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Rahm Emanuel’s $18.5 million paychecks: How did he do it?

Kindergarten student MaliHarringtgot some attentifrom Rahm Emanuel mayoral candidate  as he visited with students faculty February 7 2011 Bucktown

Kindergarten student Malia Harrington got some attention from Rahm Emanuel, mayoral candidate, as he visited with students and faculty on February 7, 2011 at the Bucktown International Charter School. | Al Podgorski~Chicago Sun-Times

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Updated: March 9, 2011 12:16AM

Is there anything wrong with mayoral candidate Rahm Emanuel making $18.5 million dollars as an investment banker in the 2 ½ years after he got out of the Clinton White House – much of it from Clinton donors?

“I defy you to tell me anybody you know who jumped out of government into a business for which he had no credentials or background, made $18.5 million in two years and then jumped back into government,” said Gery Chico, Emanuel’s rival for the mayor’s office.

“I’m not saying it’s illegal, but let’s call it what it is: As an insider he took advantage of the knowledge and contacts he made at the White House to make money,” said another rival, City Clerk Miguel del Valle. “He made a hell of a lot of money in a short of amount of time. How many people have that kind of opportunity, to go from being on the inside to being on the outside, take advantage of the fact you were on the inside to make $18.5 million?”

What credentials did Emanuel present to go to work in investment banking after a career raising campaign funds for Mayor Daley and President Clinton, then advising Clinton on policy issues?

“There is, in that culture, two types of bankers: a person who knows the numbers, industry specific; and a person who kind of also deals with relationships,” Emanuel told the Sun-Times editorial board. “I was what was considered, at that time, although I don’t think this is really interesting, relationship banking, and that’s what I did.”

Chico scoffs at Emanuel’s explanation.

“What does that mean? What’s a relationship guy? I never heard of that,” Chico said.

“He was a managing director of Wasserstein, Perella [& Co.]. How’d you get that spot? No banking experience — why am I going to hire you? He said he was a relationship manager. What’s a relationship manager? What relationship was he bringing? He was bringing in donors to the Clinton administration.”

Experts said Emanuel’s earnings put him in the top 5 percent of investment bankers. But some who watched Emanuel rake in the bucks during his brief foray into investment banking say he played the same rules as everybody else and just did it better. He had the advantage of a “golden Rolodex” coming out of the Clinton White House.

“I worked in the private sector and was remunerated as a private sector [employee],” Emanuel said.

In 1998, As Emanuel prepared to leave his post in the Clinton White House, Bruce Wasserstein, a major donor to Clinton and other Democrats, sent the head of his Chicago office to interview Emanuel about coming to work for his firm.

Despite his lack of experience, Emanuel was made managing director of the Chicago office in 1999 and put together several big deals.

“One of them, a merger between the Chicago Unicom and Philadelphia Peco, that merger not only kept the corporate headquarters here and expanded it so Chicago has one of the leading energy companies here in the city of Chicago,” Emanuel said.

That $8.2 billion merger created Exelon, parent company of Commonwealth Edison. The Obama White House tapped Exelon CEO John Rowe to lobby lawmakers to support the administration’s greenhouse gas-reducing legislation. Obama senior adviser David Axelrod has worked for Exelon.

“John Rowe and I had known each other, and when I came out of the White House, he called me and said, ‘We’re looking at doing a merger, would you guys be willing to be our banker?’ Wasserstein, Perella, we had expertise in that area,” Emanuel said.

The newly merged utility ended up laying off 3,350 workers, or 10 percent of its work force.

Emanuel also oversaw GTCR Golder Rauner’s purchase of SecurityLink from SBC Ameritech, where Emanuel’s successor as White House chief of staff, William Daley, would later become firm president.

“GTCR private equity in Chicago bought from SBC their home security business,” Emanuel said. ”That turned out to be a great business deal for the investors as well as the company, which was eventually bought by Tyco [Intl. Ltd.]”

Wasserstein, Perella was sold twice during his tenure, and Emanuel profited handsomely each time, he said.

Some of Chicago’s investment bankers who watched Emanuel work say there is no reason to be surprised or upset he earned so much money in such a short time in the business.

“Look, he’s a smart guy, he knows a lot of people — he’s got a golden Rolodex, incredible access, great recognition, he can get the right people in front of the decision-makers,” said Jeffrey Golman, head of investment banking for Mesirow Financial.

“You don’t need any special training to be a good banker,” agreed John Canning Jr., chairman of Madison Dearborn Partners and an Emanuel supporter. “He understood synergies and he understood business. He had the interpersonal skills, and he also had the smarts, and he’s aggressive.”

Emanuel made such strong contacts in the investment banking community that they contributed $1.5 million to his first run for Congress in 2002 and $5.8 million to the Democratic Congressional Campaign Committee when Emanuel headed it in 2006. They make up a large part of the $12 million he has raised in this mayoral run.

Chico, del Valle and former Sen. Carol Moseley Braun have also hit Emanuel for taking $360,000 as a board member for mortgage giant Freddie Mac.

Emanuel said investment banking was a nobler option to make money than writing a kiss-and-tell book or becoming a lobbyist after he left the White House.

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