My Life and Times

November 28, 2004
The Making of a Wise ManBy LANDON THOMAS Jr.
TEPHEN A. SCHWARZMAN was standing backstage at the Kennedy Center in Washington last month, perusing the speech he would give in honor of Lorne Michaels, the creator of "Saturday Night Live." It had been a giddy night for Mr. Schwarzman, the Wall Street financier and the recently appointed chairman of the center. He had spent the evening sharing chuckles with Dan Aykroyd, Steve Martin and Senator John McCain, and was about to offer his closing remarks.
"And now, live from Washington, D.C., please welcome Lorne Michaels!" he shouted as he took center stage.
For Mr. Schwarzman, the evening represented a high-water mark of what appears to be a campaign to rise above his status as just another fabulously rich deal maker and to achieve renown on the larger, more alluring public stage of the arts - and Washington politics.
Since the early 1970's, he has moved with ferocity and guile in the jungles of Wall Street, staying largely unknown to the wider world. He rose to the top of his class at Lehman Brothers before breaking off, in 1985, to be a co-founder of the Blackstone Group, a hugely successful boutique investment house.
His net worth approaches $1 billion, and he has accumulated the totems that such wealth bestows: a $30 million Manhattan co-op; an estate in East Hampton; a mansion in Palm Beach; a hideaway in the south of France; and the use of a corporate jet and a Sikorsky S-76 helicopter.
He has also become a patron of the arts, joining all the right charity boards, including those of the New York Public Library and the New York City Ballet, and donating generously to a wide variety of New York philanthropies.
But unlike many bankers who are happy with having a few charity boards to enhance their public profiles and smooth the sharper edges of their riches, Mr. Schwarzman has kept striving for more. An avid supporter of President Bush (they lived in the same dormitory at Yale), he has distinguished himself from others on Wall Street by giving thousands of dollars to the Republican Party at the state level, in swing states like Wisconsin, Ohio and Minnesota.
Such double-barreled munificence has led to his name appearing in New York's gossip columns, and speculation has built in some quarters that he may even be a candidate for Treasury secretary - a job he is said to covet.
Republicans who have been briefed on the administration's plans say that John W. Snow, the current Treasury secretary, is expected to remain in office for as much as a year. They say, too, that Mr. Schwarzman has not appeared on any prospective short list for the job.
But that does not mean that Mr. Schwarzman, a career deal maker who has made no public speeches on any aspect of fiscal policy, cannot aspire to it.
He cites as role models two former Yale graduates, often called the Wise Men, who mixed successful business careers with government service: Cyrus R. Vance, who was a corporate lawyer before serving as secretary of state, and W. Averell Harriman, who left Wall Street to become a trusted adviser to presidents from Franklin D. Roosevelt to Lyndon B. Johnson.
"I just want to give something back," Mr. Schwarzman said, as he tucked into a bowl of cereal in the sun-splashed breakfast parlor of his 24-room duplex at 740 Park Avenue, at 71st Street. "To the extent that I can add value and make my country a better place, that's a good thing to do."
THAT Steve Schwarzman, who is 57, wants to be a Wise Man - and could even end up becoming one - should not be surprising.
Wall Street has a long history of titans forgoing the blunt power of their capital for the prospect of a purer form of influence in and around the White House. And the legend that Robert E. Rubin created for himself by abandoning a Goldman Sachs partnership to counsel President Bill Clinton on economic matters has made the lure of Washington all the more intoxicating.
But this ripening desire also reveals the extent to which the rigid class strictures that once applied to Wall Street and New York society have softened. Much has changed since men like Mr. Harriman and Mr. Vance left for Washington. Then, to be tapped by a president for a high-level post was more than a professional honor. In many ways, it was the final reward for a life spent going to the right schools and belonging to the right clubs - a modern form of the old honors curriculum in Rome, where rising officials were obligated to hold a series of offices before finally reaching the highest professional rung.
"The old honors curriculum used to consist of a frightful boarding school, an Ivy League education, time spent at war and success at a major investment bank or law firm," said Nelson W. Aldrich Jr., the author of "Old Money." "Only then would you be tapped. Now what matters is that you make a pile and start giving a lot of it away. In many ways, this new curriculum has replaced the old class system."
A product of the meritocratic boom that hit Wall Street in the 1960's, Mr. Schwarzman - who attended public school in a suburb of Philadelphia and whose father ran a dry-goods store - skipped many stages of the curriculum. He got into Yale on his intelligence alone and used the Ivy League degree and a stopover at Harvard Business School to start a career on Wall Street.
With success came wealth, and with wealth came patronage and the gradual efflorescence of his public image - a purposeful metamorphosis that in some respects could happen only in New York City.
"There is no real class structure in New York anymore, just relative degrees of publicity," said Michael M. Thomas, a former partner at Lehman Brothers and an author of novels about class and money on Wall Street. "Some people find that a more acceptable form of class system because it is easier to manipulate."
Mr. Schwarzman dates his interest in public service to a three-hour lunch he had with the 78-year-old Mr. Harriman, also a Yale graduate, in 1969 at Mr. Harriman's town house opposite the Metropolitan Museum of Art. "I wrote him a letter and told him I was interested in the public world," Mr. Schwarzman recalled. "He asked me to lunch, so I went out and bought my first suit and we had lunch on trays in his living room."
Mr. Schwarzman, then a Yale student, still remembers the small details: the man in the white coat opening the door, the bust of Robert F. Kennedy on the mantle, the calls from Mr. Vance updating Mr. Harriman on the peace talks with North Vietnam, and not least of all the Impressionist paintings on the wall. "I thought - 'jeez, this is remarkable,' " he said. "And, 'wouldn't it be wonderful if I could have some elements of this in my life when I grow up?' "
SO he went off to seek his own fortune - the vast bulk of which has come to him since he has served as president of Blackstone. People on Wall Street familiar with Blackstone's business guess that Mr. Schwarzman will take home $75 million to $100 million this year. It is an extraordinary figure, even by Wall Street's bloated standards, and it could well surpass the compensation packages of the chief executives of Morgan Stanley, Goldman Sachs and Merrill Lynch combined.
When investment bankers and top executives speak of Blackstone and Mr. Schwarzman, they do so with a hush of respect, if not a small degree of awe. That is partly because Blackstone, with its $27 billion worth of private equity funds and its propensity to cash in its stakes quickly, can sprinkle more than $700 million in fees across Wall Street in a year.
But for executives whose wealth is largely tied up in the stock of their companies, there is also a sense of wonder at the efficiency of the Blackstone money-making machine. Not only do the top partners at the firm divvy up hundreds of millions of management fees each year, they also take personal stakes in the wide variety of companies that the firm buys. When the stakes are sold - as a few were this year - Mr. Schwarzman and his partners often take home additional chunks of cash.
Despite his growing public obligations, Mr. Schwarzman has kept a steely grip on activities at Blackstone, signing off on all the major deals. Like many other deal makers, he can be impatient and blunt when talking to those around him, no matter if they are colleagues or kitchen staff.
During one interview at his home, he was interrupted by a phone call from a top banker at his office who asked him to weigh in on a deal in the making. "It's a very marginal return," he said with distaste as he quizzed the executive on the investment's finer points. "I like things with upside. That's how you make money." And when his white-coated houseman did not respond to his frequent buzzings for more coffee, Mr. Schwarzman ran off to find him: "I called you six times," he said, confronting the man in the kitchen. He also has a quirky side, and will call his banking friends to sing "Happy Birthday" to them.
For a banker of Mr. Schwarzman's stature and means, becoming a patron of the arts has been fairly straightforward. The role models are many; among the most prominent have been Sanford I. Weill, the chairman of Citigroup and an energetic benefactor of institutions like Carnegie Hall, and Henry Kravis of the buyout firm Kohlberg Kravis Roberts (which competes with Blackstone), who has achieved his own éclat through his good works at the New York Public Library and the Metropolitan Museum of Art.
Mr. Schwarzman approaches his socializing with the same determined vigor and attention to detail that has characterized his style as a banker and investor over the last 30 years. In some ways, it has the feel of a political campaign, and his grinning visage has become a regular feature on NYSocialDiary.com, a Web site that chronicles the social and charitable activities of New York's upper class.
With his wife, Christine, Mr. Schwarzman has appeared at events small and large: from a book party he gave this spring for Princess Michael of Kent, to a benefit in October for the charity Casita Maria - his wife and Prince Dimitri of Yugoslavia were two of the leaders of the dinner - and, earlier this month, the Library Lions ball for the New York Public Library.
One evening this fall, before the tribute in Washington, he had a cocktail reception at his apartment for Mr. Michaels. The apartment, which once belonged to John D. Rockefeller Jr. and more recently to Saul Steinberg, the 1980's corporate raider, is lavishly appointed and has 13 bathrooms. It even bears some of the touches that widened the eyes of the young Mr. Schwarzman when he sat in Mr. Harriman's living room back in 1969.
Paintings by Monet hang throughout the apartment, and one of Cy Twombly's celebrated blackboard works dominates a wall in the living room. Instead of a Kennedy bust, a large silver-framed photograph - bearing the presidential seal - showing Mr. Schwarzman and President Bush arm in arm and grinning broadly, is displayed on an antique writing table in the living room.
On that night, Mr. Schwarzman planted himself near the apartment entrance and received the swirl of Manhattan socialites that the elevators disgorged directly into the foyer. A bit hunched in appearance, with an ever-present smile that can veer from impish to smug, Mr. Schwarzman anchored the teeming throng. Caroline Kennedy dropped by, as did Ahmet Ertegun, the record producer, and a passel of lesser-known habitués of the Upper East Side's cafe society. Shaking hands, throwing air kisses, slapping backs, Mr. Schwarzman did not desert his post until his last guest had left.
The thrill of it all continued the next day. Paula Zahn! Mike Nichols! "And did you see Lesley Stahl?" he asked, with the enthusiasm of a teenage boy recalling a chance meeting with his baseball heroes. "Mike Bloomberg was also there - he came early."
It was almost as if Mr. Schwarzman were pinching himself: the parties, the art, the celebrities - yes, he had finally arrived. And his friends and peers agreed. "If you have all that money and all those pretty houses, I think you have made it socially," said Richard Jenrette, a founder of Donaldson Lufkin & Jenrette, the investment bank where Mr. Schwarzman started his Wall Street career.
Even the mayor, a former partner at Salomon Brothers who in many ways perfected the model of using Wall Street money to get a leg up in New York society, is impressed. "This guy has spent a lot of time in business making money, and he leads the good life, too," Mr. Bloomberg said. "He goes to one dinner a night and I go to five. I think it's great that he is reaching out. Successful people have an obligation to give back."
Making it in New York is one thing; in Washington, however, it can take an extra bit of work. That is why Mr. Schwarzman has sought the wisdom of a local insider there, Kenneth M. Duberstein, a former chief of staff for Ronald Reagan who now runs a well-connected lobbying firm.
It was Mr. Duberstein, then the acting chairman of the Kennedy Center, who recommended that the search committee break a deadlock by considering Mr. Schwarzman for the chairmanship, then strongly advised him to take the position.
While the job may not set the blood racing for veterans of the New York charity circuit, it is considered a plum for those seeking to assume a more forceful presence in Washington. Past chairmen have included James D. Wolfensohn, a former investment banker based in New York who leapt from the Kennedy Center to his current position as president of the World Bank, and James A. Johnson, the preceding chairman, who many felt would have been either chief of staff or Treasury secretary had Senator John Kerry won the presidential election.
And don't forget: the job also requires the approval of the president.
"I thought this would be a good stage for him," Mr. Duberstein said. "It gives him New York and D.C. at a high level of involvement in not only the arts but the politics of an administration and Capitol Hill."
To celebrate his appointment, Mr. Schwarzman and his wife were given a private lunch with Laura Bush this year in the upstairs residence of the White House. It was his first visit to the White House, and he still revels in the moment - from the guided tour of the quarters to the cake - in the shape of a Kennedy Center stage and bearing his name - that was sprung on him by the first lady.
"It was two feet by a foot and a half," he said, using his hands to describe the pastry, as if it were a trout hauled in from a stream. "There was a black chocolate background, with the stage done in sorbet, the orchestra in peaches and the audience individual raspberries. It was such a kind, considerate thing for Laura to do."
When asked if he has any interest in a high-level job in the administration, Mr. Schwarzman said he has "a great life." Still, that does not mean that it could not become greater: within Republican fund-raising circles and on Wall Street, Mr. Schwarzman's desire for the Treasury post has become well known.
As for his credentials, his supporters point to his experience as an international financier. He is also a member of the Council on Foreign Relations, along with a multitude of other bankers who fancy themselves as globetrotting statesmen.
All the same, unlike Peter G. Peterson, his co-founder at Blackstone and a former commerce secretary who has written book after book cautioning against the ravages of out-of-control deficits, Mr. Schwarzman has written no major op-ed articles or books on public policy.
Others on Wall Street wonder whether he could extricate himself from Blackstone, a small firm that has succeeded largely on the basis of his energy and contacts, and question how he would fare in a large bureaucracy like the Treasury Department.
NOW, as he casts his eye toward Washington, even some of his friends are still unsure of his stand on issues or even what party he belongs to. "Isn't he a Democrat?" asked John F. Welch Jr., the former chief executive of General Electric, when asked about Mr. Schwarzman's political ambitions. "I had no idea. I just talk to him about deals."
But what Mr. Schwarzman does have going for him is a relationship with a president known to put the highest stock in personal ties.
"It's a personal connection," Mr. Schwarzman said of President Bush. "I was fascinated about how that transition occurs with someone who was not achievement-oriented. He could have ended up like most guys from a privileged background."
All the same, Mr. Schwarzman is cagey about the depth of the bond - as well he should be: the cardinal rule for prospective appointees is never to let on how badly you want a job. But he cannot resist the odd, if not somewhat revealing, joke.
"I'm being announced tomorrow," he said when asked about any contact he has had with the White House since the election.
"Oh come on, you have to have a sense of humor," he added quickly, when no laughs were forthcoming. "I'm just kidding." Or is he?
Copyright 2004 The New York Times Company Home Privacy Policy Search Corrections RSS Help Back to Top