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http://money.cnn.com/2011/05/16/news/companies/bill_daley_barack_obama_business_ties.fortune/index.htm

Bill Daley: Obama's business whisperer


Chief of staff Bill Daley (far right) meets with President Obama in the Oval Office in February.


FORTUNE -- Bill Daley doesn't tweet. He's not a big fan of e-mail. When Daley wants to connect, he picks up the phone and, depending on the situation, proceeds to cajole, console, commiserate, counsel -- or some combination thereof. It is a skill he's honed in more than two decades as a counselor to restless lawmakers, presidential candidates, and CEOs -- and one he's now employing as President Obama's new chief of staff and unofficial troubleshooter of the administration's badly damaged relationship with corporate America. "I've always thought politics was about relationships and people," Daley tells me in a rare interview (over the telephone, of course) about himself. Practicing politics, he adds, is not like practicing a golf swing. "It's about engaging people, listening to them, understanding what motivates them."

That solicitous mindset, which sounds almost quaint in today's hyperpartisan environment, was one he learned from his father, legendary '60s and '70s era Chicago Mayor Richard J. Daley. (Brother Richard M. Daley until a few months ago also was the city's mayor, serving 22 years.) Bill Daley took his dad's machine brand of politics for a spin through corporate boardrooms and into presidential campaigns. Now ensconced in the service of another Chicagoan, Barack Obama, Daley, 62, brings with him a lifetime roster of friends from the stratosphere of American power -- from Bill Clinton (who appreciated Daley's service as his Commerce Secretary but especially liked him as a golf partner) to corporate bigwigs like AT&T (T, Fortune 500) CEO Randall Stephenson and J.P. Morgan (JPM, Fortune 500) chief Jamie Dimon. ("I miss him terribly," Dimon says of Daley, who was Midwest chairman at the bank and oversaw its government relations.)

Daley, who took over the job from Rahm Emanuel in January, faces a daunting task: Not since Jimmy Carter sat in the Oval Office during the inflation-plagued 1970s have business leaders -- many of whom supported Obama in 2008 -- soured so badly on a President so quickly. A big reason for this desertion is Obama's policies -- massive health care and banking reforms clearly rankled them. But executives particularly dislike the way the President talks about business. CEOs accustomed to viewing a White House invitation as an honor (and a chance to proffer self-interested advice to the leader of the Free World) quickly learned that a summons from Obama was just as likely to result in a scolding for causing a painful recession. "I fully understand and appreciate the anger people were feeling, but I think the rhetoric itself in Washington was damaging to the economy, demeaning to business, and hurting consumer confidence," says Dimon.

In Daley, business leaders have a kindred spirit in the White House. Before he became chief of staff, Daley was on record criticizing the health care bill and worrying that the administration had moved too far left. Those who know Daley say he wasn't just shilling for his employer at the time, J.P. Morgan; he's a moderate and a pragmatist whose views are shaped by his broad, bipartisan network of associates. And for Daley, politics is all about personal networks. Just listen to how he sums up Obama's problems with business: "The relationships weren't there," he says bluntly. In his first two years in office Obama had "no one from the business world" around him. "People like Valerie [Jarrett] worked to change that. But he didn't have those long relationships, and that raised more cynicism."

Being wired has served Daley well in his own rise to power. Here's how Daleyworld works: Decades ago, his father helped launch the career of the powerful House Ways and Means Committee Chair Dan Rostenkowski, who treated Bill like a son. That friendship made Bill especially valuable as a corporate lobbyist -- and later as Bill Clinton's point man on the North American Free Trade Agreement in 1993. When the trade deal passed, Clinton rewarded Daley with the Commerce Secretary job, which made him especially useful to AT&T's Ed Whitacre, who hired him to manage its struggles with regulators. Flash-forward a few years, to 2010: Daley has moved to J.P. Morgan and Whitacre is at the helm of General Motors (GM, Fortune 500). "Bill would call me and ask, 'Can we help in any way?'" recalls Whitacre. The result, says Whitacre: J.P. Morgan was chosen to help underwrite GM's first IPO.

This web of friendships unnerves Obama's supporters on the left -- and it isn't clear it will translate into support from the business community. The reality is that, even with Daley running his White House, Obama's business policies are likely to change only around the edges: more push on free trade, and possibly some tax reform.

Indeed, Daley's corporate charm offensive has already run up against his boss's politics: Since January, Daley has been in constant phone contact with one of Obama's most vocal critics, U.S. Chamber of Commerce president Thomas Donahue, and he pushed President Obama to visit the trade group in February. But when the White House last month issued an executive order forcing businesses seeking government contracts to disclose their political contributions, the Chamber wasted no time denouncing Obama, calling the order an "egregious attempt to intimidate business."

A inside man from the start

Bill Daley grew up in the Irish working-class Bridgeport neighborhood, with the old Comisky Park looming on one end of the block and Nativity of Our Lord church on the other. Besides Catholicism, the family religion was baseball. Mother Eleanor (known as "Sis") was a rabid White Sox fan. In between baseball games and classes at St. Ignatius College Prep there were visits to the White House and photo ops with world leaders paying their respects to Daley's famous dad. (When Daley went to see Obama about the chief of staff post, he experienced a moment of déjà vu waiting in the same room where he and his family had gathered to offer private post-inaugural congratulations to John F. Kennedy.) At age 11, Bill and his family dined with Queen Elizabeth II. At age 18 he was President Lyndon B. Johnson's overnight guest in the Adams Room. The youngest of seven kids, "Bill was very quiet," says brother John, Cook County commissioner.

Bill Daley seriously considered going into the family business on a few occasions, most recently weighing a run for Illinois governor in 2010, just before the implosion of Rod Blagojevich. Ultimately he decided not to run (it would have just been "an ego thing," he says) and instead continued a course set early in life -- operating behind the scenes.

Early on Daley established himself as a strategic thinker and power broker who knew how to close a deal. Starting in the 1980s, he helped build the lobby operation of the influential Chicago-based law firm Mayer Brown, both in Illinois and Washington, where his friendship with Rostenkowski proved a boon. "The firm profited from [Daley] greatly," says longtime partner Mickey Kantor, who also applauds Bill's "analytic skills."

In 1989, Daley burnished his corporate credentials, taking a job as vice chairman, and eventually president, of Mayer Brown client Amalgamated Bank. Says longtime Chicago political consultant Don Rose: "There's a sweetheart relationship between a dozen law firms and banks that benefit from city business. Nothing illegal, just routine business in Chicago. Bill is a very talented guy, but there's also the fact that he was related to the most powerful mayor in the country" -- brother Rich, who was elected that same year.

Daley returned to Mayer Brown, where he helped deliver Illinois to Bill Clinton in the 1992 campaign. The new President rewarded him with a lucrative board position at Fannie Mae, a post he held from 1993 to 1997. The President also recruited him to secure passage of NAFTA -- a bill that seemed so doomed by fierce opposition from unions and their Democratic allies that Clinton dubbed it the "Lazarus Project."

Daley raised NAFTA from the dead by tapping his powerful network, including Rostenkowski, and doing some shrewd political horse-trading. According to Kantor, the entire Florida congressional delegation was against the deal until Daley learned of their concerns about Environmental Protection Agency prohibitions on a widely used crop herbicide in the state. Daley helped persuade the EPA to give the state a waiver for use of the herbicide, and won over all but one Florida vote. "Bill understood what they needed," Kantor says.

It wasn't long before he was handed another troubled project to repair: In the summer of 2000, Vice President Al Gore -- his presidential campaign mired in indirection -- called on Daley to bring discipline to a campaign filled with big, and often competing, personalities.

On Election Night it was Daley who stepped out into the rain to tell Gore supporters that the race was too close to call. And during the tense 36-day recount battle, when the leadership of the U.S. hung in the balance, Daley stayed behind the scenes, favoring a cautious -- and, as he would later put it, "realistic" -- approach throughout the proceedings.

Gore ultimately lost the election to George W. Bush, but Daley forged a fast friendship with his counterpart in the rival camp, Bush campaign chair Don Evans. When Evans -- an oilman with little Washington experience -- was appointed Commerce Secretary, Daley threw him a welcome-to-D.C. party.

Politically agnostic or shrewd operator?

The willingness and ease with which Daley reaches across the aisle has earned him the respect of several key Republicans -- and the suspicion of many liberals. (His bipartisanship may be politically expedient, but it is also a family trait: Brother Rich kept a photo on his mayoral desk of George W. Bush beaming, with Rich and Bill on either side. "The rose between the thorns!" the Mayor quips to me.) Daley counts the Bush family as friends, and James A. Baker, who served as chief of staff to President Reagan and the senior President Bush, has only nice things to say about Daley: "Bill will be good at smoothing things out with a business community that really felt bruised, that felt looked on as greedy profiteers."

Liberals also look askance at Daley's corporate stints. In late 2001, Daley was recruited by the telecommunications giant SBC Communications -- now AT&T -- with a $1.1 million signing bonus and $612,000 salary. His mission: to help the phone company secure regulatory relief from rules that required it to share its network with competitors at discounted rates. "We were in the throes of regulatory hell at the time," recalls AT&T CEO Stephenson, who was chief financial officer at the time. "Our business was stressed like I've never seen it."

Ed Whitacre, then CEO of the company, needed someone to open doors with state and federal lawmakers and find a way to convince Democrats that changing the rules wouldn't hurt consumers. One name stood out: Bill Daley. "He could give us entrée into some of these places in states, and also at the federal level," Whitacre says. (A federal appeals court eventually rejected the line-sharing rules; the phone companies have turned their focus to wireless.)

At his next corporate post Daley expanded his responsibilities beyond government relations. He joined J.P. Morgan in 2004, and within two years Daley had become a member of the 15-person operating committee and a personal sounding board for CEO Dimon -- including on how to position the bank's image with regulators and the public during the financial crisis and taxpayer bailout. Daley had always understood the importance of optics in politics. When the 1996 Democratic Convention came to Chicago, he put former Vietnam War protester Tom Hayden on stage to close the door on memories of the 1968 violence. He brought that same talent to J.P. Morgan, urging the bank to drop its fight and make changes on credit card billing before new rules went into effect. Daley was richly rewarded for his work at the banking company, earning a pay package of $8.7 million -- 180 times the average American's pay, some bloggers noted. Even a strategist such as Daley couldn't change the optics on that one.

Obama's low profile Mr. Fix-It

When President Obama came into office, declaring his intention to change the way business was done in Washington, he prohibited his administration from hiring lobbyists. Daley had spent much of his career opening doors to regulators and lawmakers -- for Mayer Brown clients, for SBC and AT&T. He hired J.P. Morgan's Washington lobbyist. But technically he wasn't a registered lobbyist. And so when Obama, disdainful of lobbyists, decided he needed one at his side, he tapped Daley. The two Chicagoans were not personally close: Obama -- the Hyde Park liberal and law professor -- sees politics as an intellectual exercise; for Daley -- a product of working-class Bridgeport and the Daley machine -- relationships trump ideology.

In his four months on the job Daley has imposed his signature discipline, keeping the President's advisers in their own lanes and maintaining a low profile (unlike Emanuel -- now mayor of, yes, Chicago). He helped broker the recent budget agreement among Senate Democrats, House Republicans, and the White House, thanks in part to, you guessed it, a personal alliance, this time with House Majority Leader John Boehner, a fellow Midwesterner whom he's known for 20 years. It's true, Daley tells me, that relationships can't necessarily overcome basic philosophical differences. "But if there is a personal relationship, there is a comfort that if you say you'll do A, B, and C, you'll do it."

Yet for all his talk about connections and ties Daley sounds surprisingly unconcerned about wooing executives. He tells me he's advised the President not to waste a lot of time worrying about irate business leaders. "If our policies work and the economy is improving," they will come around, Daley argues. "People in the business community respect strength and results. There is outreach. We are listening to stakeholders, but that's all they should expect.

"They are not going to own or think they can own President Obama's administration." Like a good Mr. Fix-It, Daley hasn't forgotten who he works for.


Eric D. Schwerin
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
eschwerin@rosemontseneca.com
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