The Revolving Door Spins Into The Obama White House
Obama's new chief of staff has cashed in on his time in government. But who does he owe now?
Politico has a puff piece up today on President-elect Obama’s new chief of staff Rahm Emanuel called “How Rahm Got Rich.” Emanuel served in the Clinton White House. After he left that job in 1998, and before he won his seat in Congress in 2002, he worked as an investment banker. His brief dip into the private sector netted him a cool $16 million.
Nice work, if you can get it.
The Politico story reads like it belongs on Lifestyles of the Rich and Famous instead of a site that purports to cover politics. Here’s our favorite nugget of fawning nonsense: “as a former investment banker himself, Emanuel may be well-positioned to understand the problems and priorities of the nation’s struggling financial system.”
Is the author kidding? Investment bankers are the boobs that got us into this mess, not to mention politicians. Emanuel is 0-for-2 on that score. Actually, Emanuel’s O-for 3. As the story points out, he also served on the board of Freddie Mac during the time of some of that quasi-company’s worst financial shenanigans.
But amid the author’s breathlessly laudatory prose about Emanuel’s work ethic and business prowess, there are glimpses of the not quite completely buried lede: Emanuel “earned” his millions by exploiting his connections in and knowledge of government.
First, Emmanuel opened up his rolodex of big Clinton donors from his White House days and signed them on as his new clients. Then, he milked his knowledge of government regulators and regulations to help big corporations push through questionable mergers and acquisitions:
One signature transaction was the $16 billion merger of Unicom Corp. and PECO Energy Co. into Exelon Corp., now one of the nation’s largest electric utilities, with nearly $19 billion in annual revenue. The company owns 17 nuclear reactors, which produce about 20 percent of the nation’s nuclear power.
When the transaction began in 1999, it was not at all clear that such an energy behemoth could be created. Utilities are subject to intense government regulation, and nuclear power plants face a host of government approvals before they can be sold to a new owner.
…
But the deal benefited from a wave of electricity deregulation, and backers of the merger argued that the new company would be well-positioned to sell power in markets across the country as states opened their electricity markets up to competition.
So now Emanuel is 0-for-4. Not only was did he work for Freddie Mac, one of the main culprits in the mortgage crisis and financial meltdown. Not only was he in the investment banking industry, another huge culprit in that mess. Not only was he a powerful congressman who did nothing to head off the disaster. He also exploited and profited from the energy deregulation disaster that just about bankrupted California and ratepayers around the country.
What’s next? Are we going to learn he worked for Enron at some point?
It’s bad enough when ex-government insiders like Emanuel cash in on their public service experience. But it’s even worse when they swing through the revolving door again and head back into government again. Look at Dick Cheney and Hallburton. He made the giant company huge profits while he was CEO in the 1990’s, but it really hit the jackpot when he returned to Washington.
We are not saying Emanuel’s ties to companies like Exelon are as troubling as Dick Cheney’s relationship with Halliburton, but the fact remains, he made millions from them in the past. And, as it turns out, his new boss, President-elect Obama, has some connections of his own to the giant firm:
Donors affiliated with Exelon gave Obama’s presidential campaign more than $197,000, according to the Center for Responsive Politics.
The company didn’t give that kind of cash to Obama just because they like his speaking style. There is a history there. For instance, when one of Exelon’s nuclear reactors was leaking radioactive matter into groundwater, Obama talked tough about cracking down on the industry and forcing companies to disclose such leaks. He even bragged about it on the campaign trail. But it turns out, he actually didn’t do much at all to affect his big campaign donor’s business. From a NY Times story in February:
While he initially fought to advance his bill, even holding up a presidential nomination to try to force a hearing on it, Mr. Obama eventually rewrote it to reflect changes sought by Senate Republicans, Exelon and nuclear regulators. The new bill removed language mandating prompt reporting and simply offered guidance to regulators, whom it charged with addressing the issue of unreported leaks.
The bill eventually died a quiet death without being voted on. Now, Exelon and other nuke producers are allowed to voluntarily report any problems. In other words: self-regulation.
Oh, and by the way, Exelon is now trying to make itself even bigger and more powerful with another questionable merger. Just in time for two of their biggest boosters in government to take over the White House. Nice timing.
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