NEW YORK — Supporters of Antonio Weiss knew the Wall Street banker’s nomination for a top job at the Treasury Department was in deep trouble the morning of Dec. 5.

Kirsten Gillibrand, Democratic senator from New York, went on MSNBC’s “Morning Joe” and refused to say if she would back the Lazard banker. And she made clear who was really calling the shots. “I think Senator Warren’s very clear,” Gillibrand said, sounding a bit like the Massachusetts senator’s press secretary. “She believes that, as the person responsible for how consumers are affected, his background and his experience don’t fit the requirements.”


Weiss supporters in the White House and on Wall Street were stunned. They expected some opposition from the left but not the explosion that greeted the nomination. Never mind that, as undersecretary for domestic finance, Weiss would not be the person chiefly responsible for consumer financial protection — Warren created a whole separate agency for that — or that neither Gillibrand nor Warren had ever met or spoken to the man.

The verdict was in. And it was bad.

“That moment stunned me,” said one close friend of Weiss. “For a senator from New York who is ostensibly part of the sensible center to say this, I was just flabbergasted.”

Senior White House officials, led by chief of staff Denis McDonough and counselor to the president John Podesta, would continue to work the phones and argue in public and private for Weiss’ nomination for the next several weeks.

But as Democrats kept coming out in opposition — while Republicans sat back and relished the show — it became clear that Weiss would have a very hard time getting confirmed.

The game in Washington had changed.

Elizabeth Warren, sometimes disregarded by the White House as a largely irrelevant nuisance, could no longer be ignored. Bolstered by grass roots groups eager for any anti-Wall Street crusade and a vibrant progressive media that hung on her every word, Warren succeeded in knocking out Weiss’ nomination.

It was not a total victory. Weiss will still join Treasury as an unconfirmed counselor to Secretary Jack Lew. But in terms of symbolism, the Washington power game and the ideological direction of the Democratic Party, Warren won big. And the moderate, Wall Street- and business-friendly wing of the party — in past years happily occupied by Democratic presidential nominee-in-waiting Hillary Clinton — got punched in the mouth.

“They will have to be more careful now and you won’t see any bankers nominated for high-level positions,” said a person close to the campaign against Weiss, who said the episode could also influence the way Clinton staffs and runs her campaign.

On the other side, the despair among Wall Street’s Democratic elite is growing acute. As is the belief that Weiss himself never mattered in this fight.

“In this case, the thing Warren was against — adding another Wall Street anti-regulatory guy — wasn’t even remotely true,” said one senior Wall Street Democrat who has worked in government but, like many interviewed for this article, declined to be identified by name to avoid Warren’s wrath. “There is no one in government right now who has any market or finance experience. It’s not like there are ‘too many.’”



How it began

The White House nominated Weiss, a highly respected Wall Street banker at boutique firm Lazard, on Nov. 12. Treasury wanted him because no one in its top leadership tier — including Lew and deputy secretary Sarah Bloom Raskin — had any real financial markets experience.

Lew worked briefly at Citigroup, as did under secretary for international affairs Nathan Sheets. Raskin worked for a time at Promontory Financial Group. But none had the kind of deep relationships or international financial experience that Weiss did. And Weiss, in addition to his work on Wall Street, was a big financial supporter and bundler for President Barack Obama.

It did not take long for Warrren to declare war on the nomination.

On Nov. 14, POLITICO first reported, citing a Warren aide, that the senator would oppose Weiss for the job. “She is a no on Antonio Weiss. She was a Treasury official herself, she cares a lot about who is in the domestic finance role,” the aide said at the time. “It oversees Dodd-Frank implementation and other core economic policymaking.”

Shortly after the POLITICO story, Warren penned an op-ed for The Huffington Post laying out her case against Weiss, ripping his extensive career on Wall Street and his work on a controversial deal in which Burger King bought Canadian coffee and doughnut chain Tim Horton’s and moved its headquarters to Canada.

The morning the first POLITICO article about Warren’s opposition came out in the “Morning Money” tip sheet, a small group of progressives at CREDO Action in San Francisco gathered to plot strategy, poring over the Warren aides’ every word. This was the perfect fight, they decided.

After the midterm election drubbing, the battle was on for the soul of the Democratic Party. And another fight was already brewing over the inclusion of pro-Wall Street language in the year-end spending bill.

“It was the exact right campaign at the exact right time,” said Murshed Zaheed, deputy political director at CREDO and a former aide to Senate Minority Leader Harry Reid. “We felt this nomination presented the perfect battle that would drive the narrative of where the party needs to go and where the progressive movement is right now.”

People who spoke with Antonio Weiss during this time described him as bewildered by the characterizations of him as a super-wealthy tycoon who favored tax inversions and would come to Washington to do Wall Street’s bidding at Treasury.

Warren and other Democrats — along with Republican Chuck Grassley — slammed the Burger King deal as an un-American “inversion” transaction. The counterargument from Weiss supporters, that the Burger King deal was not an inversion because Tim Horton’s was the larger company and putting the headquarters in lower-tax Canada was the only reasonable thing to do, never got any traction. It did not help matters that Lew himself had recently launched an effort to crack down on inversion deals, though not the Burger King transaction.

For Warren, the Weiss nomination was a last-straw moment, people close to her say. She didn’t come out hard against Mary Jo White for Securities and Exchange Commission chair, despite White’s record of defending Wall Street clients as an attorney in the private sector. She didn’t try to block Stanley Fischer as Federal Reserve vice chair despite Fischer’s work at Citigroup. And there were others.

It was time to fire up the troops against Weiss. And they came eagerly along.

By early December, with no coordination with Warren or anyone else on the Hill, CREDO said it had close to 200,000 signatures on a petition to oppose Weiss.

Progressive groups Democracy for America and Moveon.org also joined the fight. The AFL-CIO, the nation’s largest labor group, raised questions about millions of dollars in accelerated compensation Weiss was to receive if he left Lazard for Treasury. The pressure came not just from the left. The Independent Community Bankers of America sent a letter to top senators questioning whether Weiss would do enough to champion the interests of smaller banks.

Through an aide, Dick Durbin, the No. 2 Democrat in the Senate, indicated he would oppose Weiss. Sen. Joe Manchin of West Virginia also came out in opposition, an early indication that a full-scale populist assault was underway. Then Jeanne Shaheen of New Hampshire, viewed as fairly moderate, said she could not back Weiss because of his work on tax deals.

Outgoing Senate Finance Committee Chairman Ron Wyden made it clear Weiss would not get a confirmation hearing in the lame-duck session of Congress in December. Weiss would have to wait until Republicans took over in 2015, allowing the opposition movement to gather strength.

“Warren successfully put together this incredible coalition of activist groups and liberal media organizations that sprang into action without her really having to do much of anything,” said a Wall Street executive who tried to help steer Weiss through the process. “These people can now stop pretty much anyone they want and the White House can’t do much about it.”

Others view Warren’s power as somewhat more limited. She succeeded in derailing Weiss in part because Obama could not count on Republicans — who typically like nominees with business experience — to put Weiss over the top.

“Unrecognizable”

As opposition began to grow, Weiss, who declined to comment for this story, hunkered down in New York. He could not speak out on his own behalf, hamstrung by the need to wait for confirmation hearings. He did not get to sit down in advance with Warren or other senators coming out against him.

People who spoke with Weiss during this time described him as bewildered by the characterizations of him as a super-wealthy tycoon who favored tax inversions and would come to Washington to do Wall Street’s bidding at Treasury. “The picture they painted of him was totally unrecognizable to him,” one friend said.

Instead, friends and colleagues described Weiss as a fairly progressive Democrat who liked poetry, bought the Paris Review to keep it afloat and fell in love with policy while working part time — at Podesta’s invitation — on tax reform issues at the Center for American Progress, a Democratic think tank, where he co-authored a paper calling for curtailing tax loopholes for Wall Street executives, among other things.

These people say the 48-year-old Weiss had long been thinking of a career shift, especially in the years since his father passed away. He did some teaching but became most attracted to the idea of doing policy work in Washington. When Lew reached out to him for the undersecretary job, he jumped at the chance.

People who know Weiss say he expected to get some opposition. And they say he knew his high salary — he earned at least $15.4 million from Lazard over the past two years — would become public knowledge and the source of some embarrassment.

But friends say Weiss did not expect to be portrayed as a proponent of tax inversions, since his role at Lazard did not include working on the tax implications of merger deals. And they say he thought his broad international experience — he spent eight years in Paris — would be seen as a plus. Instead, Warren and others used it as a cudgel to argue that he lacked enough experience in issues of domestic finance. And they said that it would be better if Weiss had experience in Asia rather than Europe because of China’s and Japan’s large holdings of U.S. debt.

Meanwhile, White House officials including Podesta, Lew and National Economic Council Director Jeff Zients continued to speak out on Weiss’ behalf and say they thought the GOP Senate would confirm him in 2015. By all accounts, the White House never gave up on Weiss. Lew told CNBC as recently as Friday that he thought Weiss could have been confirmed: “I still thought that there was a pathway for him to be confirmed. My concern when he said he didn’t want to be renominated was that we’d get the benefit of his talent.”

Some moderate voices — Andrew Ross Sorkin in The New York Times and the Bloomberg News editorial page — came out in favor of Weiss. But progressives just laughed off those endorsements as indications that the Lazard banker really should not be trusted.

Opposing Weiss become even more critical for progressives as the White House pushed hard for support of the year-end spending bill despite a provision rolling back a section of Dodd-Frank prohibiting banks from holding certain derivative securities inside their tax-payer backstopped subsidiaries.

Wall Street fought for the provision for years and Warren and many on the left railed against the White House for allowing Republicans to sneak it into the bill. Letting that happen and approving Weiss as well would be just too much.

As all this was going on, people close to Weiss say he took a long holiday break and decided it would not be worth it to keep up a confirmation fight that could take months and leave him little time to actually do the job. “Antonio learned a lot of lessons the hard way about how Washington really works now,” one friend said.

And while the White House still hoped that Weiss would eventually receive a heavy dose of Republican support, there was no guarantee. Republicans could have simply delayed a hearing for Weiss and let Democrats continue to fight among themselves.

Friends say Weiss, after a lengthy series of conversations with friends and colleagues, decided leading up to the weekend of Jan. 10 that he would ask the White House not to resubmit his nomination in the new Congress. Officials at Treasury and in the West Wing pushed back at first on the decision but then relented and asked that he still join the administration as a counselor to Lew with a senior advisory role on a wide range of issues from fiscal policy to debt management and financial regulation.

He would not have the clout of a confirmed position or the ability to testify publicly on the administration’s behalf. But he could still do most of the stuff he wanted to do. Some on the left squawked that he should not be allowed to go to Treasury at all. But Warren, herself a former unconfirmed Treasury official, mostly left the issue alone, content in scoring a major headline win and sending a message to the administration that they should not mess with her or the progressive movement on anything to do with Wall Street.

What it all means

Warren’s message clearly resonated. Obama came out with strong populist themes in a State of the Union address that adopted much of the Massachusetts senator’s rhetoric on standing up for the middle class against the wealthy and powerful. Obama called for a big bank tax, an increase in the capital gains rate and crackdowns on other loopholes enjoyed by the wealthy.

And Warren shot to her feet and applauded vigorously when Obama promised to veto any bill sent to him by the GOP Congress “unraveling the new rules on Wall Street.”

This was the Obama the activist left loves, rather than the more cautious centrist with Wall Street sympathies who tried and failed to install former Clinton administration Treasury Secretary Larry Summers as Federal Reserve chair. Summers, a protégé of banker Robert Rubin — perhaps the most hated Democrat among the activist left — eventually had to step aside in favor of Janet Yellen, a beloved figure to progressives.

Warren clearly demonstrated her ascendance as a political force. The larger question is the extent to which Warren continues to use her platform to push Hillary Clinton to the left and away from her more centrist, Rubinite roots. So far, Clinton has proved less than adept at co-opting Warren’s message. She’s struggled mightily to talk about her own significant wealth, complaining about being “dead broke” when leaving the White House in 2000. And she stumbled on the stump in the midterms when she said that it’s not corporations that create jobs.

Running on Warren’s issues — reining in Wall Street, protecting consumers — is not a political liability. The public – and certainly the Democratic Party – is largely with Warren on all these issues, polling data show. But Democratic insiders and analysts all question whether Clinton would be successful at shifting left or come across as hypocritical and insincere.

There is also the question of financial support. Clinton has long enjoyed heavy backing from Wall Street. But that could dry up if she keeps criticizing the industry as she did in a tweet on Jan. 16: “Attacking financial reform is risky and wrong,” she said. “Better for Congress to focus on jobs and wages for middle class families.” Clinton, in the tweet, criticized Dodd-Frank changes strongly supported by Wall Street.

The former first lady and secretary of state will hardly be beholden to the financial-services industry for money, especially in the era of billionaire-funded “super PACs.” But she would still face charges of changing her tune if she were to tack too hard toward the Antonio Weiss-bashing left.

“My guess is she will try to thread her way through this by saying that Warren has very legitimate concerns but that Wall Street is still an important part of the economy,” said one of Clinton’s biggest Wall Street supporters who also backed Weiss for Treasury. “But that’s just a very tricky needle to thread.”

Michael Grunwald contributed to this report.