An Interview With Harry Wilson
A veteran of the Obama administration's auto task force doesn't, on the face of it, seem the most likely candidate for comptroller in New York state – at least on the Republican side.
"So far, every free market guy has been skeptical when we start talking," the candidate, Harry Wilson, tells me over lunch at a Greek restaurant in Midtown Manhattan. None of them, he says, have still been skeptical when he is done talking.
So it is for a guy who, when he graduated from Harvard, where he was president of the College Republicans and co-founded a student group that backed the Gulf War, was profiled in the student daily, the Crimson, as "the nicest Republican you'll ever meet."
"We should talk about this openly," Mr. Wilson says. "People say to me, 'you are a free market conservative, how could you do this?'"
The way he tells it, President Bush and Obama were both headed down the road of injecting federal money into the auto industry. It was going to happen anyway. The question was whether it would be done well, or whether it would be screwed up. He thought his own experience with restructuring and investing money as a private equity manager could help, so he volunteered to help.
Amid the depth of fear and despair of early 2009, "there was no private capital available," Mr. Wilson says.
If General Motors had failed, its suppliers would have failed, and the failure of the suppliers could have taken Ford down, too, he says.
"I almost succeeded in stopping the Chrysler deal," he says; he opposed putting federal money into Chrysler in part because he thought there was less value in the product pipeline there. It is the Chrysler deal that drew the more heated objection from bondholders.
There are certain parallels, Mr. Wilson says, between the problems GM faced and the problems New York state faces – an institution that once held a leadership position has entered a long decline, with issues including powerful unions and expenses for health care and retirees. GM's annual revenues and New York's are roughly the same.
On some level, GM was easier – there was the legal tool of bankruptcy, the power of the profit motive, and the federal government's ability to withhold capital. But Mr. Wilson says that just as GM is now gaining market share and has the lowest cost structure in the auto industry, "New York can grow again."
How would he approach the job of comptroller, a statewide elected office in New York with authority over the state's common retirement fund and strong auditing power?
"The biggest domestic problem we face as a nation and a state is excessive spending," he says. "Now is time to get a handle on it."
New York's highest-in-the-nation tax burden, he says, is "driving out businesses and driving out people," including in Johnstown, the upstate town where he grew up as a young Reagan fan in a Greek immigrant family (his mom was a sewing machine operator). The joke there was to chant "We're number one…in unemployment."
I ask about the corruption scandal involving investment managers who paid to have state pension money invested in their firms, an investigation that has involved Mr. Wilson's fellow member of the Obama auto task force, Steven Rattner.
Mr. Wilson says he thinks the state pension system will ultimately evolve, for new entrants, into a defined contribution system more like 401(k) plans. "It has to go that way," he says, noting he is "generally in favor of giving people more control over their lives."
He notes, though, that his authority over implementing such a change will be limited because it is part of negotiations between the state and its highly unionized workforce.
The current comptroller, Thomas DiNapoli, a Democrat, was appointed after the previous comptroller, Alan Hevesi, resigned and pleaded guilty to a felony related to using a state employee as his wife's chauffeur.
Mr. DiNapoli's executive order prohibiting those who contribute to a comptroller candidate from managing state money for two years after the contribution is "purely incumbent protection," Mr. Wilson says, because it applies even to money managers who give to losing candidates, and it doesn't apply to securities lawyers who want the state pension fund as a client and have been big givers in the past. It creates, Mr. Wilson says, "a very unequal playing field in the guise of ethical reform."
Mr. Wilson says he's wrestled with the issue of shareholder litigation as a pension fund manager. He sees the importance of shareholder activism within capitalism, but he worries about setting a precedent for someone coming later who would be less thoughtful about when to be an activist. He seems to have concluded that as a general matter, as comptroller, he "would not be an active litigator."
I ask what he thinks, as a former private equity manager, about taxes on the carried interest of private equity managers. "I wouldn't support any new taxes," he says.
His real focus as comptroller, he says, would be using the office's audit power to apply cost-benefit analysis and highlight government programs that don't work, serving as "a check on the spending process."
"I have no interest in being a benign accountant," which is how the comptroller's job is often viewed, he says.
He suggests that one target for the audit power might be New York's high health care costs for long-term care, contrasting that with Mr. DiNapoli's use of the audit power "to harass charter schools."
Republicans as a party, he says, have done a "bad job articulating free market principles."
I ask if that includes Treasury Secretary Paulson.
"I feel bad second-guessing him," Mr. Wilson says, arguing that "my conservative friends…didn't appreciate the depths of the psychology" of Depression-style market-wide fear that had Mr. Paulson dry-heaving in the middle of the crisis. "Some pieces were warranted," he says; others were "not well-handled."
Mr. Wilson, the only declared candidate on the Republican side of the race, has been spending his days meeting with political figures, the press, and financial people. He seems to be enjoying it. In his previous jobs – at Goldman Sachs, the Blackstone Group, Clayton, Dubilier, and Rice, and Silver Point Capital – Mr. Wilson says, it wasn't really considered socially acceptable to spout off about politics all day long. As a candidate, "All you do is talk about ideas all day long. I love that."
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