President-elect Barack Obama’s first major personnel decision brings a man well-known in hedge fund circles into his inner circle.
Rep. Rahm Emmanuel (D-Ill.) accepted the Illinois senator’s offer to become his chief of staff when the Obama administration begins on Jan. 20 yesterday. Emmanuel, who served as a staff in Bill Clinton’s White House before winning election to Congress, representing part of Chicago, sponsored a bill that would have prevented hedge fund managers from deferring taxes on offshore compensation. Despite his sponsorship of that measure, Emmanuel was popular among alternative investment firm employees: According to the Center for Responsive Politics, Emmanuel was the largest recipient of donations from workers at hedge fund and private equity firms this election cycle.
While he backed the effort to close the deferred compensation loophole, Emmanuel was not as gung-ho as some of his colleagues when it came to raising taxes on the alternatives industry. He opposed closing the so-called “carried interest” loophole, even writing a memo offering several options to keep it.
After leaving the Clinton administration, Emmanuel spent two-and-a-half years at boutique investment bank Wasserstein Perella Group, earning more than $10 million. He also served on the board of directors at mortgage giant Freddie Mac in 2000 and 2001.