For all we know, Steve Schwarzman might be the first to congratulate Roger Altman if the front-runner becomes the next Larry Summers, who is currently the director of the National Economic Council.But we have a feeling that won’t be the case, because Altman and Schwarzman have a rocky past.
Pete Peterson and Steve Schwarzman tried to recruit Altman to join Blackstone in its founding years, 1986 and 1987, according to “King of Capital,” a book about Schwarzman’s life and the rise of private-equity giant Blackstone. Peterson was an old friend of Altman’s; the two worked together in the top ranks at Lehman Brothers.
The pair were annoyed when Altman turned their offers down, but they got their payback. When Altman finally joined in 1988, he received only a 4% ownership in the firm.
Then Altman, Peterson and Schwarzman butted heads again, in 1993, when Altman was named the deputy treasury secretary in the new Clinton administration.
In King of Capital, authors David Carey and John E. Morris write that Altman had a 3% stake in Blackstone Financial Management, a spin off of Blackstone that would eventually become BlackRock, and the three men disagreed over whether or not he should sell it when he took the new job.King of Capital: The issue this time was Altman’s potentially valuable 3% stake in Blackstone Financial Management, the fast-growing fixed income venture that Larry Fink led. Altman fought tenaciously to hang on to his share of BFM, but Blackstone’s founders said no because of the potential conflict of interest. For a high-level Treasury Department official to own a sizable piece of a firm that traded Treasury securities would flunk just about any smell test.
Altman’s exit from Washington was even bumpier. That August he resigned under pressure ver his handling of congressional inquiries into Whitewater — a financial and political scandal that grew out of a dubious 1980s Arkansas land deal involving Bill and Hillary Clinton. Though the Clintons were never prosecuted for their roles in the affair, other Whitewater figures were convicted of fraud. When Altman returned to New York, says a friend, he fully expected Schwarzman and Peterson to case aside their bygones and ask him to rejoin the firm, but the invitation was never extended. Altman went on to start an M&A-private equity boutique of his own, Evercore Partners, which swiftly established itself as a top deal adviser.
“That he wasn’t asked back had nothing to do with Whitewater,” a former partner says. “It had everything to do with what had gone on before.”
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