Before President Obama made him famous, Rahm Emanuel earned at least $17 million in three years as an investment banker
(Bloomberg) — President Barack Obama made Rahm Emanuel a global name by appointing him White House chief of staff. President Bill Clinton and Chicago Mayor Richard M. Daley helped make him rich.
The wealth and connections Emanuel amassed while working for all three men give him advantages — and liabilities — as he explores running for a job he has said he always wanted, mayor of his native city.
Emanuel, 50, earned at least $17 million in three years as an investment banker after leaving the Clinton White House, public records show. While that part of his resume didn't hurt him when he first ran for Congress in 2002, any new bid for public office would come amid criticism of Wall Street's excesses and a U.S. unemployment rate of 9.6 percent.
"It didn't have traction because it was before the markets went down," said Nancy Kaszak, who lost to Emanuel in the 2002 Democratic primary to represent part of Chicago's north side and northwest suburbs. "There are a lot of people who are very angry now because of the finances they are facing. I think it is a potentially more harmful issue now."
Emanuel will step down from his White House post today, people familiar with the matter said yesterday. He already is testing voter reaction to his investment banking success and ties to City Hall in the polling he has done, according to the Chicago Sun-Times newspaper.
Chicago is facing an estimated $654.7 million deficit in its $3.39 billion budget for 2011 and has an unemployment rate of 10.8 percent, down from a high of 12.3 percent in January.
Daley, who on Sept. 7 announced he wouldn't run for a seventh term, filled holes in the current $3.12 billion budget by using money from the earlier privatization of parking meters, garages and a tollway. Those shifts and the failure to trim labor and other costs prompted Fitch Ratings to cut the rating for the nation's third-largest city two levels to AA from AAA on Aug. 5.
Emanuel's Wall Street ties and time spent on mortgage lender Freddie Mac's board of directors a decade ago could prove to be a political drag, said Donald Haider, an unsuccessful Chicago mayoral candidate in 1987 who is a professor at Northwestern University's Kellogg School of Management.
Yet the money Emanuel earned from the contacts he made as a Daley fundraiser and later as Clinton's political director and senior adviser — someone who routinely interacted with corporate executives — would bring obvious advantages to a mayoral bid.
"Having resources to spend on your own campaign is a wonderful elixir, and it scares off a hell of a lot of people," Haider said. "Rahm's argument is, 'Here I am, I can deliver. I have all this clout I bring from Washington at a time when the city is strapped.'"
Daley, 68, is the person who launched Emanuel on a path of political power and later fortune. Emanuel's rapid ascension in national politics was rooted in his skill as a fundraiser, initially for Daley in his first successful mayoral bid in 1989 and then for Clinton's presidential campaign in 1992.
The route Emanuel later took from government service to private-sector wealth is common for people with top Washington connections. How quickly he made his millions is rare, said Dave Levinthal, a spokesman for the Washington-based Center for Responsive Politics, which tracks the revolving door between government and business.
"That's NFL salary kind of money," Levinthal said. Emanuel declined an interview request through a White House spokesman, Ben LaBolt.
After leaving the White House in 1998, Emanuel went to work for one of Clinton's top fundraisers, the late Bruce Wasserstein. Emanuel tapped the contacts he made in government to close deals while working in the Chicago office of Wasserstein Perella & Co.
Emanuel's largest transaction came about a year after he left the White House when he represented Unicom, the former corporate parent of what was Commonwealth Edison, in an $8.2 billion merger with Pennsylvania-based Peco Energy Co. The merger, completed the year after Daley criticized ComEd for service problems, created Chicago-based Exelon Corp., the largest U.S. producer of nuclear power.
Exelon cut 3,350 jobs — about 11 percent of its workforce — within a year of the merger. Another 1,900 jobs, primarily management and professional personnel, were cut by 2006.
The merger saved Chicago jobs by expanding Exelon's footprint while keeping its headquarters in the city, said a person close to him who asked not to be named. Emanuel's business experience will help him solve Chicago's budget problems, the person said.
Kaszak, who said she would support Emanuel if he ends up being the "best candidate," said her 2002 campaign held a news conference on a Sunday morning near a Commonwealth Edison building in Chicago to criticize Emanuel's involvement with the deal. She said few reporters showed up.
"We thought that would be a point where voters would connect," she said. "The deals he was cutting had implications for workers and consumers."
An Emanuel campaign could be shaped by a new Illinois campaign finance law that will cap individual contributions to candidates at $5,000 and corporate and union contributions at $10,000 for each election cycle. It takes effect Jan. 1.
Some executives outside Chicago are so eager to see Emanuel out of the White House that they've offered to write checks for a potential mayoral bid, said one Chicago chief executive who has been asked to hold fundraisers for him. The executive asked that his name not be used out of concern for retribution by Emanuel.
The former congressman is the early favorite of Chicago business leaders, the executive said, though they would gladly shift support to another viable candidate because they're unsure what Emanuel's priorities are other than getting elected.
Nov. 22 is the last day to file nomination papers for the Feb. 22 Chicago mayoral election. That contest is almost certain to be followed by an April 5 runoff for the top two vote-getters, which is needed if no candidate gets more than 50 percent of the vote.
Should Emanuel enter the race, he also could tap the $1.1 million he has in his congressional campaign fund. Haider estimated that a total of $100 million will be spent by candidates in the Chicago mayor's race. Daley spent $4.6 million in 2007 to defeat two opponents.
In Chicago, Emanuel has especially close relationship with the investment firm Madison Dearborn Partners LLC, which was the top source of contributions during his four congressional campaigns, according to the Center for Responsive Politics.
John Canning, Madison Dearborn's chairman, befriended Emanuel when he was working as an investment banker in Chicago.
As a congressman, Emanuel visited the firm's offices in 2007 to hear concerns about legislation involving buyout firms and hedge funds. Canning didn't respond to an e-mail seeking comment on a potential Emanuel mayoral bid.
In 2005, House Speaker Nancy Pelosi tapped Emanuel to run the Democratic Congressional Campaign Committee, where he again leveraged his financial industry contacts. He recruited candidates and raised money, leading the Democrats to regain control of the House in 2006. The securities and investment industry was Emanuel's biggest sector for campaign contributions during his congressional career, according to the center's data.
When he first ran for Congress to fill a seat being vacated by Rod Blagojevich, who was running for governor that year, Emanuel spent $450,000 of his own money, or about 14 percent of his total fundraising, the center's data shows.
Emanuel has investments and other assets worth between $6.7 million and $15.2 million, according to a White House financial disclosure form he filed in May that allows for a broad range of valuations.
He reported spending between $10,000 and $15,000 on legal fees during 2009 in connection with the probe of Blagojevich, who is scheduled to stand retrial as early as January on corruption charges. Emanuel may be called to testify because he had conversations with Blagojevich about who should be picked to fill the U.S. Senate seat Obama vacated.
That legal tangle isn't Emanuel's only complication. Chicago Alderman Walter Burnett, who represents part of the city's west side, said his wealth will likely be an issue. "In this atmosphere of economic challenges and people losing their jobs, people in my area of the city are not impressed with people who have stuff," Burnett said.
—With assistance from Mike Dorning in Washington and Darrell Preston in Dallas.