All three of President Barack Obama’s chiefs of staff earned millions of dollars after passing through the revolving doors that lie between the Democratic Party and Wall Street.
Yet Obama is positioning himself as Wall Street’s foe in the 2012 election, aided by millions of dollars in political donations from Wall Street companies, including Goldman Sachs.
Rahm Emanuel and Bill Daley, and now Jacob Lew, are all career Democrats who have taken lucrative trips through those revolving doors, eliciting jeers from Republicans who say Obama is running an administration of crony capitalists.
Obama’s self-portrayal as defender of the common man was displayed Jan. 3, for example, when he used a campaign-style speech in the swing-state of Ohio to announce that he planned to install Richard Cordray as director of the Consumer Financial Protection Bureau.
“Does anyone think the reason we got in such a financial mess [in 2007] was because of too much oversight? Of course not,” Obama said at a high school in a tony suburb of Cleveland. “Financial firms have armies of lobbyists in Washington looking out for their interests. … Every day that Richard waited to be confirmed was another day when millions of Americans are left unprotected.”
That language was mild compared to Obama’s claims in a Dec. 6 speech in Osawatomie, Kansas, where he railed against “the breathtaking greed of a few with irresponsibility all across the [financial] system.”
“It plunged our economy and the world into a crisis from which we’re still fighting. … It claimed the jobs and the homes and the basic security of millions of people — innocent, hardworking Americans who had met their responsibilities but were still left holding the bag,” he declared in a speech that aides said highlighted his re-election themes.
Obama’s first chief of staff was Emanuel, who was in the job from 2008 to 2010 after serving as a Democratic congressman from 2002 to 2006. Before his Capitol Hill tenure, he worked as a top aide to President Bill Clinton and parlayed his political contacts into a lucrative two and half years on Wall Street at Wasserstein Perella & Co.
On Wall Street, Emanuel earned $16.2 million as an investment banker — without any prior experience in business or finance.
When Emanuel quit to run for Chicago mayor, Obama hired Bill Daley as his chief of staff. Another long-time Democratic political figure, Daley had also worked as a top executive at JPMorgan Chase for four years. He joined the boards at Boeing, drug-maker Merck & Co. and Boston Properties, a commercial real-estate firm.
Daley’s departure, announced Jan. 9, prompted Obama to elevate Jacob Lew, another veteran of the revolving door who most recently helmed Obama’s budget office.
From 2006 to 2009, Lew worked at banking giant Citigroup, where he headed its Alternative Investments Unit and and made more than $1 million per year, plus a bonus of nearly another $1 million in 2009. In 2008 and 2009, Lew’s subdivisions made tens of millions of dollars in profits by investing in a fund that correctly bet real-estate prices would collapse. It lost billions of dollars through other complex transactions, however, according to a June 2010 article by a Huffington Post financial reporter.
Citigroup’s losses, however, were offset by a taxpayer rescue of the financial sector in 2008 and 2009. Since then, the financial industry’s profits have climbed to record levels.
Daley and Emanuel also played direct roles in the real estate bubble that was inflated from 1994 onwards by federal regulators seeking to steer Wall Street money into Democratic-dominated poor neighborhoods.
The process started under President Bill Clinton, but was redirected and accelerated by President George W. Bush, who wanted to bring Hispanic immigrants into the GOP. The resulting real estate boom — and bust — took down Wall Street in 2007, and helped elected Obama.
Daley played a role in the disaster because he was a board member of the government-backed mortgage giant, Federal National Mortgage Association, dubbed Fannie Mae. He served on that board from 1993 to 1997. That’s when the government-backed mortgage firm began to snap up mortgages from companies selling them to Americans, mostly minorities, who lacked the resources to repay the loans. In turn, Fannie Mae sold the increasingly toxic mortgages to Wall Street, and used its revenues to write yet more mortgages.
Emanuel was a board member of Fannie Mae’s twin, the Federal Home Loan Mortgage Company — more commonly called Freddie Mac — from 2000 to 2001, when he ran for Congress.
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- Politics & Government
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- President Bill Clinton
- Jacob Lew