Obama's Ethics Rules Won't Ban Big Fundraisers From Transition

By Jonathan D. Salant

Nov. 12 (Bloomberg) -- President-elect Barack Obama is barring lobbyists from participating in the transition that will help install his administration. He will still leave room on his team for the rich and powerful.

Top fundraisers and other well-connected supporters will serve in an advisory capacity before the Democrat takes office on Jan. 20.

Five of the 12 members of Obama's transition advisory board raised at least $50,000 for his presidential campaign, and eight contributed the maximum individual donation of $4,600. Other transition team members include a partner in a lobbying firm and two executives of financial companies whose employees were among his biggest donors.

``If an Obama administration is going to sell influence, these are the ones who have bought it,'' said Craig Holman of Public Citizen, a Washington-based advocacy group that favors stronger campaign-finance and lobbying laws.

Obama spokeswoman Stephanie Cutter defended the advisory board, saying it ``was selected based on the skill and experience of each member, and they are providing critical advice to ensure a smooth transition process.''

Transition co-Chairman John Podesta yesterday released rules banning registered lobbyists from raising money for the transition or working for the new administration in areas on which they represented clients.

The new rules also prohibit members of the transition team who become lobbyists from trying to influence the administration on any issues that they worked on. Podesta called them ``the strictest, the most far-reaching ethics rules of any transition team in history.''

Bundlers Exempt

The rules, however, won't prevent campaign fundraisers known as bundlers from serving.

Valerie Jarrett, a transition co-chairwoman, raised between $100,000 and $200,000 for Obama, according to his campaign Web site. Two advisory board members, Julius Genachowski, managing director of Rock Creek Ventures, a Washington firm that invests in online companies, and Donald Gips, a vice president of Broomfield, Colorado-based Level 3 Communications Inc., each raised at least $500,000 for Obama.

A third, Michael Froman, brought in between $200,000 and $500,000 for the campaign. Froman is a managing director at New York-based Citigroup Inc. The financial institution's employees and their families contributed $581,216, Obama's seventh-biggest source of campaign cash, according to the Center for Responsive Politics, a Washington-based research group.

Campaign co-chairman William Daley, a vice chairman at New York-based JPMorgan Chase & Co., also sits on the advisory board. JPMorgan employees and their families were Obama's sixth-biggest source of donations, giving $581,460.

Registered to Lobby

Another board member, Mark Gitenstein, was registered to lobby through June, House records show. Gitenstein is a partner in the lawyer-lobbying firm of Mayer Brown LLP, whose clients include Dearborn, Michigan-based Ford Motor Co., which is pushing for government help, and New York-based Merrill Lynch & Co., which sold itself to Bank of America Corp. in September.

Obama may be learning quickly that what sounds good on the campaign trail may not always be best for governing, said Costas Panagopoulos, director of Fordham University's Center for Electoral Politics and Democracy in New York.

``They want to find the most qualified people; some will have been donors,'' Panagopoulos said. ``It was probably shortsighted to make promises that such individuals would not be included in his administration.''

Plenty of Jobs

The president-elect will have plenty of opportunities to fill jobs before he takes office. Podesta said he expects the transition to have a $12 million budget and employ about 450 people. With less than half that amount coming from federal appropriations, Obama's transition team will raise money privately, he said. As in the campaign, Obama won't accept money from registered lobbyists and political action committees, Podesta said.

Obama raised a record $650 million for his presidential campaign as he became the first major party nominee to shun federal funds for the general election.

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net .

Last Updated: November 12, 2008 00:01 EST

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