Bought and Paid For (7 page)

Despite the fact that it was largely contradicted by his far-left voting record as a state senator and now a U.S. congressman and by his associations with people like Ayers and Wright, the media accepted Obama as a moderate without much debate. Likewise, the more Volcker read about Obama, the more he accepted him as an agent for banking reform, even as Obama wooed the very same bankers who would oppose it. A few days after Gallogly sent Volcker the material, Volcker said he liked what he had read, and Volcker was in.

But while each of the men in the room was looking for something new, they also wanted something old. While Volcker may have somehow come to believe Obama had the personal history to possibly upend the status quo—namely his background in “progressive” politics as a community organizer—everyone else in the room showed up because Gallogly's pitch was pretty simple: In the end, Barack Obama really was someone Wall Streeters felt they could work with, despite all the noise they might have heard about Obama's far-left views and his associations with some of Chicago's more unsavory characters, like criminally convicted businessman, real estate developer, and Democratic Party fund-raiser Tony Rezko.

In 1995, Rezko became literally one of the first three people to ever make a campaign contribution to Obama, and he would help to raise millions over the years for him, particularly when Obama was in the Illinois state senate, where he could influence legislation involving real estate. Their association didn't end there; Obama and Rezko became close friends, so much so that Rezko hired Obama to do some legal work for him in the 1990s.

Obama's association with Rezko was in many ways emblematic of his dealings with business in general (and more specifically with Wall Street). As with his relationships with Jeremiah Wright and William Ayers, who helped Obama solidify his left-wing political credentials in Chicago, Obama's relationship with Rezko gave him access to amazing amounts of campaign cash over the years, though it would also raise questions about his judgment. During the Democratic primaries, Hillary Clinton mocked Obama's reference to Rezko, calling the land developer a “slum lord.” In 2008 Rezko would end up being convicted on sixteen charges: six counts of wire fraud, six of mail fraud, two of corrupt solicitation, and two of money laundering for offering campaign contributions in exchange for state contracts.

Being someone who spent years as an Illinois state senator before representing the state in the U.S. Senate, Obama had been surrounded by the notoriously corrupt world of Illinois politics: Disgraced and soon-to-be-impeached governor Rod Blagojevich was caught on tape attempting to sell his appointment to fill Obama's now-vacant Senate seat. But Obama also made very productive use of his time in Chicago, forging deep connections not just with real estate developers and powerful albeit controversial local political players like Wright and Ayers but also with key business leaders, which would put him in good stead later in his career. What's more, he built relationships with others who would themselves create a web of Wall Street ties—like Valerie Jarrett, a real estate lawyer who ran a firm that specialized in profiting off its strong relationships with Chicago-based developers, and of course a certain ambitious young man named Rahm Emanuel.

Like Gallogly, Warren Spector had long been involved in Democratic Party politics, though he knew very little about Obama's ties to the likes of Wright, Ayers, or Rezko, he would later say. And like some of Obama's other supporters, Spector said he really didn't care. The more he got to know Obama, the more he judged him as his own man, someone who was smart, educated about Wall Street in a way that went beyond simply asking for campaign contributions. He seemed to really appreciate what bankers did—the financial innovations, as in mortgage bonds, that people like Spector produced had a direct social benefit by expanding loans and housing to more and more people.

As the executives milled around the room with wineglasses in their hands, Obama immediately spotted Spector and walked over to him. “Glad you could make it, Warren,” Obama said. “Good to see you, too,” Spector responded. Spector might have been impressed with Obama, but he wasn't quite sold on Obama's being the next president because he was still leaning toward supporting his rival, Hillary Clinton.

That was about to change. After a couple of glasses of wine, the group sat down and each man formally introduced himself to the candidate. Most, like Dick Fuld and Larry Fink, did so matter-of-factly, and Obama gave them both friendly hellos. Those who had not already met Obama expected a night of policy analysis from the wonkish candidate, not exactly the most exciting way to end a hard day at the office.

But Spector immediately livened up what had begun as a dull affair. Inside Bear Stearns, Warren Spector was not known for his sense of humor, and the strain of the firm's recent problems was clearly weighing on him. The failing Bear Stearns hedge funds had been big financial news. Some pundits were saying they were harbingers of a broader decline of Wall Street because many of the biggest firms, most notably Bear itself, had invested in the same toxic housing bond investments that were found in Bear's hedge funds.

As a result, Bear's stock was getting crushed, and with that the rumors had begun swirling that Spector's boss, Jimmy Cayne, a right-wing conservative (the political opposite of Spector), was getting ready to fire him over the problems that had begun with the losses of the Bear hedge funds, which were clearly under his watch. Spector's problems with Cayne had been brewing for years. Just three years earlier, Cayne had publicly chastised Spector for his public support of Democratic presidential candidate John Kerry. (Cayne, despite his personal political views, thinks it's bad business to overtly support any political party—unless, of course, there's business to be gotten.) Since then the two had barely spoken and with the hedge funds disaster, their relationship turned even more toxic.

Yet tonight Spector was unusually glib, as if he knew the end of his career at Bear was approaching and with it a great weight was coming off his chest. He would soon be a free man, free to start his own hedge fund; free to start his own film production company (called Tashtego Films); and free possibly to be part of history—the election of President Barack Obama, the nation's first black president and, most important (although by no means unprecedented), a progressive who could work with Wall Street.

When it was Spector's turn to talk, he announced himself to the group as “Warren Spector, the current scourge of Wall Street.” Everyone laughed, including Obama, who had undoubtedly read in the financial papers about the problems at Bear Stearns.

Spector certainly broke the ice that night, and then, as the conversation began, Obama did much of the talking. Gallogly immediately knew he was hitting a home run as candidate Obama expounded on his vision about the future of America, one unburdened by the politics of the past and one in which the financial sector and capitalism flourished, according to people who were there and who were immediately impressed by Obama's rhetoric.

But in reality, the pose Obama assumed at this meeting downplayed his alter ego, what some would say is the
real
Barack Obama, the ultraliberal politician and community activist who lobbied on behalf of the far-left housing advocacy group known as the Association of Community Organizations for Reform Now, better known simply as ACORN.

ACORN billed itself as the largest community action group in the country, with 350,000 active members who lead marches, protests, and voter registration drives in advancing its far-left agenda. And it's no stranger to the community activist turned president; Obama worked closely with ACORN during his days as a community organizer, and his campaign paid an ACORN affiliate more than $800,000 for its get-out-the-vote efforts.

It was ironic that Obama would be glad-handing some of the same bankers who had been targets of many of ACORN's protests, including claims that the big banks were at the center of a plot to redline inner-city neighborhoods and that they refused to lend to minority communities out of sheer racism.

Less ironic but more scary is ACORN's own record of abuse. The organization would make the news for numerous alleged criminal activities, including encouraging prostitutes to evade the law and, much more sinister, possible voting fraud. (Examples that would be amusing if they weren't so scary and scurrilous include a voter application form for “Mickey Mouse” submitted by ACORN in Orlando, Florida, and registration forms sent in by ACORN in Las Vegas that included the names of the entire starting lineup of the Dallas Cowboys.)

But none of that mattered to the high-powered executives in the room. Obama was demonstrating the skill that, even more than his vaunted oratorical ability, has served him most usefully throughout his political career: a chameleon-like quality that allows him to be all things to all people (not unlike the previous Democratic president, Bill Clinton).

Earlier in 2007, the closely watched rankings of the
National Journal
ranked Obama
the
most liberal U.S. senator in the entire Congress, based on his votes to expand government health-care benefits, as well as other spending initiatives. In fact, he was ranked as more liberal than Hillary Clinton, who was ranked sixteenth despite her long-standing desire to create government-run health care. But unlike Hillary, Obama had a reasoned, calm demeanor that appealed to the bankers, who still remembered the bruising national drama of the Clinton years.

Obama had voted against George W. Bush's successful “surge” of troops in Iraq, which would finally turn the corner on bringing peace to that troubled land and limiting Al Qaeda's operations, and he had repeatedly voted yes on questions of massive government entitlements—yet at this meeting he wasn't asked a single question about either of these issues, according to people who were there.

Obama once considered Reverend Wright his spiritual mentor, despite Wright's espousal of so-called Liberation theology in his church in Chicago, the Trinity United Church of Christ. Liberation theology interprets the Bible through the prism of Marxism, yet no one asked how it could possibly be squared with the candidate's newfound faith in capitalism. Nor did anyone ask how a candidate vying for the presidency of the United States could admire a man who said such things as “God damn America” or “[T]he Jewish vote, . . . that's controlling [Obama]” or, concerning the September 11, 2001, terrorist attacks, “America's chickens are coming home to roost.” (Obama was eventually forced to disavow Wright and these statements, but only after intense media pressure.)