Thursday, September 13, 2007

Hillary and a boy named Hsu

In her quest for the presidency, Hillary Clinton must dampen the suspicion, shared by many, that she is just another establishment shill for the status quo. Clearly, her most devoted supporters don't see her that way; nor does she. The problem at the moment, however, is that the Norman Hsu scandal is threatening to become a metaphor for Clintonian politics as usual.

Addicted to the money race, virtually all the major presidential candidates have come to rely on "bundlers" - free-lance power players who hit up their hundreds of friends, employes, associates, and acquaintances for campaign donations, then bundle them for delivery to the grateful White House aspirant - and at times there have been bipartisan embarrassments.

Roughly a dozen of George W. Bush's bundlers were investigated for sleazy business dealings; one was Jack Abramoff, the GOP super-lobbyist who now lives in the slammer, and another was Thomas Noe, an Ohio player who pleaded guilty to embezzling state money and laundering his own campaign donations through his employes. Mitt Romney was embarrassed recently by a bundler who got indicted on fraud charges. A John Edwards 2004 bundler has been indicted on a laundering charge similar to Noe's. One of Barack Obama's bundler's was indicted last autumn on fraud charges.

But with regards to the Norman Hsu saga...well, this guy (now under arrest after trying to flee a new court appearance on an old fraud charge) is in a class by himself. He raised at least $850,000 for Hillary - an amount that dwarfs the known output of all other bundlers - and he seemed to have a suspicious talent for bundling campaign donations from people of quite modest means. Consider, for instance, the Paw family in California, which has somehow managed to donate roughly $300,000 to various candidates (including Hillary) over the past three years, even though the Paw head of household is a mail carrier with annual earnings of $49,000.

The FBI is conducting preliminary inquiries into Hsu's bundling activities and business dealings; the Manhattan DA is investigating whether Hsu bilked a private equity firm in a Ponzi scheme. But what interests me is how the Clinton campaign has reacted to all this:

With all the speed of a turtle trundling through molasses.

Its first response, last June, was total denial. When a California businessman reportedly emailed the campaign to warn that "there is a significant probability that a man using the name of Norman Hsu is running a Ponzi scheme," a campaign official emailed back to say, "I can tell you with 100 certainty that Norman Hsu is NOT involved in a ponzi scheme. He is COMPLETELY legit."

Its second response, also last June, was to search public records for information about Hsu, but aides turned up nothing. Apparently they didn't look very hard, because The Washington Post pointed out yesterday that "a commonly used public record search shows that Hsu had multiple business lawsuits filed against him dating back to 1985, filed for bankruptcy in 1990, and was a defendant in two Californis court matters listed as possible criminal cases."

The campaign's third response, when suspicions about Hsu surfaced in the press in late August, was to praise their bundler. A Clinton flak said: "Norman Hsu is a longtime and generous supporter of the Democratic party and its candidates, including Senator Clinton. During Mr. Hsu’s many years of active participation in the political process, there has been no question about his integrity or his commitment to playing by the rules, and we have absolutely no reason to call his contributions into question." The campaign also said that it would not return any of the Hsu-related campaign contributions.

The campaign's fourth response was to grudgingly give ground. After it became clear that Hsu was a fugitive from justice, and after other Democratic candidates made it clear that they intended to purge themselves of Hsu money, Clinton did the same, by donating to charity $23,000 that Hsu had personally donated. But the campaign made this announcement in the early evening, after most East Coast news deadlines...and made it clear that Clinton was refusing to give back the donations that Hsu had bundled from others.

The campaign's fifth response came this past Monday evening. After learning that the FBI was on Hsu's trail, and after learning that The Los Angeles Times had obtained those aforementioned emails (the heads-up from the California businessman, and the 100 percent denial from the campaign), Clinton decided to give back the donations that Hsu had bundled from others. That's the $850,000. But the campaign, to soften the blow, made this announcement in the early evening (sound familiar?), after most East Coast news deadlines, and after the network news shows had gone on the air in the East, mostly with the dominant coverage of the Petraus hearings on Iraq. And now the campaign is refusing to disclose the names of the 260 bundlees who are poised to get their money back.

Bottom line: If Hillary Clinton intends to stump for the presidency by associating herself with only the upside of her husband's presidency (economic prosperity, for instance), while skipping past the downside (the campaign finance scandals of 1996, for instance), she may well need to become more vigilant in her responses to the Hsu disclosures, and others that might come along. Otherwise, she might have a problem convincing independent swing voters that she, more than her rivals, best embodies the politics of change in Washington.