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A Project of The Annenberg Public Policy Center

Obama White House ‘Full of Wall Street Executives’?

A conservative group exaggerates the number of “Wall Street executives” in the Obama White House. In a major TV ad buy, the American Future Fund lists 27 people it claims are part of “Obama’s Wall Street Inner Circle.” But the ad is either flat wrong or greatly exaggerated in more than half of those cases. Among the most laughable examples we found of “Wall Street executives” in Obama’s “inner circle”:

  • A “White House fellow,” class of 2009-2010, who served in the Department of Defense, not the White House.
  • Treasury Secretary Timothy Geithner, who never worked for Goldman Sachs (as the ad falsely claims) or any other Wall Street firm.
  • Two men who were appointed by President George W. Bush, and who left not long after Obama took office.
  • Two men who never worked in the administration — including the president of the Federal Reserve Bank of New York, who was selected by the New York Fed’s board of directors (the majority of whom are appointed by member banks).
  • Two others who never worked for any Wall Street firm until after leaving the Obama administration.

It’s true that Obama raised a record amount of money from Wall Street for his 2008 presidential campaign, as the ad says. But Obama has had a rocky relationship with Wall Street executives since taking office — especially since signing legislation in the summer of 2010 that imposed tougher regulations on the industry.

The Geithner Myth and Other Exaggerations

American Future Fund, a 501(c)(4), announced Feb. 27 that it would spend nearly $4 million in nine states on a TV ad titled “Obama’s Wall Street.” It opens with a clip of Obama saying, “I did not run for office to be helping out a bunch of fat cat bankers on Wall Street.”

The ad then mocks those words with two facts that, while accurate, can use some context:

  • The ad correctly states that Obama’s 2008 campaign received $42 million — “more than any other candidate in history” — from “Wall Street bankers and financial insiders.” The ad cites an analysis of campaign finance data by the Center for Responsive Politics, which reported that Obama’s campaign raised $42.2 million from the “finance, insurance and real estate” sector. That’s up from the $35.9 million that Bush raised for reelection in 2004. Even when adjusted for inflation, Obama still raised more than Bush, although the gap is smaller: $42.2 million to $41 million.
  • The ad also correctly says that Obama, as a senator, voted for the Wall Street bailout in 2008. So did 73 of the other 99 senators — including Sen. John McCain, who was Obama’s opponent in the 2008 presidential campaign. The ad also fails to mention that Bush proposed the bailout and his administration lobbied for it.

The ad veers sharply from the truth when it claims Obama’s “White House is full of Wall Street executives.” The viewer is shown photos of seven people to support this claim — but more than half of them are bogus examples. One of them never worked as an investment banker (Geithner); two of them have resumes that fall far short of being “Wall Street executives” (Rahm Emanuel and Louis Caldera); and one was not part of the White House (Jon Corzine).

The most blatantly false example is Geithner, who is pictured along with the words “Goldman Sachs” and “$1.7 million estimate of  assets.” Despite a popular myth circulated on the Internet, Geithner never worked for Goldman Sachs. The New York Times wrote an article about how often this rumor has been misstated as fact, including in the venerable Washington Post.

Geithner, who was president of the Federal Reserve Bank of New York before joining the administration, had this comical exchange with Damon Silvers, deputy chairman of the Congressional Oversight Panel for TARP, at an April 21, 2009, hearing:

Silvers: All right. Let me stop you right there. What I don’t get–and I practice law, and you have been in banking — is a deal where —

Geithner: Actually–I have never actually been in banking. I have only been in public service.

Silvers: Well, a long time ago. A long time.

Geithner: Actually never.

Silvers: Investment banking I meant.

Geithner: Never investment banking. Spent my entire life in public service in the Treasury and at the Federal Reserve.

Silvers: Well, all right. Very well then.

In addition to Geithner, the TV ad stretches the truth by including photos of:

  • Rahm Emanuel, the president’s first chief of staff. It’s true, as the ad notes under his photo, that Emanuel reaped $16 million while working as an investment banker for Wasserstein Perella. But he worked there two and a half years. He spent nearly his entire professional life in politics and government. As Politico wrote, Emanuel worked on Paul Simon’s 1984 election to the U.S. Senate, served as a senior adviser and chief fundraiser for Richard M. Daley in 1989, and became a senior adviser to President Clinton in the 1990s. He was also a member of Congress from Illinois, and he is now the mayor of Chicago.
  • Louis Caldera, former director of the White House Military Office. It’s true that Caldera was a member of the board of directors for IndyMac Bancorp for six years, leaving in August 2008. Many public officials serve on the boards of major corporations. But his career has been in government and academia. He was a California assemblyman (1992-1997), chief operating officer of the Corporation for National and Community Service (1997 to 1998), U.S. Army secretary under Clinton (1998-2001), and president of the University of New Mexico (2003-2006). Prior to his appointment, Caldera was a law professor at the University of New Mexico. He is now vice president of programs at the Jack Kent Cooke Foundation.
  • Jon Corzine, an ex-chief executive at Goldman Sachs and former New Jersey governor. Corzine is a true Wall Street executive, but the TV ad goes too far in claiming Corzine was “Obama’s adviser on the stimulus.” Corzine, who endorsed Hillary Clinton for the Democratic nomination in 2008, was one of several people consulted by Obama’s campaign on the economy during the general election. But in 2009, Corzine was preoccupied with reelection, which he lost. Obama’s economic team was headed by Geithner and included Christina Romer, chair of the Council of Economic Advisers, and Lawrence Summers, director of the National Economic Council. Romer, Summers and Peter Orszag, the director of the Office of Management and Budget, were the main players in shaping the stimulus bill, as detailed by the New Yorker magazine.

Padding ‘Wall Street Inner Circle’ List

While the ad’s narrator focuses on these seven “Wall Street executives,” the names of 27 people scroll up the screen under the header of “Obama’s Wall Street Inner Circle.” It’s supposed to read like a Hall of Shame. But we found 14 of those names don’t belong on the list — including, as mentioned above, Geithner, Emanuel and Caldera.

Other names used to improperly pad the list include two Bush appointees: Stephen Friedman and Neel Kashkari, both former Goldman Sachs executives.

Bush appointed Friedman to the President’s Foreign Intelligence Advisory Board in 2001. He became chairman in 2006 and served until 2009. Likewise, Kashkari was the interim assistant Treasury secretary for financial stability under Bush. Kashkari had been “in charge of staffing TARP and helping to structure the government’s investments,” as the Wall Street Journal reported. He was asked by the Obama administration to stay in his position for a limited time after the inauguration, and he resigned in May 2009. He now works at PIMCO.

Others who don’t belong on the list are two men who never worked in the Obama administration: William Dudley and Adam Storch.

Dudley, a former chief economist at Goldman Sachs, replaced Geithner at the New York Fed. He was selected by the New York Fed’s board of directors after a two-month search by an outside firm. Storch went from Goldman Sachs to the Securities and Exchange Commission, where he works in the Division of Enforcement. Obama did appoint the SEC chairwoman, Mary Schapiro, but the agency itself was responsible for Storch’s hiring.

Then there is the curious case of Emil Michael — a White House fellow, class of 2009-2010. This supposed member of the president’s “inner circle” didn’t even work at the White House. His assignment was at the Pentagon. He was just one of 13 fellows selected for a one-year stint in government. Very few of the fellows actually work in the Executive Office of the President.

One true insider on the list — but not a Wall Street executive — is former White House counsel Gregory Craig. After leaving the administration, Craig joined the law firm of Skadden, Arps, Slate, Meagher & Flom in January 2010, and one of his clients is Goldman Sachs. He’s a lawyer, not a Wall Street executive. Prior to working at the White House, Craig was a partner in the high-powered Washington law firm of Williams and Connolly.

So, that means Craig was retroactively made a member of Obama’s Wall Street inner circle — as was Peter Orszag, the former White House budget director.

Orszag had no Wall Street experience before joining Citigroup after he left the administration. His background is in government and public policy. Prior to joining the White House, Orszag headed the nonpartisan Congressional Budget Office (January 2007-November 2008) and was an economist at the Brookings Institution (2001-2007).

As with Emanuel and Caldera, there were a few others on AFF’s “Wall Street inner circle” list who made their careers in government or academia — not Wall Street. They include:

  • Defense Secretary Leon Panetta, whose lengthy government resume includes being a congressional aide, a California congressman and a former chief of staff to Bill Clinton. He makes the list based on his six years serving on the New York Stock Exchange board of directors.
  • Larry Summers, a former Harvard University president who served as treasurer under President Clinton. Summers, who headed Obama’s National Economic Council, was managing director of the hedge fund D.E. Shaw after he stepped down as president of Harvard University in 2006. But he spent nearly his entire professional life in government or academia.
  • Diana Farrell, who worked under Summers at the National Economic Council. She worked just two years for Goldman Sachs in the late 1980s, from 1987 to 1989. Most of her career has been at the management consultant firm of McKinsey & Company, serving as the director of its research arm, McKinsey Global Institute. She was the institute’s director from 2002-2008.
  • Karen Kornbluh, who makes the list because she briefly worked about 20 years ago as an economist at Townsend-Greenspan & Co., where she started as an intern. Her background is almost exclusively in government. A graduate of Harvard University’s John F. Kennedy School of Government, Kornbluh has worked for Sen. John Kerry (1991-1994), the Federal Communications Commission (1995-1997), the Treasury Department (as a deputy chief of staff in the Clinton administration) and for Obama (2004-2008). She is now the U.S. ambassador to OECD.

The ad wraps up by saying “Wall Street sure supports President Obama.” It includes a headline from a Washington Post story to show that Obama is continuing to raise big money from Wall State execs despite the new Wall Street regulations. The Post story was based on combined fundraising by the Obama campaign and the Democratic National Committee. But as the story also noted, “Obama’s [fundraising] numbers look much worse” compared with Republican Mitt Romney when the DNC funds are not included. That’s still the case. Center for Responsive Politics data show Romney has received $12.5 million from those in the finance, insurance and real estate sector — more than double Obama’s take of $5.2 million.

Certainly, the American Future Fund has a point about the massive amounts of money the Obama campaign raised in 2008 from Wall Street executives. The jury is still out, though, as to whether such executives will support him more than the Republican nominee.

For sure, Obama has hired some Wall Street executives to serve in the White House — including White House budget director Jacob Lew (Citigroup) and former chief of staff William Daley (J.P. Morgan Chase). He also has appointed some long-time investment bankers — including ex-Goldman Sachs executives Gary Gensler, who chairs the Commodity Futures Trading Commission, and Phil Murphy, U.S. ambassador to Germany. But in its zeal to build its case against Obama, American Future Fund strains credibility by padding its list of “Obama’s Wall Street Inner Circle” with a majority of people who don’t belong.

— Eugene Kiely, with Scott Blackburn, Lalita Clozel and Dave Bloom

Correction, March 1: In our original report, we misidentified the position Adam Storch holds in the SEC. His title is managing executive of the SEC’s Division of Enforcement. He reports to Robert Khuzami, the director of the division. We also originally said the ad was from a political action committee, but it is sponsored by American Future Fund, a 501(c)(4), not the group’s PAC.