Erskine B. Bowles

Erskine B. Bowles

‎Erskine B. Bowles has been a director of Morgan Stanley since December 2005, during which time the bank was revealed to be a key player in the subprime mortgage crisis, received $10 billion in TARP bailout funds, and was secretly bailed out by the Federal Reserve with a massive infusion of funds. Read more about the role of Morgan Stanley in the financial crisis on Sourcewatch's Morgan Stanley page.

Bowles was elected President of The University of North Carolina effective January 1, 2006. He has been a Senior Advisor to Carousel Capital, a private investment firm, since September 2001, and served as a Managing Director from March 1999 to September 2001. Mr. Bowles was a General Partner of Forstmann Little & Co., a private investment firm, from March 1999 to September 2001. He served in the Administration of President Clinton as head of the Small Business Administration and White House Chief of Staff. He was the United Nations Deputy Special Envoy for Tsunami Recovery with the rank of Under Secretary General in 2005. Mr. Bowles worked at Morgan Stanley from July 1969 to January 1972. He is a director at General Motors Corporation, Cousins Properties Incorporated and North Carolina Mutual Life Insurance Company. A graduate of The University of North Carolina, he has an MBA from Columbia."

Morgan Stanley and Other Wall Street Ties

While Erskine Bowles was Chief of Staff for a time for President Bill Clinton and attempted to run for office himself a few times in his native state of North Carolina, he has spent most of his career as a financial adviser on Wall Street.

In 2012, Bowles was a senior financial advisor to the private equity firm, BDT Capital. Previously he worked for a series of private investment firms, Carousel Capital LLC , Forstmann Little & Co , although he began his career in corporate finance at Morgan Stanley according to Forbes.

Bowles started his career at Morgan Stanley. He later served as a board member of Morgan Stanley through out the entire financial crisis, a firm that was implicated in all the activities that lead to the 2008 financial crisis.

In 2006 the bank bought Saxon Capital, dubbed the “King of Subprime” loans so that Morgan Stanley could gain access to subprime mortgages and repackage them into complex investment vehicles. When the crash came Morgan teetered on the brink. It borrowed $10 billion from the TARP bailout programs and paid the money back with great fanfare in January 2009. However it was revealed later that the bank was secretly bailed out by the Federal Reserve to the tune of $100 billion, an amount only discovered by a Bloomberg News lawsuit against the Federal Reserve.

Subsequently, the firm doled out millions since to settle claims of electricity price fixing and for engaging in illegal off-exchange trading. The trouble never ends at Morgan Stanley,in 2012 they were sued by the ACLU for violating civil rights laws by encouraging a lender to push more expensive and risky mortgages on black neighborhoods in Detroit.

The Simpson-Bowles Commission

The National Commission on Fiscal Responsibility and Reform (often called Bowles-Simpson/Simpson-Bowles from the names of co-chairs Alan Simpson and Erskine Bowles; or NCFRR) is a Presidential Commission created in 2010 by President Barack Obama to identify "…policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run." The commission first met on April 27, 2010.

A report was released on December 1, 2010, and although the Commission's recommendations were supported by over 60% of the members (11 out of 18), the report did not reach the 14-vote threshold required to formally endorse the blueprint and have it sent to Congress for approval.

The document that is referred to as the commission's final report (The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform) http://www.fiscalcommission.gov/news/moment-truth-report-national-commission-fiscal-responsibility-and-reform is in fact a report of the co-chairs, Erskine Bowles and Alan Simpson.

On March 28, 2012, Representatives Jim Cooper (D-TN) and Steve LaTourette (R-OH) put a bill modeled on the plan, with, according to analyst Ezra Klein, "somewhat less in tax increases," to a vote in the House where it was rejected 382 to 38. 22 Democrats and 16 Republicans supported the bill.

The plan contained painful austerity measures that critics contended would further weaken the economic recovery. The plan called for cuts in benefits for the elderly, veterans, and many government employees. Most importantly, it would have cut the Social Security “cost of living” or COLA increase. Reduced COLA would amount to a benefit cut of close to 3% for a typical retired worker. Since the median income for households of people over age 65 is just $31,000, this would be a big hit to a segment of the population that is already struggling.

President Obama implicitly called for cutting Social Security by 3 percent and phasing in an increase in the normal retirement age to 69 when he again endorsed the deficit reduction plan put forward by Erskine Bowles and Alan Simpson, the co-chairs of his deficit commission. According to economist Dean Baker "The reduction in benefits is the result of their proposal to reduce the size of the annual cost of living adjustment by 0.3 percentage points by using a different price index. After 10 years this would imply a reduction in benefits of 3 percent, after 20 years the reduction would be 6 percent, and after 30 years the reduction would be 9 percent. If the average beneficiary lives long enough to collect benefits for 20 years, the average reduction in benefits would be approximately 3 percent."

Under Consideration as U.S. Treasury Secretary

Bowles has made many short lists for replacing U.S. Treasury Secretary Tim Geither in President Obama’s second term in office.

Economist Dean Baker comments: “Erskine Bowles gives us a real trifecta. He used his position as co-chair of President Obama's deficit commission to protect Wall Street. He pockets millions as part of a flawed system of corporate governance that allows CEOs to rip off the companies they run. And he wants to reduce social security benefits for seniors who are already living on the edge.”

JP Morgan Chase

Bowles wife, Crandall C. Bowles, sits on the board of directors of JP Morgan Chase. From her bio there: Ms. Bowles has been Chairman of Springs Industries, Inc., a manufacturer of window products for the home, since 1998 and a member of its board since 1978. From 1998 until 2006, she was also Chief Executive Officer of Springs Industries, Inc. Subsequent to a spinoff and merger in 2006, she was Co-Chairman and Co-CEO of Springs Global Participacoes S.A., a textile home furnishings company based in Brazil, until July 2007. Ms. Bowles is a director of Deere & Company (since 1999 and previously from 1990 to 1994) and of Sara Lee Corporation (since 2008). She previously served as a director of Wachovia Corporation (1991-1996).

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