Representative and he sat in the background and listened to the staff discuss. This shows an incredible level of respect for the staff and a desire to listen and learn first.
And then after a while he did speak up, to say he liked what the Senate staff was proposing more than the proposals from the House staff. And that carries a lot of weight because he clearly was listening to both sides rather than just backing his team. This is what gets the congressional staff to listen to you and use your arguments when preparing legislation.
Many times over the course of the interview Ed would discuss lobbying the staff to get what he wanted in the bills they craft for the committees because that gives a better chance of passage than if you try to get it added after. But as he said – it's a lot of work. He also discussed how you oh so carefully craft bills so they go to your committee, and only your committee. This is the grimy invisible grunt work required to be a really effective junior legislator. No one knows if you do it or not, so it comes only from wanting to be effective in the job.
I asked him what his top priorities were for the next 2 years – and this is where Representative Ed Perlmutter showed himself to be superlative. Because his top priority is to see his two daughters graduate, one from High School and one from College. And he talked quite a bit about both – definitely the very proud father.
This is a guy who truly understands what's most important in life, and volunteers that information. It's not saving the economy or the environment or… It's his family. It's 'Ohana and that is a wonderful thing to see. I think it also makes him a better legislator because he's going to fight for legislation that makes the world a better place as he has 2 daughters that are living in this world.
His next item was green legislation. This clearly is where his heart is, but is second right now while the economy has to be fixed. But it is a very close second. A lot of discussion about legislation he had worked on for some time that got added to the stimulus bill. This had not occurred to me (it should have – stupid on my part) but most (all?) of the stimulus bill was various legislation that had been in process and either not passed both houses or was still in committee.
But it was detailed legislation that had been through the sausage factory and worked on, discussed, revised, and packaged up in a way that was acceptable to many. So the stimulus bill was a collection of well thought out legislation, not a bunch of stuff thrown together in a month or so. I think this makes it a lot more likely that the stimulus bill items will work out well.
Ok, so we got the weatherizing and renewable energy for HUD housing in the stimulus bill due to Ed. And the rail part was in, then moved to the rail transportation bill – again thanks to Ed. (And I think there is a 3rd item I'm forgetting.) Anyways, in and moving forward.
But a remaining part that I think makes a lot of sense is legislation he is moving forward to have renewable energy and public transportation proximity in a residence provide a discount in mortgage payments. The purpose here is to encourage people to green their homes both through the house itself (using less energy, having renewables on the roof) and through the location (take more public transportation, drive less).
And the beauty of this is that this discount should occur because these items have been shown to both protect the value of a house and decrease the likelihood of a default. Residences close to subway stops have lost almost none of their value in this market while those out in the suburbs have tanked. Green-ed houses have lost less of their value and owners of them have been less likely to default.
And then we were on to the VA hospital. Ed thinks General Shinseki is awesome (I agree – and have heard the same from many in the military). Some of the earlier VA administrators he clearly would have liked to strangle due to their delays in getting us the VA hospital. Ed has clearly put in a lot of effort and gone through a lot of heartache to help get this built.
I also think if they are about to break ground, the equipment is out there, and something holds it up – don't be surprised if he hotwires an earthmover and just starts breaking ground himself. He clearly is very focused in they need to start yesterday, both because it is so needed and he does not want to see yet another delay.
He says that General Shinseki has committed to getting this going soon. So we should see it start in 90 – 120 days.
There was a bit more discussed. I asked him about the politics side and other stuff, but that was more of a two-way conversation. He clearly is very politically astute and zeroed in on a couple of things I brought up. Don't let the fact that his heart is on the legislative side worry you – this guy knows how to run and how to win.
I did not ask him about his future plans. He clearly loves the House and I can see him happily staying there. And if he does his emphasis could be in a number of areas. I can als see him running for Governor and I think he would also do well in that position. On the flip side, his history shows he is not desperate to be in office and he is not incessantly climbing. So he might also go do something else.
Personally I hope he stays in office – the country needs people like him right now. Definitely a superb Congressman.
