William M. Daley has been a lawyer, banker, and rainmaker. He's managed companies and political campaigns, and served as a Cabinet official. But above all, Bill Daley has been a fixer for powerful bosses in and out of government.
His ultimate challenge may be the job he accepted on Jan. 6 as chief of staff to a President facing a strengthened opposition, a sluggish economy, and reelection in 2012. "Every chief of staff kind of fits the moment," says Rahm Emanuel, who sought Daley's advice almost weekly when he was in the job. Emanuel recommended Daley when he told Obama he was mulling a run for Chicago mayor after Daley's brother Richard decided against a seventh term. "Bill will fit the moment, going into this reelect," says Emanuel.
With Daley on board, Obama's next two years are likely to be markedly different from the first two. It will be "a time of negotiation and compromise, checks and balances, and trying to find common ground rather than creating a landslide of legislation all on one side of the aisle," says former Reagan Chief of Staff Kenneth M. Duberstein, a Daley friend and fellow Boeing (BA) board member who met with Obama in December.
Daley, 62, a centrist Democrat known for his negotiating skills, gives Obama added credibility as someone who can cut budget and trade deals, issues Obama now wants to emphasize. He also gives Obama something Emanuel didn't: "Rahm had the trust of Congress," says Leo Melamed, chairman emeritus of CME Group (CME), parent of the Chicago Mercantile Exchange and the Chicago Board of Trade. "Bill has the trust of business."
Daley's first White House assignment was persuading Congress to pass the North American Free Trade Agreement in 1993, a task not unlike the one he faces now—charming both an ascendant opposition and the sometimes hostile members of his own party. Daley also had to get a Democratic House to ignore labor's objections while overcoming business doubts that President Bill Clinton was serious. "Daley helped to bridge that gap," says Christopher Padilla, an IBM (IBM) government relations vice-president. "He knows how to talk to business." In the end, Nafta passed with 102 House Democrats joining 132 Republicans.
After his 1996 reelection, Clinton made Daley his Commerce Secretary, a job Daley held until the summer of 2000, when Al Gore asked him to manage his troubled Presidential campaign. Gore was down 25 points in the polls; Daley helped him catch up, though he didn't prevail. On election night, after Gore had conceded, it was Daley who bounded down the steps of the Tennessee War Memorial building to tell supporters that Gore would fight on. Gore later said he might have won the election had Daley joined the campaign earlier.
In 2003, when Daley was president of SBC Communications, the power of the family name was on full display. SBC won passage from the Illinois legislature of a measurejust four days after its introductionthat gave SBC broad latitude to raise the fees it charged competitors for using its network. Obama, then a state senator, was one of those who voted no. "Ramrodding bills through because you've got the clout to do so—rather than because you've got arguments on your side—is not a good way to do the people's business," Obama told the Chicago Tribune. A court later overturned the measure.
Daley took on a quieter lobbying role when he joined JPMorgan Chase (JPM) in 2004 as Midwest chairman. He never really worked as a banker in the traditional sense. "It's less investment banker than it is political coordinator," says Melamed of CME. When the Chicago Merc was trying to acquire the Chicago Board of Trade four years ago, Daley's role at JPMorgan, an adviser on the deal, was to make sure antitrust issues didn't trip it up, says a person who worked on the $11.3 billion transaction. Daley was rarely seen during the talks, but whenever regulators raised concerns that might slow the deal, Daley made sure they were addressed, says this person, who asked to remain anonymous because the talks were private.
Daley played a similar role as Congress considered the financial rules overhaul. He didn't register as a lobbyist, though he hired and supervised Peter L. Scher, who worked alongside Daley in the Clinton Administration, to lead JPMorgan's lobbying units. Daley revamped the bank's strategy by bringing in Chief Executive Officer Jamie Dimon and other managers to meet personally with lawmakers. In the end, JPMorgan and other big banks won key concessions on derivatives and how much of their own capital they could invest in hedge funds and private equity deals.
After Obama introduced him at the White House, Daley reminisced about a visit he made there 50 years ago this month, just after John F. Kennedy had been sworn in. As John Daley, another brother, recalled, "Kennedy specifically said that he would not be there without my dad," a reference to Richard J. Daley who, as then-Chicago mayor, helped Kennedy pull off a narrow and controversial win in Illinois in 1960. Fixing things is an old Daley family tradition.
The bottom line: Bill Daley, Obama's new chief of staff, will try to improve relations with business and Republicans, with an eye toward the 2012 election.