Ex-Goldman Sachs honcho's donkey fight

(Fortune Magazine) -- When Philip D. Murphy, formerly global co-head of Goldman Sachs's investment management division, became the Democratic National Committee's national finance chairman last year (and yet another Goldman (Charts, Fortune 500) alum to enter politics), he knew he'd be stepping into the middle of a donkey fight - one that pitted DNC chair Howard Dean against Senator Charles Schumer and Congressman Rahm Emanuel.

Dean had argued that the Democrats should shift their limited venture capital away from key swing states to all 50, even entrenched Republican strongholds. Emanuel and Schumer - and their big-donor allies - saw the plan as an ego-driven waste of dollars by a failed presidential candidate.

Phil Murphy in New Jersey

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So far, Murphy has stayed above the fray. "I'm a sucker for the view that you have it out in the locker room, not in public," says the 50-year-old father of four who left Goldman in 2006.

Murphy's first phone call after receiving Dean's offer to become the DNC's new moneyman was to his friend - also formerly of Goldman - Robert Rubin, the Clinton Treasury Secretary who is no stranger to ugly intraparty squabbles. Rubin assured Murphy he could handle Washington.

"He has very substantial technical expertise from his corporate finance work, but he combines that with a wonderful facility for dealing with people," Rubin told Fortune. Murphy, Rubin added diplomatically, could handle the "complexity" of the DNC schism.

Murphy has spent the past year plying his Harvard undergraduate, Wharton MBA, and Goldman alumni networks to build a base in stubbornly red states like Alabama, Georgia, and Mississippi.

He has turned to friends like Cappy McGarr of McGarr Capital Holdings in Dallas, Jonathan Lavine of Bain Capital in Boston, Goldman senior director Robert Kaplan, now teaching at Harvard, and Orin Kramer of hedge fund Boston Provident in New York.

His biggest challenge now is catching up with the Republicans, even as he borrows their vision for long-term party building.

The Republican National Committee continues to outraise the DNC - $57.3 million so far this year, compared with $36.8 million for the Democrats - but Murphy has considerably narrowed the gap. How the Democrats fare in next year's elections - from local to state and national races - will reveal whether those millions were put to good use.