We meet at a trendy little café on Main Street in Peoria on a cold, sunny Monday afternoon. State Treasurer Alexi Giannoulias is on the campaign trail, and he has agreed to meet me to talk about his run for U.S. Senate. He smiles widely as he thrusts his hand out to meet mine in a firm, confident handshake. No doubt he’s had plenty of time to perfect that movement since taking office in 2006 at the politically-young age of 29.
“We’ve got to be in the Quad Cities by four,” he says, explaining why he’s ordering a quick slice of candy-encrusted cheesecake instead of a more healthy dinner. “Don’t tell my mother,” he says.
He is a man with style. His modern clean-cut suits and fine French cuffs help reinforce the persona of confidence and competence that he has cultivated during his time in Springfield. “I think I’m a pretty regular guy,” he says, showing the Hartmarx label on his Chicago-made suit. “I’ve always believed in looking professional. Even when you’re not at work, it’s important to look presentable….My days of going to the movies in sweatpants are over.”
Giannoulias is leaving behind more than the comfort of sweatpants. He’s leaving the Illinois Statehouse, pinning his hopes on a bigger dream in a bigger Capitol. He is running for the U.S. Senate seat once held by friend and basketball foe President Barack Obama, and he will need more than just his style and understated swagger to land in Washington, D.C.
Banking, basketball and Obama
In some respects, Giannoulias owes much of his success so far to basketball. It was on the basketball court, in between school at the University of Chicago and working part-time at the family bank, that he met Barack Obama, then a state senator with a competitive streak, on the court. Giannoulias left Chicago to play ball at Boston University before moving to Greece for a year to play professionally, but he didn’t forget Obama. He returned to the U.S. to attend law school at Tulane University in New Orleans, but it was back in Chicago, managing loans at the family bank, that their relationship developed into more than mere gym buddies.
Giannoulias worked hard to promote Obama when Obama ran for U.S. Senate, raising money and drumming up support everywhere he went. When Obama won the Senate race, he rewarded Giannoulias’ efforts with a shining endorsement as the young banker sought the state treasurer’s office. While their relationship has sometimes been characterized as a mutual back-scratching arrangement, Giannoulias says that’s not the case.
“I supported him when he ran for U.S. Senate because he’s one of the smartest people I’ve ever met, someone who understands and connects with people and genuinely believes in public service,” Giannoulias says. “When I ran for treasurer, I had to convince him why I was running, of what I wanted to do in this office, and that I had the experience to turn this office around. It wasn’t until I did that that he endorsed my candidacy.
“Is he a friend? Yes. Is he a mentor to me? Yes. He’s one of the reasons I ran for office in the first place, but we both believe in public service.”
Giannoulias has used much of his time in the treasurer’s office expediently. On his very first day on the job, he followed through with a campaign promise to ban campaign contributions from any company doing business with his office, earning him valuable marks on ethics in a state beleaguered by scandal. He installed the popular Green Rewards program, which gave tax rebates for hybrid vehicle purchases, and turned the state’s weak college savings fund, Bright Start, into one of the nation’s best. He scored points with military families by creating a scholarship for children who lost a parent in the line of duty, put pressure on banks to save jobs, and created the Cash Dash program to help Illinoisans claim lost bank boxes. He even created an eBay account for the state to auction contents of those unclaimed bank boxes.
Through all of this, he has made the office of treasurer relevant to the average Joe while also making a name for himself.
On top of the world
Giannoulias has raised a lot of cash in the Senate race — most of it, in fact. According to the Federal Election Commission, he has reported raising $3 million to date, meaning he controls 56 percent of all money raised in the Democrat race for U.S. Senate. That gives him a $2 million buffer between himself and the next largest Democrat fundraiser, Jacob Meister, who has just over $1 million. Meister only garners 1 percent of support in voter polls, however, making him more of a footnote than a threat.
Giannoulias’ only real competition in raising campaign cash is Republican Mark Kirk, U.S. representative from Chicago’s North Shore, who also reported raising nearly $3 million. This fact won’t truly come into play until after the primary, and that’s assuming both Giannoulias and Kirk make the cut.
Not only does Giannoulias dominate the Democrat field in fundraising, but the vast majority of his campaign money reportedly comes from individual donors. Just 2 percent of Giannoulias’ funding comes from the Democratic party and political action committees — registered groups formed to promote specific candidates or causes, sometimes seen as disproportionately powerful. The rest comes from more than 2,200 individual donations. PACs have contributed only $50,000 to Giannoulias’ campaign, and he denies taking any money at all from corporate PACs, giving him the ability to claim independence from powerful corporate lobbying interests.
Cash isn’t the only thing Giannoulias has going for him. His list of endorsements is 166 names long and contains U.S. representatives, state senators and representatives, Chicago aldermen, Democratic county chairmen, organized labor, special interest groups and more. Even Illinois Secretary of State Jesse White — running for reelection this year himself — has given Giannoulias an endorsement.
Giannoulias also leads other Democrat candidates by a wide margin in both name recognition and favorable opinion among voters statewide. A poll by the Chicago Tribune in December showed Giannoulias with 31 percent of voter support compared to 17 percent for Chicago Urban League president Cheryle Jackson and 9 percent for former Chicago inspector general David Hoffman. He did fall slightly behind Kirk in the poll, but those numbers compared the two candidates against candidates in their own party and may not represent the outcome of a race between the two frontrunners.
Despite the advantages he undoubtedly enjoys, Giannoulias makes an easy target for opponents — Democrat and Republican — who seek to knock him from his perch, and he continues to confront questions about his past decisions and associations.
Perhaps the most convincing argument raised against Giannoulias is his handling of the state’s Bright Start college savings program. In January 2009, Giannoulias announced that the program’s Core Plus investment fund had lost $85 million in value the previous year. He initiated a lawsuit against fund manager OppenheimerFunds, Inc., and announced a settlement in December 2009 that would see Oppenheimer return $77 million to Illinois. At that same time, Giannoulias revealed that 2009 losses to the fund put the total lost at $150 million, meaning Illinois would receive 51 percent of its losses back for a net loss of $73 million.
Hoffman says Giannoulias knew about the problem for months before he stopped allowing further investments in the troubled fund, claiming Giannoulias misled the public about the total amount lost until the settlement was announced. “He purposely misled the public and Bright Start victims about the size of the loss and how much he would recover,” Hoffman said in a press release. At a December candidates’ forum at the Union League Club of Chicago, Hoffman also questioned whether Bright Start was even one of the nation’s best.
E-mails from Giannoulias to Oppenheimer reveal Giannoulias did try to work with Oppenheimer to “turn the ship around” after learning of the problem. Greg Brown, a mutual fund analyst at investment research company Morningstar, Inc., says Oppenheimer is under fire in several other states for misleading investors about its risky investment leverage, pointing out that Giannoulias was the first state official to recognize a problem and attempt to fix it. “To Illinois and Alexi’s credit, they were the first to sound the alarm,” Brown says. “They met quickly with Oppenheimer and asked what on earth was going on. In my opinion, they reacted as quickly as they could.”
Giannoulias points out that the fund in question was only one of many funds included in Bright Start, and that only 3 percent of the program’s estimated $2 billion value was invested in the troubled Core Plus fund.
“Oppenheimer made some investments that were impermissible,” he says. “There was nothing structurally wrong with Bright Start. David Hoffman likes to say people lost 50 percent of their money, but that’s not true. At worst, if you had all your money in Core Plus, which is 3 percent of the people, you lost 38 percent. But with the settlement, you get half that money back, so you only lose maximum, with the market rebounding, about 15.5 percent. To make it seem like people lost 50 percent of their money is horribly inaccurate.”
Even so, the fact remains that some Illinois families lost money on his watch, and his opponents aren’t likely to let him forget it. As Giannoulias releases documents from the Oppenheimer settlement, he will likely face more tough criticism.
“It’s troubling,” Jackson said at the Union League forum in December. “It does speak to the people, the families, that need protection the most, that are the most vulnerable…that their money wasn’t better protected.”
There’s also the Bright Start hybrid vehicle fiasco, in which Giannoulias used fees paid by Oppenheimer to purchase a hybrid SUV that is used to promote the program. He has come under fire for purchasing the vehicle at the same time the Bright Start program was experiencing such heavy losses. Giannoulias defends the purchase, however, saying it was not paid for with taxpayer funds or with proceeds from the program, and it is not driven for personal use.
Another issue that has dogged Giannoulias relates to the family bank, where he served as a vice president in charge of loans from 2002 to 2006. Broadway Bank made loans to unsavory borrowers before and during Giannoulias’ time there, and his opponents and the media have questioned his involvement.
One such loan went to Michael “Jaws” Giorango, a convicted bookkeeper and pimp who borrowed money from Broadway Bank for a fleet of gambling boats in Florida. Though Broadway is not accused of any wrongdoing, Giannoulias has been questioned on the propriety of such loans, and some of his political detractors have whispered that the Giannoulias family’s ties with crime may go deeper than simple loans. Giannoulias himself plays down such assertions.
“It’s politics,” he says. “I think people are sick and tired of guilt by association.”
In the same vein is the claim that Broadway Bank bankrolled Tony Rezko, a political fundraiser convicted in federal court of money laundering and fraud in June 2008. Rezko has ties with impeached governor Rod Blagojevich, and he is accused of writing nine bad checks totaling nearly $450,000 in Las Vegas from a checking account he held at Broadway. The bank did not cover the checks, Giannoulias points out, saying that is proof the bank has nothing to hide. Rezko also received loans from the bank, and he is now considered to be in default, though Giannoulias says he was considered credit-worthy when the loans were issued.
“Tony Rezko has never supported me politically,” Giannoulias says. “Republicans like to make that claim, but there’s only one candidate that’s ever taken money from Rezko, and that’s Mark Kirk. I haven’t; he has.”
(Records from the FEC show Kirk accepted $1,000 from Rezko in 2000.)
Planning for the future
If Giannoulias should survive the questioning, the primaries and the general election to find himself in the U.S. Senate, what can we expect from him?
His first priority would be job creation, he says. “This is about jobs, jobs, jobs. We all have neighbors, family members who have lost their jobs,” he says. “Young people are looking at the worst job market we’ve seen in a long time. People who were supposed to be retiring are trying to hang onto their jobs. It’s really scary out there.”
How does he expect to spur job growth? Cut taxes for small businesses, he says, tax overseas profits for corporations shipping jobs elsewhere, and create a payroll tax holiday for low-to-middle-income individuals. Giannoulias also says he wants to enact better oversight of non-bank mortgage lenders, erase federal budget deficits, end unfair trade agreements with China and a slew of other policy goals.
For now, those are simply ideas floating in the ether. What matters now for Giannoulias is the Feb. 2 primary, when Democrat voters will decide whether he has a shot at following in the footsteps of Obama or whether this has all been a pipedream.
In the meantime, Giannoulias is positioning himself as a public servant in this race, rather than as a politician.
“I’m just doing it because I genuinely believe in helping people, and I think politics is a great avenue for true public service,” he says. “If we can get enough intelligent, capable, passionate, hard-working people in office who really care, we can make this world a better place. I don’t think that’s ever going to change, and the minute I stop feeling that way, I won’t run for office anymore. I’ll step aside.”
Contact Patrick Yeagle at firstname.lastname@example.org.