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A quiet return to the corridors of power


WASHINGTON -- Fridays, almost without fail, the White House gates swing open for a trim, dark-haired visitor whose arrival signals a remarkable comeback.

His name is Tony Coelho, and he's regarded as a wise man by those who labor in the administration's inner sanctum.

Once the fastest-rising Democratic star on Capitol Hill, he fled Congress in 1989 amid questions about his financial dealings. His quiet return to the corridors of power is only the latest turn in the life of a man who set out to become a priest, only to be rejected because he was an epileptic, and who wound up in politics through the intercession of comedian Bob Hope.

Today, at 51, he is a partner in a Wall Street investment bank, cleared of any wrongdoing after a lengthy federal investigation and earning a lucrative living. On the side, he's an unpaid adviser to the highest circles of the Clinton White House.

He meets regularly with White House Chief of Staff Thomas F. "Mack" McLarty and other senior staff members. "I don't know if it's every Friday," says Mr. McLarty, sounding a tad uneasy about discussing Mr. Coelho's behind-the-scenes role.

But there's no doubting he's a player.

He's become an unofficial back channel between Capitol Hill and the White House, relaying messages from his friends in Congress to top Clinton aides.

"I have told the president personally that I think Tony is somebody who can help them in terms of advice and counsel," says Maryland Rep. Steny H. Hoyer, the House Democratic caucus chairman and Mr. Coelho's closest friend in Congress. "Tony's as good as anybody I know in how you spin things to the public."

During the fight over the North American Free Trade Agreement, Mr. Coelho counseled the White House not to attack House Majority Leader Richard A. Gephardt (another close friend) for opposing NAFTA. This hands-off attitude allowed Mr. Gephardt to satisfy his allies in organized labor without preventing President Clinton from winning the NAFTA vote. Now, Mr. Gephardt is the House point man on health care reform, the defining issue of the Clinton presidency.

Lately, Mr. Coelho has been urging the White House to set up an informal club for the 50 or 60 Democrats who are Mr. Clinton's core supporters on Capitol Hill. The idea, he explained in an interview, is to reward the president's most loyal backers in Congress -- who might be feeling ignored after Mr. Clinton cut a number of highly publicized deals with recalcitrant lawmakers to pass the budget and NAFTA.

"You take them to Camp David. Bring them to the White House. Have them to dinner and a movie and popcorn," he says. !B "Basically, open up personally and share your presidency with them in a way that makes them feel personally committed to you."

White House aides praise Mr. Coelho's powers of political analysis. "I just think he is one of the smartest heads about politics and issues," says Mark Gearan, the White House communications director.

A Coelho intimate puts it another way: "Here's a guy who can explain Washington to a bunch of people who seem to value their non-Washington status as a badge of honor."

His vast network of Washington friends and former aides reaches deep into the Clinton senior staff and includes presidential scheduler Marcia Hale, deputy communications director Rahm Emanuel, U.S. Trade Representative Mickey Kantor and his staff chief Tom Nides, and Clinton political advisers Mandy Grunwald and Stan Greenberg.

But outside the White House, the extent of his involvement with the administration is known to few, which is fine with him.

"I don't believe in a public role," he says. "I don't need a visible role. My ego doesn't need it. I've been there. That's not where I am today."

He was recently offered a chance to join the Clinton team full time. Although Mr. Coelho wouldn't discuss the matter with a reporter, he was sounded out for the job of deputy White House chief of staff, and turned it down.

No contact with Clinton

What is perhaps most extraordinary about all this is that Mr. Coelho has no relationship with Mr. Clinton and has never met with the president. Mr. Clinton has never asked to see him, says Mr. Coelho, who adds that he keeps going to the White House because Clinton aides keep inviting him.

Described by friends as the best-organized person they know, Mr. Coelho is able to offer the White House two things it sorely lacks: Washington know-how and an iron sense of discipline.

"I've always believed strongly in staff," says Mr. Coelho, who was a congressional aide for 15 years. "I think that the best way that you help the president is you help his staff."

Becoming a Washington power broker was the last thing Mr. Coelho had in mind growing up on a dairy farm in California's Central Valley. As a student at Loyola University, a Jesuit school in Los Angeles, he was inspired by the Kennedy years to become a priest.

But his plans were shattered when he discovered, at age 22, that he had epilepsy. Church law at the time barred epileptics from becoming priests.

Worse, he was shunned by his own parents, whose Portuguese forebears taught them that epilepsy was a disgrace, a sign that some ancestor had committed an unspeakable sin.

A comedian's support

He emerged from that black period through the intercession of Bob Hope, whose wife hired him as a household helper. The entertainer suggested that young Coelho could assist others by getting into politics. Through an uncle, he got a staff job in Washington with the local congressman; when he retired, Mr. Coelho won his seat from California's 15th District.

The trajectory of his fast-moving career, now all but forgotten outside Capitol Hill, was that of a high-rolling operator who climbed swiftly to the heights of influence, then flamed out in spectacular fashion.

More than all but a half-dozen other U.S. politicians, Mr. Coelho "shaped the politics of the 1980s," according to the Almanac of American Politics. As chairman of the Democratic Congressional Campaign Committee during the early Reagan years, he created a political machine to help keep the House of Representatives in Democratic hands by forging an enduring bond between the party and big-money business interests -- an alliance that indirectly led to his downfall.

In 1986, his colleagues rewarded him with the third-highest position in the Democratic leadership, that of majority whip. And he seemed well on the way to a loftier perch, until the Democratic leadership became enmeshed in scandal.

While an investigation of Texas Democrat Jim Wright's finances was forcing him to become the first House speaker to resign in midterm, Mr. Coelho was facing ethics questions of his own. They revolved on a reported criminal investigation of a junk bond deal with the firm headed by billionaire financier Michael Milken, who later went to jail for insider trading in an unrelated case. Though Mr. Coelho had done nothing illegal, his prospects for advancing in the House leadership were suddenly clouded. Abruptly, on May 26, 1989, he decided to resign from the House.

"I was 47 years old," he recalled the other day. "I had no job. Two kids ready for college. Lots of debt and no income."

Network of powerful friends

What he still had, however, was one of the most potent Rolodexes in town. In a matter of days, he received 83 job offers and settled on one from Wall Street, about which he knew next to nothing.

As president and CEO of the money management arm of Wertheim Schroder & Co., Mr. Coelho oversees a portfolio of stocks and bonds worth $3.5 billion (up from $600 million when he began, he proudly points out). He also works actively on behalf of disabled Americans.

He says he's not bitter about the circumstances that led him to quit Congress. The Justice Department and the Internal Revenue Service investigated him from mid-1989 until early 1992, then sent him a letter clearing him, he says.

"I played hardball and I don't have any problem with people playing hardball back," he says, noting that the investigations took place under a Republican administration.

The rhythm of his life today is like a congressman's in reverse. As he heads from New York to Washington on Thursday nights to spend long weekends with his wife, Phyllis, at their suburban Virginia townhouse or beach house in North Bethany, Del., he crosses paths with his former colleagues leaving the capital for their home districts.

He says his company does not lobby the federal government, and he has no personal ax to grind.

"We have to get Bill Clinton re-elected in '96 in order to have an impact on the judicial system and the bureaucracy," he says. "Basically, I am very committed to him succeeding."

The only government jobs he says he covets are ambassador to Portugal and White House chief of staff. That has led to speculation that his friends in the administration are maneuvering to have him become Mr. McLarty's replacement if he were to leave.

Mr. Coelho dismisses his chances of getting the top White House staff job and indicates he's never been happier. Last month, for the first time in 29 years, he was able to talk with his parents about his epilepsy, ending "a real troubling time for me."

"So that's why I really mean it when I say that things are very positive for me," he says. "I just turned a page in my life and I have a wonderful new chapter."

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