The Real James Bond Jim Lebenthal's Tax-Bill Crusade By Bernice Kanner

 

"I'M JIM LEBENTHAL," SAYS THE keyed-up voice on the radio.  “Municipal bonds are my babies—and my babies are in trouble. But so are you, if the provisions for killing tax-free municipal bonds prevail in the Senate. These are just some of the changes you can expect in everyday living: higher property taxes, more slums, fewer jobs, higher rents.” James “Bonds” Lebenthal’s voice cracks with fervent disapproval of tax-reform bill H.R. 3838.

“Higher electric bills,” he goes on. “Costlier tuitions, bigger hospital bills, more garbage.” He is really wound up now. “Dirtier air, no more Superdomes, no more Meadowlands.” Everyone is going to pay more—and get less from local government.
‘To tell our states and cities they can’t issue tax-Free bonds for traditional local needs, to take away the one tool they’ve got for rebuilding this country, is like going out and shooting your own work horse. This commercial message is sponsored by Lebenthal in the heartfelt belief that we’re not the only ones who are going to miss the bonds when they’re gone and it costs a king’s ransom to turn on the lights, boil water, or haul the garbage.”

Jim Lebenthal is waging a one-man crusade against the “evil, malicious, capricious, counterproductive, discriminatory, and unconstitutional” federal- government proposal to tax municipal bonds. He has hounded senatorial aides, worked to drum up support from mayors and citizens, and evangelized other bond sellers to save the munis. He has become “the recognized voice of the municipal bonds” for the Public Securities Association, says Dennis Holt, manager of the PSA’s special projects.

There is obviously an element of self-interest in Lebenthal’s crusade. Take away the tax-free status of his bonds— virtually his firm’s only product—and Lebenthal & Company, Inc., would shrivel. “People are willing to lend the municipalities money and accept lower returns because the interest is tax-free, not because anyone loves the sewer-works,” says Lebenthal, whose nasal voice is reminiscent of Tony Randall’s and whose receding hairline and angular features make him look like Frank Perdue. Rebuilding America “without tax-free municipal bonds, that’s pure pharaoh to the children of Israel—‘Go make bricks without straw.’

The language may be figurative, but the risk to tax-free municipal bonds is quite real. The Reagan administration’s tax-reform plan, which puts a cap on the dollar amount of tax-free bonds issued in each state, has already been passed in the House. If this version were to become law, New York State could lose as much as $1 billion in tax-free bonds. If the Senate passes its own, less Draconian version of the measure (which could happen by mid-June) and the two chambers reach a compromise, a plan limiting tax-frees could become law by fall.

The House plan calls bonds non-essential if they fail to meet certain technical requirements. Take, for example, a bond for a waste-disposal plant operated by a private contractor for a year or longer. The government would say that the bond benefits the private contractor, and brand it non-essential (“like Hester Prynne walking around with an A on her bodice,” says Lebenthal). Fewer of these bonds would be allowed to come to market, and those that did could be subject to a fiat 25 percent tax.

“No one would be able to buy these bonds at an affordable cost to the city,” says Lebenthal, “The tainted bonds would command at least a 2 percent interest premium, and that’s a cost the cities and villages can’t afford to pay.”
Lebenthal is better equipped than any other bond salesman to go public against the cuts, because he’s fashioned a peculiarly successful relationship with the public. The colorful TV and radio commercials he writes and stars in have helped transform his small firm into one of the best known in the country. In frenzied 1985, as cities stampeded to get to market ahead of tax reform, the company’s 35 salesmen hawked about $600 million worth of bonds. That’s a “flea on the back of an elephant,” if examined in light of the $200 billion worth of bonds sold last year, but “more bond sales per pound of salesman than any other firm,” gloats Lebenthal, his chin jutting in pride.

A pre-eminent spider with a country preacher’s command of theatrics, Lebenthal, 57, is titular chairman and, in reality, front man for the company his parents founded in 1925. “1 give the place swagger and dash; Mum gives it a sense of tradition,” he says.
He also gives it direction, as the self- proclaimed “spiritual leader” of this “military unit.’ Lebenthal doesn’t balance the books “or do other adult things,” but he helps hire the sales force and direct the flow of work. Though there is a sales manager, Lebenthal often acts as sales director, pointing out what to emphasize about each bond. But essentially, Lebenthal, who earns $200,000 a year, is a salesman. These days, however, he is spending less and less time selling and more time rabble-rousing.

LEBENTHAL & COMPANY STARTED as an odd-lot house, says Sara Fischer Lebenthal, the chairman’s mother, who is the company treasurer and, at 57, still the one who picks the bonds the company features. Louis Lebenthal died in 1951, but the company prospered in the hands of his daughter and son-in-law, Eleanor and Gerard Bissinger. Jim Lebenthal, however, was the one who gave the firm celebrity. His tool is his advertising. Let others seek to write the great American novel; Lebenthal is obsessed with writing the great American municipal-bond ad.

Since he became a permanent fixture at the company, in 1967, he has written more than 800 commercials and ads—as well as a weekly newsletter to 7,500 clients and a triweekly edition to 20,000. He spends more time puzzling over copy than over interest rates, and his works are oddities in the world of financial tombstone ads—they crackle with life as he chides and upbraids the listener.
One ad suggests that the way to go down in history as the best nana and grandpa ever is to finance baby’s freshman year with zero-coupon bonds, “As for your present,” says the ad, “you got it when they made you nana and grandpa.”

In another spot, he chides holders of jumbo CDs coming due that they are settling for peanuts after “Ron, Mario, and Ed take their cut.” In another—this one directed at the “scared and lonely under-$500,000 investor”—Lebenthal announces, “You millionaires who are halfway there slay me. You’ve got money. You’ve got power. But when it comes to your first municipal bond, look at you. Quivering in your boots for fear of picking the wrong bond . . . being taken, and your heirs grieving at the graveside about how dad, poor old dad, sure ran his principal into the ground.”

Other spots unearth excuses for inaction: “Fear of picking the wrong bond— the security demon. There’s fear of the year 2000—the maturity demon. Fear of fluctuation and interest rates. Fear of municipal-bond arithmetic, the Wall Street Jungle, and the new and unknown—and so it goes.”

He often launches into the commercials by introducing himself in the hectoring tones that have made his radio voice as recognizable as Paul Harvey’s. Than it’s on to the high jinks. In one TV spot, while holding a paper cow made of bond certificates he croons, “We’ve been selling a cow that instead of milk gives money. So put a little moola in your portfolio and get a cash cow.” He also rings cowbells, tosses peanuts into his mouth, and has spent 97 takes throwing a bit of chalk into the air on cue. Several spots end with a recitation of the firm’s credentials. “For 60 years, through eleven recessions, three wars, the Depression, one city crisis, we’ve been getting people just like you over the hurdle and finally started in tax-free municipal bonds at last.”

The ads are aimed at real people—80 percent of the municipal bonds sold last year were bought by individuals, Most buyers are in their fifties and are making $60,000 or so—”middle-class moguls,” says Lebenthal. The average account at Lebenthal is $65,000. New Yorkers, especially, like the bonds because they’re exempt from state and city taxes: For the Manhattan couple paying tax on $60,000 (the 49 percent bracket), a tax-free bond paying 7.25 percent would be the equivalent of a taxable one paying 14.2 percent.

But not all those real people in his family of customers are sold on Jim Lebenthal. Leona Helmsley, for one, hasn’t spoken to him since he sold her some dogs. She is not alone. He steered some customers into the Washington Public Power Supply System, some of whose bonds went whoops in July 1973.  And at the onset of the municipal crisis, in 1975, he was hawking New York City’s general-obligation bonds as the second-safest investment in America.

Still, he has many fans. “Lebenthal has helped popularize munis as investments and made the business less scary for the ordinary guy,” says Gedale Horowitz, an executive managing director of Salomon Brothers. “He’s helped bridge the gap between the monoliths of Wall Street and the little guy, and he’s done it with old-fashioned values and integrity.” “He’s a celebrity, right up there with Victor Kiam, Tom Carvel, and Frank Perdue,” says TV executive Jerry Chester, a friend for two decades. “I can’t tell you about the others’ expertise, but Jim definitely knows his stuff.” Adds samurai lawyer Harry Lipsig, “He’s notable and quotable—he is always courteous and helpful, and I’ve never lost money using him. I’ll do whatever he suggests, and I am a wary man.”

Financial printer William Shakespeare. who produces—and chuckles over—Lebenthal’s weekly broadsides to clients, finds their author hard to reach. “He’s on the run a lot” says Shakespeare, who puts up with that because Lebenthal “knows how to find good investments and matches them to your portfolio ambitions. Having him as a bond man is like having a celebrity doctor—not for the guy who wants a lot of hand-holding.”

He is, by turns, curmudgeon, good shepherd, and aggrieved benefactor to his flock. In a phone conversation with a customer not long ago, he snarled, “If you bought a house like you bought bonds, you’d be out in the cold.” To another client, disgruntled that the value of his equity had slipped, he advised, “Get on your knees and fall east and west that you don’t have to sell.. . .“ He tries to soothe an anxiety-stricken woman by asking what she’s making for dinner. “Fish, at today’s prices?” he gasps. “All right. Now. I want you to relax and think about dinner. I tell you, [your husband] is doing the right thing. God bless.”

James Avram Lebenthal was born on June 22, 1928, on the Upper West Side, not far from where he lives today. He passed through Dalton, Andover, and finally Princeton, where he majored in political science and helped run the university’s photo service. In his senior year, he tried to launch a TV show called Pick Your Future, in which people who wanted to be architect, for instance, would be paired with experts in the field who’s counsel and test them.

After graduation, he took a reporting job at Life, where he stayed for six years; eventually he moved up to movie correspondent, writing about film stars like James Dean and Grace Kelly.  He took two years off for the Army, then set out resume to more than 200 TV stations.  Many responded.  He joined KFSD, the NBC affiliate in San Diego, to produce and direct live commercials, and the enthusiasm that serves him so well now got him into trouble there.  In one spot, he panned a sofa as lovingly—and slowly—as possible, so it looked too big to fit into anyone’s house.  The store’s irate president demanded (and got) a make-good.  Then there was the Ford dealer’s spot, which pictured used cars without price tags on their windshields; Lebenthal had removed the tags for eye appeal, leaving nothing to indicate that cars might be a good buy.

His aesthetics prickled sales-minded advertisers but caught the attention of the NBC network, which hired Lebenthal as a producer on Tonight: America After Dark.  He immediately felt he’d made a mistake and quit.  One gray afternoon, as he was taking a ruminative drive, he spotted a tumbled blowing across the highway.  He spent the next year making T Is for Tumbleweed, a short that was nominated for an Academy Award.

The tumbleweed triumph led to a Walt Disney film on otters.  Lebenthal, the city boy, pitched camp near a glen in Boulder Junction, Wisconsin, importer otter pups to the site, and filmed them growing up through four seasons.  When he finished the studio assigned him the silver fox; Lebenthal balked “One year with furry creatures as my only company was quite enough,” he says.  So he called a chum at Young & Rubicam with an idea for an for Life and worked at the agency for the next two years writing and producing Gulf corporate spots.

In 1961, Lebenthal rejoined NBC as associate producer on Update, a teenage news program broadcast at noon on Saturdays to a tiny audience.  Lebenthal’s salary was equally tiny, and after a few more turns in the road, he ended up in the family business.
At Lebenthal & Company, the prodigal is thought of as both inspiring and exasperating, which is pretty much the way he’s thought of at home.  “Life with Jim is a sparring match—ripostes between Beatrice and Benedick,” says his wife, Jackie Beymer, whom Jim hired in 1960 to gussy up his apartment and ended up marrying (they have three children).  “Jim is the only man I know who speaks in captions: it’s as if the balloons in cartoons poured from his mouth, though I’m sure he doesn’t know what he’s going to say seconds before he says it.  He thinks aloud.  And he’s a workaholic.  To him, the sound of typewriter keys is Muzak.”

It was Lebenthal’s zany antics that won his wife.  “He’d call constantly with decorating schemes, one day saying he’d found a shoeshine chair that would make a terrific lamp, another day that he’d found a post-office screen that would make a divine room divider.  Once, he called chagrined.  He and an artist friend had painted a huge, tacky Venice-scene mural on one wall.  Of course it had to be painted over, but it shows Jim’s enthusiasms.”

Years later, he’s still the same.  When Jackie leaves town, she attaches notes to the furniture cautioning Jim not to redecorate.  “He simply can’t control himself,” she says/  “He is a song-and-dance man.  He is wonderfully theatrical but also greatly disorganized.”  Once, when Jackie came home from a business trip, the housekeeper pulled her aside to ask about peanuts.  Jim had spent three nights walking around the apartment, tossing peanuts heavenward and catching them in his mouth to perfect the stunt for a commercial.  Those he didn’t’ catch littered the floor. “I don’t understand his method of working, but it works,” Jackie says.

His family at the office is a little less sympathetic.  “Jim makes a wonderful contribution,” says his sister, Eleanor Bissinger, who is fifteen months older.  “But he is a source of untold frustration.  If there’s ever a foul-up, you know Jim is behind it in some way.  No, not because he orders his own Rolodexes-he never wants to order anything through me, because it might take another ten minutes—but because he always goes his own way.”  Bissinger, as executive vice-president, heads the back-office operations; her husband, Gerard, is president.

Lebenthal claims he gets along with his mother by doing things her way; she claims they co-exist because she walks on eggshells.  “I try not to bring up anything personal with him, and I never interrupt him when he’s writing,” she says.  “I have learned how to hold back.  God forbid I take issue with what he’s written and he turns on me with such a withering glance.  Yes, sometimes I could wring his neck, but I still love him.  Why, are things so perfect in your family?”

THE PROPHET: If Congress places limitations on tax-free municipal bonds, Lebenthal believes, “the result will be so horrendous that I don’t allow myself to consider defeat. It will mean war.”

LEBENTHAL DOES LOVE HIS writing. Somehow, his poor showing in English at Princeton and his aborted journalism career fuel his “driving ambition to make everything in the bond business pass through the poesy of TV with smart-ass turns of phrase.” It also inspires poesy on behalf of his alma mater. In a fund-raising letter, LebenthaI invokes alphabetical lists of donors from the class of ‘49, his class: “Jacobsen, Jadwin, Jamieson, Jarrel, Jenks, Jennings, Jessup, Jirgal, Johns, Johnson, Johnston, Jones,”

In earlier pitches, he had puzzled over the “chemistry that alkalizes the resistance of Remington, Rentschler, Repp, Reynolds, Rheinstein, Richardson, and Riddle to sitting down and writing out a check, or that pulls so powerfully at the purse and heart strings of Huber, Huber, Hughes, Hughes, and Hungerford.” To hear Lebenthal tell it, you needn’t be bighearted, rahrah, or even rich to join the annual giving. You just have to have sat next to others in the great chain of giving.

Lebenthal does his fund -raising and other noble missions— “making the complex issue of boring mathematics come alive” and “beating the drum to get the federal government off our backs”—by himself, just as he does his advertising. He tried to use ad agencies, but they never quite measured up. He began with Albert Frank Guenther Law in the sixties and moved to Calderhead, Jackson in the early seventies. He loved the work Case & McGrath turned out, but he changed the copy and assignment so often that Patrick McGrath fired his client. Twice, Lebenthal moved to Isidore, Lefkowitz, Elgort. The first time around, the firm presented Lebenthal’s salesmen as heroes—but then the city plunged into a fiscal crisis, and the heroes became goats. The second time, the agency turned celebrities into family members—Joan Lebenthal Fontaine, June Lockhart Lebenthal, Count Basie Lebenthal, and so on.  Lebenthal left Chiat/Day in a huff after spending $25,000 for market research “to learn there’s salt in the ocean.” He stayed at Fredericks Kullberg Amato Pisacane “for about as long as it would take to open and close an account.” He was a client at Lord, Geller, Federico, Einstein “for about half an hour,” says Arthur Einstein president there. “Jim doesn’t really need an ad agency. He’s brilliant and impatient, and he knows how to do what anyone can do for him.

Lebenthal believes, however, that he’ll need help solving the pending tax problem, “the result of which is so horrendous “that I don’t allow myself to consider defeat. It will mean war—people won’t stand still for paying more for services they have demanded and gotten from government. The people will rise up, and then the municipalities will be in a state of war with the federal government.”

But why, if the consequences are so dire, is Congress considering the reform? “There is no constituency for saving bonds,” cries Lebenthal. “No congressman or voter gives a hoot about this issue, and the city officials are swamped with other business.”
Some experts, though, think the tax-reform bill will be worse for people like Lebenthal than for cities or citizens. “Since the bill would limit the amount of bonds that can be issued, there wilt be an adverse effect on bond dealers,” says Joe Gale, Senator Moynihan’s tax specialist.

“It’s true that state and Local government bonds have been paralyzed by the pending legislation—no one knows what will be tax-exempt and what won’t,” says Dr. Albert Wojnilower, chief economist at First Boston. “And it’s true that things will cost more, that people will pay higher fees to haul garbage, turn on the lights. But calling it a king’s ransom is overblowing the effect. Things won’t cost that much more for that reason.”

What will Lebenthal do if the worst happens? “I’ll work toward appeal,” he says, “and switch to selling Ginnie Maes”—U.S. government- backed guaranteed mortgages. His business in 1986 has been off around 25 percent, because few bonds have been issued (the trading is all in secondary or existing bonds), but it is far better than when the city had its financial nervous breakdown, in 1975.

It may seem that Lebenthal has got himself overly worked up, but there is strategy beneath the lather. Overstating the case, he feels, may be the way to mobilize the populace. “This is my cross,” he says. “Here I am at 57, making commercials, looking through the lens, doing what I’ve always wanted to do functionally. But instead of focusing on some Hollywood starlet, I’m off on the dullest subject in America. I’m so busy trying to save America that I don’t even know what the market is doing.”

Then it’s back to the latest draft of his newsletter. “With tax reform on 535 tongues in the House and Senate, and a $200-billion deficit in everybody’s hair, why should your representative stick out his neck to fight for municipal bonds without a peep, a sign, a gesture, a letter indicating that one New Yorker, one taxpayer, one constituent is on his side’?” cries Lebenthal. “Get out your pens!”