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Obama turns away from longtime Democratic supporters in N.Y.

By Jason Horowitz
Wednesday, July 21, 2010; C01

President Obama will travel to New York this month to survey the ruins of the Democratic fundraising hierarchy he helped destroy.

On July 28, the president will attend two private dinners in Manhattan to benefit the Democratic National Committee. He'll be guest of honor for a $30,000-a-head event at the four-story Sullivan Street townhouse of Vogue editor Anna Wintour, who is an outsider to the traditional fundraising firmament of Wall Street investors.

That more moneyed club -- which views even the arbiter of high fashion as part of a lower circle of donor -- will have its own earlier event at the Grill Room at the Four Seasons. That venue wasn't the first choice of these insiders. The White House nixed an earlier plan to hold the dinner at the home of Marc Lasry, a major Wall Street figure and supporter of the president.

The message was clear. Obama has dismantled the old apartment circuit traveled by past Democratic standard-bearers and has no interest in putting it back together again. He has turned his back on a tradition of aggressively raking in financial sector dollars, but also of soliciting, in intimate settings, the unfiltered feedback of the captains of an industry he is transforming.

"That era is over," said John Catsimatidis, a supermarket magnate who hosted the Clintons several times at his apartment and threw a fundraiser for Obama when he was a senator. The donor hosted so many events in his place that "my apartment was probably wired by the Secret Service," he ventured.

* * *

During the 16 years that Bill and Hillary Clinton reigned over the hub of Democratic fundraising, an expansive network of investors welcomed the president and other top elected officials to a treasure map of fabulous apartments. But first among equals in this closed circle was the husband-and-wife team of Maureen White and Steven Rattner.

The palatial Fifth Avenue apartment owned by the couple -- she a former DNC finance chair, and he a New York Times reporter turned billionaire investor turned Obama administration "car czar" -- served as the nation's Democratic fundraising flagship. Its grand marble foyer with space enough for their kids to play street hockey, its salon overlooking the Metropolitan Museum of Art and its trays of caramelized bacon appetizers were well known to a perpetual guest list of Democratic candidates and office holders.

White said that her close personal friendships with the Clintons, Al Gore and John Kerry, as well as her official title, "empowered us by default." But she also argued that "there was a climate that was really conducive to raising money for Democrats" and that her place was only one stop in a larger community. There was "a great team spirit," she said. "We had a lot of fun together and we were friends. There was a sense of mission and camaraderie."

Her apartment is no longer the headquarters it once was, White argued, because, for starters, big donors are no longer as important in the age of campaign finance reform and Obama's small-dollar Internet model. She and Rattner have recently limited their activity to supporting Reshma Saujani in a local congressional race and Harold Ford Jr. in a quixotic Senate bid. The reason, White insisted, had more to do with a transformed fundraising climate, and an expanded role she was poised to assume in Washington as a senior adviser to Ambassador Richard Holbrooke on humanitarian issues in Afghanistan.

There is, though, another factor.

Rattner, a onetime Treasury Secretary aspirant, has become embroiled in a New York state pension fund scandal. There is unanimity among the dozen donors and Democratic officials interviewed for this article that the scandal is keeping any president, presidential candidate or prominent political figure from crossing Rattner's threshold.

* * *

Other longtime insiders are also newly out of the money game.

For example, Hassan Nemazee, the finance chairman for the presidential campaigns of Kerry and Hillary Clinton, served homemade Chinese food at his Park Avenue home to practically every Democratic presidential candidate, and was especially close to Joe Biden. Last week, a New York judge sentenced him to 12 years in prison for defrauding three banks of $292 million.

The exodus is far from limited to investors shadowed by a cloud of scandal. Absent from the Four Seasons will be some of the most prominent donors of the past decade -- investors like Bernard Schwartz, Roger Altman and Alan Patricof, who was so close to the Clintons that a spy from the recently exposed Russian espionage ring thought she had scored a major coup just by infiltrating the company that did Patricof's taxes.

Obama is in no rush to build a new establishment. Unlike his predecessors, he is keeping his distance from Wall Street, and Wall Street, not surprisingly, has largely soured on him and his overhaul of the financial sector. But speaking on the condition of anonymity to explain the hard feelings toward the president, many of his most generous donors express a more personal grievance, as well: They have been treated like pariahs. Obama has not only denied them government jobs, but thank-you letters and White House invites. He has not anointed a new first couple of fundraising. (The White House press office declined to comment about the president's attitude toward fundraisers.)

"There is no new Maureen and Steve, there is no donor leadership, there is no team to join," lamented one prominent Democratic donor in New York, who spoke on the condition of anonymity so as not to offend the administration, which he still supports. "There is no place, no home to get together and say, 'What are we doing next? Who is coming to town next?' That is not in the equation."

The circumstances surrounding the president's New York visit make that new math clear.

According to multiple sources with knowledge of the planning of the Four Seasons event, but who would not be quoted speaking about private negotiations, DNC finance committee staffers, having confirmed the president's availability for July 28, scouted out a suitable location for the dinner. It was a tall order. Wall Street leaders are dismayed with the president's economic policies and his vilification of their business practices. They are not, to put it mildly, in a giving mood.

In the first week of July, the party's fundraising officials reached out to Obama's core financial team, including Lasry, a founder of the hedge fund Avenue Capital Group. Lasry, along with his wife, Cathy, was a longtime supporter of the Clintons' campaigns -- and even a former employer of Chelsea Clinton. Inside his Upper East Side red-brick townhouse, a vast collection of oils by Degas and Monet, Pissarro and Chagall hangs over 11 fireplaces. (Here, too, Chagall once lived and painted -- and decades later, Michael Jackson resided.) More important for Wall Street players upset with Obama, the house presented neutral territory. Lasry corralled a dozen supporters willing to pay the $30,000 dinner donation, with the understanding that the event would allow for frank concerns about Obama's policies to be aired in confidence.

After discussions with DNC representatives, Lasry considered the event a done deal, so firm a date that the host confirmed to the city's biggest bundlers of political donations that the president had agreed to attend a 6 p.m. dinner. The guest list, the e-mail said, was limited to 40 so that each person would have face time with Obama.

But a DNC official, who wouldn't be quoted speaking about the private events, said that while Lasry's home was one of many options, his event was never confirmed. The White House, the official said, was always informed that Lasry was a potential host. The DNC then independently determined, according to the official, that the event should be held elsewhere.

Multiple sources within the donor community and the White House itself offered a different version. Their understanding: Political director Patrick Gaspard vetoed the idea as soon as it crossed the administration's radar.

One concern was that the president would be consorting with Wall Street bigwigs at the home of a pioneer in the distressed debt market in the days after signing regulatory reform. The White House political shop suggested the DNC pick a public setting instead, and thus the Grill Room. The DNC then explained to Lasry that his capacious townhouse was too small. He said he would gladly attend the relocated event, but most of the donors he had brought on board dropped out.

* * *

In the run-up to the 2008 presidential campaign, Obama seemed to be constructing his own Establishment He Could Believe In by wooing some of the city's biggest bundlers and by cultivating a new generation of donors from the investing ranks.

According to many donors in the Obama fundraising orbit, Jane Hartley (the CEO of the Observatory Group) and her husband, Ralph Schlosstein (the powerful investor and Evercore CEO), seemed the logical successors to White and Rattner. Their Park Avenue apartment, adorned in abstract art and scented with fresh orchids, hosted Obama multiple times during his candidacy. The president kicked off his general election campaign with a fundraiser at the apartment June 4, 2008, a day after the last primary. This April, Chief of Staff Rahm Emanuel made a rare visit for an Obama administration official to the apartment, telling a reception of about 60 business leaders and bundlers about the administration's regulatory reform plans, the approach toward Israel and Supreme Court candidates. He joked that everyone should take home a work of art. In May, the couple garnered a coveted invite from the White House to the state dinner honoring Mexico.

But Hartley said she isn't interested in alpha status among donors.

"In the old days there was a fairly small group of people," said Hartley, one of Obama's most dependable donors. She argued that the presidential campaign injected new life into the circuit by bringing a wider breadth of contributors into the fold. "It was new people and it changed the whole dynamic, and changed it going forward. It is never going to be the same. In my view that's positive."

Hartley, who is attending the Four Seasons event, said that any emphasis on where the meetings occur misses the point of the gatherings: The Obama era in New York is about the democratization of the fundraising circuit and the abolishment of an exclusive hierarchy, not the creation of a new one.

Like other Obama bundlers, she cited the swell in small Internet donations that dwarfed the traditional model. But now that the enthusiasm has ebbed, many leaders in the donor community are questioning the wisdom of letting the Democrats' once well-oiled fundraising apparatus fall into disrepair.

"It's important to remember that the donor leadership is part of the grass roots," said Robert Zimmerman, a Long Island-based bundler who was close to the Clintons and Gore. "They want to feel connected to the mission, and they have the career experiences and perspectives that are essential to the success of the mission."

That is certainly not the case these days in New York.

"One thing is for sure," said one early supporter of Obama who plans to attend the Four Seasons dinner and would not be identified speaking about the private event. "There is going to be some frank dinner conversation."

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