John Delaney: The Candidate Who is Crashing the Party

Maryland Democrats initially didn’t want John Delaney to run for Congress. Yesterday he succeeded in unseating ten-term incumbent Roscoe Bartlett.

By: Len Lazarick

UPDATE 11/07/12: Yesterday John Delaney defeated Republican incumbent Roscoe Bartlett. Here's our October 2012 profile of him.

John Delaney wasn’t supposed to be the Democratic nominee in Maryland’s 6th Congressional District.

That role was intended for Rob Garagiola, the 40-year-old state-senate majority leader from Germantown, a tall, handsome progressive whom party leaders in Annapolis had given the green light last fall.

Unlike Garagiola, Delaney hasn’t paid his dues in lower office. His career in finance has progressives leery, and his message of invigorating the private sector in Maryland to create jobs has others fearful he’s a closet Republican.

If Delaney wins the seat, he’ll be one of the wealthiest members of Congress—probably in the top five, with somewhere around $200 million in assets made from two financial companies he founded and built in Chevy Chase.

Garagiola’s supporters painted him as a rich, out-of-touch “1-percenter.” And with income averaging $14.5 million over the last seven years, he’s not just in the top 1 percent—he’s in the top 0.1 percent.

But after a nasty, expensive primary campaign that party leaders tried to squelch, Delaney is now given a strong chance of helping those same Maryland Democrats pick up another House seat.

The race wasn’t in the immediate plans of the wealthy Potomac entrepreneur until a gerrymandered redistricting proposal stirred him into action last fall, and it certainly wasn’t in the plans of the Democratic establishment that had redrawn the district lines with someone else in mind.

Yet Delaney’s run for office came as no surprise to some of his closest friends, including David Bradley, head of the Atlantic Media group, who says Delaney has been “playing with this question for at least a dozen years.”

He has “the striving gene,” says Bradley. “He’s been on a vertical run through life.”

Hungry to capture another US House seat in Maryland, Democratic leaders had put a target on the back of Roscoe Bartlett, the 86-year-old Republican incumbent. They handed the bow and arrow to Garagiola.

Leaders had first looked at how to reclaim the 1st Congressional District on the Eastern Shore, but that proved too difficult. Instead they dumped hundreds of thousands of new Montgomery County constituents into the 6th and lopped off large swaths of conservative voters who reliably supported Bartlett.

“I had never heard of John Delaney,” Garagiola says. But other Democrats had, in particular those who had benefited from substantial contributions from Delaney and his wife, April. In recent years, the couple had given at least $183,000 to the national party and candidates and $83,000 to the state party and candidates, some of whom were now backing Garagiola, including Maryland governor Martin O’Malley and lieutenant governor Anthony Brown.

The Garagiola forces were quick to attack Delaney’s business record. They defined him not as the job-creating innovator he portrayed himself to be but as an unscrupulous banker who preyed on others, financed substandard nursing homes, and foreclosed on mortgages. Delaney, who went to Columbia University on a scholarship from the electricians’ union his father belonged to, was even portrayed as anti-union.

“What the establishment was trying to do was to position me as a Republican running in the Democratic primary,” says Delaney, who does have Republican friends and contributors and has given to a few Republican candidates, such as Congressman Andy Harris. “I believe in the free market. I believe that business creates the jobs in this country and not government.”

Spouting such heresy, Delaney attacked Garagiola as a Washington lobbyist and incumbent legislator far too cozy with Annapolis special interests. Garagiola hurt himself by failing to disclose some of his past lobbying income.

Garagiola garnered dozens of endorsements. But four weeks before the April 3 primary, Delaney laid down two cards that trumped them all: He was endorsed by President Bill Clinton, followed a few days later by the Washington Post.

Delaney and his wife had been bundlers for Hillary Clinton’s presidential campaign, and he had been a Clinton delegate to the convention that nominated Barack Obama.

“The party of President Clinton is the party that I identify with,” Delaney says. “Suddenly my message had credibility. I was a Democratic candidate speaking to voters in language that they had forgotten about.”

The Post endorsement stressed Delaney’s theme of job creation and lambasted Garagiola’s connections to special interests.

At the same time, Delaney was shoveling his own money into the campaign, eventually $1.6 million in loans, most of it at the beginning of March as he began dominating TV and radio.

Garagiola was no slouch at fundraising, bringing in more than $700,000. But Delaney spent more than three times that.

In the end, the two candidates, with three other rivals, spent $4 million-plus competing for just 38,000 votes cast. Delaney got 54 percent of the vote, trouncing the three-term state senator by spending $135 a vote. Garagiola received 29 percent, spending $66 a vote.

Comptroller Peter Franchot, the only statewide elected Democrat to endorse Delaney, said the party establishment “got a real punch in the nose.” Franchot, a persistent pain to party bigwigs on fiscal issues, said it was Delaney’s emphasis on job growth that drew his support.

“Tammany Hall was all behind Garagiola,” Franchot says. In an off-season spring primary, “the Democratic machine generally prevails.”

But not this time.

If Delaney wins, it will be the latest in a string of successes that had him taking two financial-services start-ups public by the time he was 40. At 32, he was the youngest CEO of a company listed on the New York Stock Exchange.

Delaney grew up in Wood-Ridge, New Jersey, not far from Meadowlands Sports Complex, attending public schools and then Bergen Catholic High. His father, Jack, was a union electrician and his mother, Elaine, a homemaker. John worked construction in the summers.

Neither parent had gone beyond high school, but “my mother wanted me to be a doctor,” Delaney says. So he went off to Columbia with scholarships from the International Brotherhood of Electrical Workers, the American Legion, and the Veterans of Foreign Wars. After working briefly at St. Luke’s Hospital in New York, he decided medicine wasn’t for him.

“I basically applied to law school as a way of telling my parents that I wasn’t going to medical school,” Delaney says.

That’s how he wound up at Georgetown Law, where he met both his future business partners and his wife-to-be.

He was hired at Shea & Gould in New York, where he had interned. But just as he was about to move, he got engaged to April McClain, a year behind him at Georgetown. She’d grown up on an Idaho potato farm about half the size of the Bethesda Zip code. She didn’t want to live in New York, and John didn’t want to head west, so they made their life in DC.

After a brief time practicing at what was then Shaw Pittman, Delaney and two friends from Georgetown Law, Ethan Leder and Ed Norberg Jr., put lawyering aside and in 1990 bought a small health-care firm called American Home Therapies.

Learning as they went, they managed to build the company and then sell it three years later. “It gave us insight into the field that we were going to finance,” Leder says.

The men then set up HealthCare Financial Partners, specializing in the financing of small health-care firms. Delaney realized that with changes in federal law, big banks were going to concentrate on consumer lending and investment banking. This created a niche for lending to small firms, especially those health-care companies whose assets were largely in receivables owed to them by insurance companies and government agencies.

They took the firm public in 1996, then sold it to Heller Financial in 1999 for $500 million. In 2000, by this time with three young daughters, the Delaneys moved from the District to a $4.5-million home off River Road in Potomac and John started the company he still chairs, CapitalSource. That company, too, was aimed at lending to small and midsize businesses that big banks had abandoned, and it went public in 2003. Since the 2008 purchase of a California bank with 22 branches, much of the company’s business is now as a federally regulated bank.

Delaney also became part of the region’s nonprofit world, which is always on the lookout for leaders who can provide both guidance and financial support. Today he’s on the boards of Georgetown University, the National Symphony Orchestra, and the Potomac School and is past chair of St. Patrick’s Episcopal Day School, which his children attended.

Few images show the couple’s connections quite as graphically as the photo that ran on the Catholic Charities website this spring promoting its annual gala, a black-tie event John and April cochaired for two years. The photo shows the Delaneys smiling with Cardinal Donald Wuerl and Supreme Court chief justice John Roberts and his wife, Jane.

“John and Jane are very good friends of ours,” says April Delaney, who like Jane Roberts, another Georgetown Law alum, worked as an attorney on satellite communications. Their daughters were in a baby group together, and the families are members of Little Flower Parish in Bethesda.

“We actually have a lot of Republican friends,” says April. “It’s a good thing to be bipartisan sometimes in this town.”

John Delaney has a comfortable life, wealth, connections, and institutional leadership in the nation’s capital. Yet he’s angling to become a freshman member of an exceedingly dysfunctional body that requires reapplying for the job every two years.

“The stakes are really high” in the country right now, Delaney says. He thinks he can help break the gridlock and political instability that he believes is holding back economic growth. “I would feel really bad about myself if I didn’t give it a shot.”

Last year, he started a nonprofit called Blueprint Maryland to create a dialogue about job growth. It represented a deeper dive into Maryland policy than he had taken before. The political contributions, fundraising, and civic engagement had been going on for years, but “we never thought we would jump in right now,” says his wife, who seems to have embraced the candidacy as a joint venture. “Maybe five or ten years from now.”

The congressional redistricting spurred them to action, even though their home is two-tenths of a mile outside the 6th District. At one point, April Delaney says, she told her husband: “If you don’t run for this seat, maybe I will.”

John Delaney favors the approach of President Obama’s Bowles-Simpson budget commission on fiscal responsibility: “We can’t really have a debate about whether we can be fiscally responsible any longer.”

He says raising capital-gains taxes, closing loopholes, reducing defense, and lessening the future burden of Social Security and Medicare, as prescribed in Bowles-Simpson, will help create a political stability that “would be more powerful than any stimulus the government could provide.”

But before Delaney can tackle those huge sticking points, he has to overcome an obstacle more difficult than grabbing a slice of market share from the big banks. He must beat ten-term incumbent Roscoe Bartlett.

Many in his own party thought Bartlett should retire gracefully. He was confronting a gerrymandered district with a large contingent of Montgomery County Democrats he had never represented and a presumably strong opponent in Garagiola. It would probably be the toughest fight he had faced since winning the seat in 1992. Bartlett was already 66 years old when he won that race, and at 86 he’s now the second-oldest member of the House.

Born dirt-poor in Kentucky, Bartlett had a career as a scientist, teacher, and researcher, with 20 mostly government-owned patents on lifesaving breathing equipment. Bartlett has always been an unconventional Republican and has long backed energy solutions that reduce dependence on fossil fuels. As an entrepreneur in his own right, he ran a research consulting business that branched into construction and built 100 homes, many with solar power.

The father of ten with his wife, Ellen, Bartlett is modestly wealthy as Congress members go, with as much as $8 million in assets, and lives on a farm along the Monocacy River near Frederick.

Though allied with the Tea Party, Bartlett practices a quirky brand of politics. At a June ceremony in Cumberland, part of the economically depressed western end of the 6th District, he gave a brief talk about the science behind the cool shade his audience was enjoying under an old tree, then described the awesome display of 23,110 luminary candles at Antietam National Battlefield that will mark this year’s bicentennial of the bloodiest single day in American history. Then he turned to the $1 billion in debt the US amasses every six hours.

“It’s easy to get depressed and despondent when we think of our polarization,” Bartlett said. “Shame on us if we can’t face the challenges facing us.”

He gave mixed signals last year about his commitment to running for reelection and got a slow start on fundraising, which partially led two legislators to challenge him in the Republican primary. A majority of the western Maryland Republican legislators supported state senator David Brinkley against Bartlett, but the incumbent easily won the primary with 44 percent of the vote against seven opponents.

“There’s a history of underestimating Roscoe Bartlett,” says Maryland GOP chairman Alex Mooney, a former state senator who briefly considered running for the seat himself when Bartlett’s plans seemed unclear. Mooney now works for Bartlett’s congressional office part-time.

Bartlett must clearly win the older parts of the district that know him well and, as one consultant put it, “stay in the ball game” in Montgomery County, where neither candidate is well known.

Delaney’s advantages are clear. Unlike Bartlett or Garagiola, he has no voting record to defend, and he can play to the anti-incumbent feeling in both parties. Delaney’s emphasis on job creation can appeal to moderates and conservatives, and coming from a union family is a point he plays up. Republicans are getting ready to probe the possible underside of Delaney’s business practices, such as predatory lending and profiting from foreclosures, but these tactics didn’t seem to work for Garagiola.

Delaney has shown he can tap into a large donor base to match his own efforts. Friends who have already given to the campaign will no doubt be asked for more, as will his former and current business associates. Two dozen CapitalSource employees contributed almost $50,000.

Delaney’s campaign manager, Justin Schall, has said the banker will put no more of his own money into the race. But Mooney scoffs at that, saying odds are he’ll put in millions more.

Other wealthy people running for high office for the first time have squandered millions on races in Maryland and other states, but Delaney seems better prepared to do battle. Virginia’s Mark Warner has shown the path on the other side of the Potomac.

April Delaney says people tell her, “I don’t know why you would want to do it, but God help you for trying.”

Len Lazarick (len@marylandreporter.com) is editor and publisher of MarylandReporter.com, a news website about state government and politics that he founded in 2009. MarylandReporter.com staff writer Glynis Kazanjian contributed to this article.

This article appears in the October 2012 issue of The Washingtonian.