The president’s support for Illinois senatorial hopeful Alexi Giannoulias is an unwanted reminder of the Windy City’s unsavory politics.
By KIMBERLEY A. STRASSEL
THE WALL STREET JOURNAL
JULY 23, 2010
White House Press Secretary Robert Gibbs sent his party into a tizzy when he recently acknowledged that Democrats might lose the House this fall. A better indicator of how anxious the White House is about midterms is the news that President Barack Obama is headed to Chicago to fund raise for Alexi Giannoulias.
Mr. Giannoulias is running for Illinois’s Senate seat. That would be the seat vacated by Barack Obama, put up for bid by indicted former Gov. Rod Blagojevich and currently occupied by the ethically tarred Roland Burris. In keeping with this pedigree, Democrats have nominated the 34-year-old Mr. Giannoulias, Illinois state treasurer and heir to a family bank seized this spring by the feds.
In the heat of the Blagojevich corruption trial, and in the wake of Congress’s “financial reform,” the last person Mr. Obama wants to be stumping for is a failed banker who radiates Chicago politics. But it was the president who created this nominee and the White House that is now stuck with the liability.
Mr. Giannoulias met Mr. Obama on a Chicago basketball court and later introduced the politician to his banking family’s money, as well as Chicago’s Greek donor community. Mr. Obama would claim this was “critical” to his 2004 Senate victory, and two years later he repaid the favor. The 29-year-old Mr. Giannoulias worked in the family bank and had no political or policy experience. Yet when he decided to run statewide, Mr. Obama turned on his star power, narrating expensive TV slots that described Mr. Giannoulias as “one of the most outstanding young men that I could ever hope to meet.” He became Mr. Obama’s candidate and sprinted to a primary victory.
Mr. Obama continued to swing for Mr. Giannoulias right through the news that the Giannoulias’s Broadway Bank had loaned millions to Michael “Jaws” Giorango, a convicted bookmaker, as well as other crime figures. He stuck with him through the news that some of this money had been disbursed when Mr. Giannoulias was the bank’s senior loan officer.
And Mr. Obama stuck with him when even the Democratic speaker of the Illinois House, Mike Madigan, refused to endorse Mr. Giannoulias. “My history in politics, if you were alleged to be connected to the mob, you were done,” said Mr. Madigan in the run-up to the 2006 treasurer’s election.
The president got his reward when Mr. Giannoulias leveraged his new political clout to raise funds for the Obama presidential campaign. Mr. Obama would also take donations from Giannoulias family members and at least one Broadway Bank manager. A few local papers noted the gap between Mr. Obama’s new-politics rhetoric and his old-politics Giannoulias ties, but most media ignored it.
It wasn’t until late 2008, when the Blagojevich affair touched on the president-elect, that the White House began to realize how toxic these relationships might prove. It scrambled to recruit Illinois Attorney General Lisa Madigan for the Senate run, to sideline Mr. Giannoulias. But Ms. Madigan declined and Mr. Obama’s protégé wouldn’t be deterred.
His primary opponent, David Hoffman, resurrected the mob story line, leading to new details about Mr. Giannoulias’s lending history. He’s been under fire for mismanaging the state’s college savings program. The Blagojevich trial has rekindled interest in the Senate nominee’s older brother, Demetris, who was pushed for a state board position by convicted Obama fund-raiser Tony Rezko. Mr. Blagojevich appointed him in 2004, and then reappointed him a year later, 33 days after Mr. Giannoulias’s father donated $10,000 to the Blago campaign.
Then in April federal regulators seized Broadway Bank. Records showed the bank’s lending profile changed sharply after Mr. Giannoulias came on full-time in 2002. His lending department doubled down on the risky real estate loans that helped shred the housing market; Broadway piled up losses. Mr. Giannoulias prospered.
No doubt Mr. Obama can’t wait to arrive on Aug. 5 to raise money for one of those, ahem, “fat cat bankers.” And he’ll be landing in Chicago just as the Blagojevich trial is raising uncomfortable questions about Mr. Obama’s Chicago connections and his role pushing his friend Valerie Jarrett for the Senate seat. The state Democratic establishment is dutifully holding “Vote Alexi” signs, but many are bitter that the White House landed them with this guy. It won’t be a pleasant visit.
Republican opponent Mark Kirk has been running as a common-sense reformer and leading Mr. Giannoulias in polls. And earlier this month came the humiliating news that the Democrat had raised a piddling $900,000 in the second quarter, compared to Mr. Kirk’s $2.3 million. News of the White House fund raiser came a few days later. The intervention shows how worried the Obama team is that not just the House, but the Senate, could be in play.
Write to kim@wsj.com.
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