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Obama's Not-So-Hot Date With Wall Street

In late January, Brad Thompson, the Obama campaign’s chief liaison to major donors in New York, New Jersey and Connecticut, called some of his contacts in the area, most of them Wall Street executives. The president’s next trip to town would be in early March. Would they be interested in helping to host a small dinner? For Obama — and therefore Thompson — things had not been going well in New York. The president had already traveled to the city around 20 times during his first term, but he wasn’t collecting money from Wall Street the way he used to. By the end of January 2008, Obama had raised well over $7 million from the securities and investment industry. By the end of January this year, he had only $2.4 million to show. Thompson needed this event to bring in at least $2 million more. Within a week, he and his two deputies had recruited half a dozen donors to anchor the dinner. It would be their job to bring in most of the guests — and the money. Some were longtime and well-connected supporters of the president: the New Jersey investor Orin Kramer, who has raised more than $2 million for Obama this cycle; Jane Hartley, a Carter administration alumna and head of the Observatory Group, an economic and political consulting firm; her husband, Ralph Schlosstein; and Robert Wolf, the chairman of UBS Americas. Marc Lasry, a well-known hedge-funder and veteran of the Clintons’ fabled fund-raising machine, also signed on. So did Antonio Weiss, the head of investment banking at Lazard, marking his first time out as a host of a presidential dinner. Three other events were to be held in New York the same day, including a $1,000-a-head gala that would draw close to a thousand people. But the dinner would be a different kind of affair. It would include no more than 60 guests — large enough to make it worth committing an hour and a half of the president’s time, small enough to give donors a sense of intimacy with the most powerful man on the planet. Tickets would top out at $35,800 per person, the maximum combined donation any individual can make to a presidential candidate and his party in a given year. In a series of conference calls beginning in early February, the hosts began parceling out prospective donors, coordinating who would reach out to whom. The campaign identified a list of about 150 potential guests, and the hosts had their own lists — sometimes even detailed spreadsheets — that identified promising targets: friends who at some point had expressed an interest in attending an Obama fund-raiser, or who couldn’t make the last event but wanted to come to the next one, or who were lukewarm on the president a few months ago but seemed to be coming around. A top priority was figuring out how to rope in major Wall Street donors who supported Obama in 2008 but weren’t committed to big fund-raising roles in 2012 — people like Hamilton E. James, the billionaire president and chief operating officer of the private-equity firm Blackstone; and Eric Mindich, a former Goldman Sachs whiz kid who went on to start his own hedge fund. Mitt Romney’s campaign had already poached the investor Peter W. May and the hedge-fund titan Paul Tudor Jones, who in 2007 held a 500-person Greenwich, Conn., fund-raiser for Obama with George Soros. The Obama team wanted to avoid more high-profile defections. “You call some people on Wall Street up, and they’re undecided,” one Obama bundler said. “They’re ‘waiting for clarity’ — that’s the term they use. Or they say the administration ‘hasn’t led sufficiently’ on an issue.” Still, there were some factors working in Obama’s favor. The Republican primary — which forced Romney far to the right on issues like immigration and reproductive rights — had soured some Wall Streeters on his chances to win in November. And negotiations over the implementation of the new Dodd-Frank financial regulations had made large Wall Street institutions, chiefly banks, wary of open war with the White House. “Most of them are scared stiff of the president,” a top Romney bundler on Wall Street told me recently. “Including the ones on our side.” But by the beginning of the year, it had also become obvious to many on Wall Street that Obama’s campaign was going to take a populist turn. Some bankers believed that the administration’s strategy was to talk tough in public and play damage control in private, and they were sick of playing along. One day in late October, Jim Messina, Obama’s campaign manager, slipped into the Regency Hotel in New York and walked up to a second-floor meeting room reserved by his aides. More than 20 of Obama’s top donors and fund-raisers, many of them from the financial industry, sat in leather chairs around a granite conference table. Messina told them he had a problem: New York City and its suburbs, Obama’s top source of money in 2008, were behind quota. He needed their help bringing the financial community back on board. For the next hour, the donors relayed to Messina what their friends had been saying. They felt unfairly demonized for being wealthy. They felt scapegoated for the recession. It was a few weeks into the Occupy Wall Street movement, with mass protests against the 1 percent springing up all around the country, and they blamed the president and his party for the public’s nasty mood. The administration, some suggested, had created a hostile environment for job creators. Messina politely pushed back. It’s not the president’s fault that Americans are still upset with Wall Street, he told them, and given the public’s mood, the administration’s rhetoric had been notably restrained. One of the guests raised his hand; he knew how to solve the problem. The president had won plaudits for his speech on race during the last campaign, the guest noted. It was a soaring address that acknowledged white resentment and urged national unity. What if Obama gave a similarly healing speech about class and inequality? What if he urged an end to attacks on the rich? Around the table, some people shook their heads in disbelief. “Most people in the financial world,” a top Obama donor later told me, “do not understand how most of America feels about them.” But they think they understand how the president’s inner circle feels about them. “This administration has a more contemptuous view of big money and of Wall Street than any administration in 40 years,” the donor said. “And it shows.” Historically, Wall Street, like many large and heavily regulated industries, has been Republican in its politics but pragmatic when it comes to political giving. For most of the last two decades, according to the Center for Responsive Politics, the financial world has split its donations between the two parties, usually favoring Republicans but also giving generously to the Democratic lawmakers who dominate New York. Even if they didn’t agree with Obama on everything in 2008, many in the financial industry looked at him then and saw a reflection of their imagined best selves: brainy, self-made, above the mewlings and histrionics of partisan politics. He seemed like the kind of Democrat even white-shoe Republican bankers and libertarian hedge-funders could get behind, and many of them did. “There is a growing belief on Wall Street that Barack Obama has the capacity to lead us out of this wilderness,” Jim Cramer, the financial journalist, wrote several weeks before Election Day. Obama far outraised his Republican rival, John McCain, on Wall Street — around $16 million to $9 million — and Goldman Sachs executives sent Obama more money than employees of any other company in the world. But four years, one recession and a host of battles — over financial regulation and the nomination of Elizabeth Warren, over Dodd-Frank and the Buffett Rule — have taken their toll. Some on Wall Street are apoplectic. One former supporter, Dan Loeb, compared Obama to Nero; the president’s enemies insinuated worse. In 2010, Stephen A. Schwarzman, a founder of Blackstone, said that an Obama proposal to raise taxes on “carried interest” — the main source of income for most private-equity managers — reminded him of “when Hitler invaded Poland in 1939.” “I think it’s an unfixable relationship,” one Democrat involved in planning the March 1 fund-raisers told me this spring. “They hate him. They really, really do. They hate all the Democrats.” And in this election cycle, Wall Streeters didn’t have to look far for a more natural fit. Mitt Romney founded a leading private-equity firm, Bain Capital, and he promised to repeal Dodd-Frank altogether. By late fall, invitations to some of Romney’s New York fund-raisers were carrying the names of dozens of financial executives, many of whom knew Romney personally or had closed deals with him during his years at Bain. Some Romney donors started asking their Obama-supporting colleagues to Romney events just to tweak them. Wall Street donors were also emerging as the financial engine behind Restore Our Future, a super PAC founded by former Romney aides. Even as Obama outpaced Romney in traditional fund-raising, Restore Our Future, exploiting the Supreme Court’s Citizens United decision and subsequent rulings and regulations, was bringing in millions of dollars in unlimited checks from hedge-fund and private-equity magnates. By the end of February, the group had raised more than $43 million, almost half of it from Wall Street — more money than Obama raised from the industry during the entire 2008 campaign. Paul Tudor Jones was among the group’s donors, cutting Restore Our Future a $200,000 check in December. At the same time, a super PAC founded by former Obama aides, Priorities USA Action, was struggling, raising less than $5 million, much of it from Hollywood and unions. The Democratic group faced a particularly cold reception among Wall Street Democrats, some of whom feared any money they gave would be used to finance attacks on their own industry. The huge gulf in super PAC donations terrified the Obama campaign. If they wanted, financiers could pour unlimited money into Restore Our Future, meaning that voters in Ohio, Florida and Pennsylvania might see nothing but negative ads about the president from September through Election Day. (It’s no wonder that the Obama team has already held more major fund-raisers than George W. Bush did during the entire 2004 campaign.) Several of the president’s advisers also feared that Wall Street’s anger would radiate into the broader business community, driving the narrative that Obama was anti-business. According to the Center for Responsive Politics, the combined financial, real estate and insurance sector has given a higher percentage of its contributions to Republicans this year than it has in any cycle since 1990, the first year the center began collecting and categorizing campaign records. Some in the White House also believed that if Wall Street executives were deeply unhappy with the president, the markets would follow suit. Further complicating matters was the White House’s well-known aversion to what is known in the fund-raising world as “donor maintenance.” Born as an insurgency against the Democratic establishment, the Obama camp has been criticized for cultivating an aura of disdain for other political and corporate power centers. Efforts to make nice with donors and business leaders — including repeated pilgrimages by White House and campaign aides to New York and other cities — were regarded as, at best, halfhearted. And Obama himself had a reputation for being cold at small gatherings, unwilling to stroke donors or cultivate them as the Clintons had. Now he was asking them to help him raise tens of millions of dollars. One New York-area bundler told me about a conversation she had with a friend who attended an Obama fund-raiser. “I just don’t think he likes us,” the guest reported back. In early February, Messina traveled to New York again to meet with 30 or so Obama supporters at the Core Club, a members-only establishment in Midtown that caters to the hedge-fund crowd. In a brief presentation, Messina thanked those who had been supportive, described the campaign’s plans for 2012 and offered his impressions of the president’s likely opponent, Romney. According to several people in the room, he closed with an appeal to the executives for help, asking them to consider signing on as hosts for the small dinner, now scheduled for March 1 (they had just locked in that date). “We want it to be a big success,” Messina told the room. Mindich, the former Goldman whiz kid, had a question. If Romney were the nominee, Mindich asked, how would the Obama campaign go after him? Would it attack his record at Bain Capital? Would it attack the private-equity industry? Near him sat Blackstone’s James, who, just a few weeks earlier, had called attacks on private equity “vicious . . . inaccurate and unfair.” Mindich and James are friends, and some in the room speculated that Mindich’s question was for James’s benefit. Our target, Messina assured the room, would be Mitt Romney and his record, not the private-equity industry. But the campaign, he added, couldn’t control what the president’s surrogates — like Priorities USA — might do. James ultimately did not attend the fund-raiser, nor did Mindich. Others were also unpersuaded. Obama’s finance team had already realized that if Wall Street was going to give less — potentially far less — than last time, other constituencies would have to give more. Hollywood, a reliable source of Democratic campaign cash, was looming larger in Obama’s fund-raising calculations. So were tech entrepreneurs and gay donors. Sure enough, the host list for the March 1 event was changing shape. A dinner that had been aimed chiefly at Wall Streeters was now being branded as an “executives” event, one that would demonstrate Obama’s support in the larger business world. Sally Susman, a top executive at Pfizer and a prominent fund-raiser in the gay community, came on board as a host; so did Kevin P. Ryan, the C.E.O. of the luxury retailer Gilt Groupe, and Deven Parekh, a New York-based technology venture capitalist. Real estate executives, like Tom A. Bernstein, the president and co-founder of Chelsea Piers, the gigantic sporting complex along the Hudson River, also began appearing on invitations. (Blackstone’s James eventually agreed to host his own fund-raiser later in the spring.) According to Jonathan Mantz, who was Hillary Clinton’s finance director in 2008 and who now helps raise money for Priorities USA, good hosts bring “their unique network that not everyone knows and that only they have — not the trustee list for the Democratic National Committee.” It also helps if they’re persuasive. For the March 1 dinner, some hosts played up the early signs of an economic recovery. Others highlighted Obama’s suggestions that he was open to extending the Bush-era tax cuts, or confided (wrongly, it turns out) that the president might not hold another small dinner in New York City this year. Like all the high-ranking volunteers in Obama’s fund-raising efforts, the hosts were e-mailed weekly talking points from the campaign and could request memos on specific issues as needed — a defense of the administration’s record on Israel, say. For those on Wall Street, however, the best argument boiled down to the simplest one: Obama was going to win. By the middle of February, formal invitations for the small dinner, at Jean-Georges Vongerichten’s ABC Kitchen, began arriving in guests’ in-boxes. Expanding the pool of hosts seemed to be working: with well over a week to go, the campaign had already secured enough guests to fill the event’s 60 seats. By the weekend before, 70 people had signed on. With 72 hours to go — the deadline for locking the guest list, so that the Secret Service has enough time to run a security check on each guest — about 80 had committed, most of them paying full freight. Any donors unfamiliar to the Obama operation were also Googled by Thompson and his aides, who searched for potential political minefields or scandals in the making. Early on the morning of March 1, New York City police officers set up barriers at both ends of 18th Street between Park and Broadway. Blackout curtains had been cast over the front windows of the restaurant, by the bar area. By 4:30 p.m., two young campaign aides in overcoats were stationed at the appointed corner, along with Secret Service agents, and the early arrivals had begun to trickle in. Every few minutes, a confused patron of the nearby Old Town Bar would wander up asking to be admitted, only to be escorted up the block by Secret Service. Inside the security checkpoint, the partygoers sipped drinks — a choice of white or red wine or a whiskey cocktail — while the sound of hundreds of guests at the $1,000-a-head Obama event next door murmured through the walls. The motorcade arrived shortly after 6, and seconds later, two enormous white dumptrucks moved into place on the east end of 19th Street, shutting off the roadway and turning the block into a parking lot for the motorcade. The hosts had agreed to dispense with the “clutch,” the private greeting they receive from the president just before the main event, to give the guests they had invited more time with Obama. Not long after entering through the back of the building, Obama glided into the dimly lit dining room. The guests, midway into their entrees — fried chicken or grilled bass in a savory broth — leapt to their feet. “I didn’t mean to interrupt dinner,” Obama began. The president’s remarks at fund-raisers are in essence a mini-stump speech, drafted by speechwriters, semipublic — a transcript is typically sent out to the White House press pool — and delivered, with variations, dozens of times. Here, Obama defended his handling of the financial crisis and highlighted the 250,000 jobs created in the previous months. With a knowing smile, he even expressed some gratitude for the Wall Streeters in attendance. “So many of you have had to defend me from your co-workers over the last three years,” he said, drawing a laugh from the crowd. “Being an Obama supporter is not as trendy as it was.” When the president wound down and the pool reporters and photographers were hustled out of the room, he took questions from his guests, alternating between men and women. According to the accounts of multiple attendees, James G. Dinan, a billionaire hedge-fund manager, asked about a possible war with Iran and what the White House would do if Israel decided to launch a strike. Susman asked about corporate tax reform. A teenage girl, the daughter of one of the hosts, asked the president about the anti-bullying initiatives he had discussed with Lady Gaga. A Turkish-American guest, one of several recruited for the event, asked about discrimination against Turkish-Americans. In the audience, eyes rolled. “This is something I don’t know about,” Obama politely explained. “But we should look into it.” He directed the question to one of his aides, standing at the back of the room. When no more hands went up, Obama began circulating around the room, going table to table counterclockwise. At some past events, the president’s team would arrange for an empty chair to be at each table — “the Elijah chair,” as some donors call it — so that Obama would have a place to sit. But with the event oversubscribed, Obama stayed on his feet. He seemed affable, guests said, more willing to banter than usual. An aide lingered nearby, unobtrusively moving Obama along, while a photographer from the campaign took candid shots that would later be made available to the guests. At one table, Obama began talking to Larry Rockefeller, who congratulated the president for supporting higher tax rates on the very wealthy. “We agree with Warren Buffett!” exclaimed Rockefeller, a prominent conservationist and philanthropist. At another table, the president recognized Jeffrey R. Gural, a real estate developer and major Democratic donor. The two had spoken around Christmas, when Obama, who had planned to be in Hawaii but was kept in Washington because of payroll-tax negotiations, called Gural to thank him for his support. Gural introduced him to his wife, Paula, and told the president how much he appreciated his phone call. Gural was upset about the Republicans’ resistance to the president’s tax proposal — but he was also concerned about the White House’s messaging. “If you ask someone coming out of Grand Central Station if they’ve had their taxes lowered, none of them would believe it,” Gural said. Obama agreed. “We’ve done a bad job of getting that message out,” the president told him. At about 7:30, Obama left the room for a private meeting with a few aides and one of the hosts, UBS’s Robert Wolf. About an hour later, he re-emerged to speak to the crowd at the gala next door. By 9:30, he was on his way to a dessert event on the Upper East Side — his 100th major fund-raiser of the campaign. In just one night, he raised more than $5 million. It was nearly a one-day record, enough to put New York back on track for its fund-raising quota. Back inside ABC Kitchen, the air went out of the room almost as soon as Obama left. Some stuck around an hour or so longer, the old Obama fund-raising base in New York mixing with the emerging one. Michael Kempner, a public-relations executive who is among the top Obama fund-raisers in the country, held court with the Turkish-Americans, most of them new to political giving. Several others stayed to greet Jack Lew, the president’s chief of staff and a New York native. But others had theater tickets, or children waiting at home. They had put in their time and plenty of their money, and the president, they knew, would be back in town soon enough. ____________________________________ Nicholas Confessore, "Obama's Not-So-Hot Date With Wall Street," The New York Times Magazine, May 2, 2012, http://www.nytimes.com/2012/05/06/magazine/obamas-not-so-hot-date-with-wall-street.html.
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