Strange and curious commercial transactions take place every day. People buy meals at the Olive Garden, or purchase imaginary goods for use in Farmville, or spring for Mets tickets. And then there’s the case of Tim Pawlenty, former Minnesota governor, former presidential candidate, erstwhile Romney administration cabinet member, selling his professional services to the Financial Services Roundtable, a Washington lobby for 100 large financial institutions, from AEGON USA, Inc., to Zions Bancorporation. In financial terms, Pawlenty just bought a call on Romney losing, while the Financial Services Roundtable bought a call option on Romney winning.
The move is strange for a few reasons. First, Pawlenty’s background and political persona seem at odds with a trade group for mega-financial firms. Pawlenty, the son of a truck driver, attended public universities, and didn’t stray far from his blue-collar roots. Letting the others rub elbows with the rich and fancy at country clubs, Pawlenty was a self-proclaimed “Sam’s Club Republican.” He was living proof of the highly dubious theory, pushed by Reihan Salem and Ross Douthat, in their book, Grand New Party, that Republicans—some day, one day, any day, maybe next year—would tailor policies to appeal to the working class.
Pawlenty played hockey. He drank beer (domestic, I’m sure). He had never been to Washington. He wasn’t interested in money. He warned about the “royal triangle of greed: big government, big unions, and bailed out businesses.” Once his presidential campaign petered out, the mixture of Main Street cred and Midwestern pedigree put him on Romney’s vice presidential shortlist. When Romney went with a younger, more Rand-ian Midwesterner, Pawlenty became a prominent surrogate for Romney. He got a primetime speaking slot at the convention and was named a co-chair of the Romney campaign. In other words, Pawlenty was setting himself up to be in the cabinet of a Romney administration. On days when Romney was polling well this summer, he may have taken a look in the mirror and said: “Well, hello, Secretary Pawlenty.”
So given his background, his hostility to the bailed-out businesses, and his role in a white-hot presidential campaign, both the destination and the timing of this leap seem strange. The Financial Service Roundtable’s membership list reads like a Who’s Who of TARP. Meanwhile, it’s Sept. 20, about seven weeks before election day, and the co-chairman of the campaign quits to take a new job that starts on Nov. 1? The optics, as they say, look quite bad. It sure looks like Pawlenty is bailing out to go work for the bailed-out.
In financial terms, Pawlenty just bought a call on Romney losing, while the Financial Services Roundtable bought a call option on Romney winning.
You always have to wonder what is going through the minds of the Financial Services Roundtable. Simply put, a 2013 Washington, D.C., in which Tim Pawlenty is available to serve as your trade association’s head is one in which Tim Pawlenty is likely to be less than maximally effective. Think about it this way: if Romney were running away with the race, Pawlenty would likely be highly engaged in the campaign and plotting his political future—not accepting a job with a trade association. Of course, the electoral conditions that would propel a Romney victory would likely bring about a change of control in the Senate from Democrats to Republicans, and a strengthening of the House Republican majority. In that political climate, a trade association would absolutely need to hire a highly connected Republican to run it. And so hiring someone like Pawlenty would be a very shrewd move indeed, a coup even. If you wanted to get a pesky regulation rolled back, or have some new subsidies installed, he’d be your guy.
But that’s not what the political environment looks like right now. As of today, the polls, the electoral models and markets, and the conventional wisdom, all seem to suggest that President Obama is likely to be reelected. What’s more, the conditions that would propel him to reelection are also likely to result in Democrats retaining control of the Senate, and the House Republican majorityweakening. Given that constellation of political stars—Democrats controlling the White House and Senate, and gearing up for an assault on the House—a trade association would seem to need a highly connected Democrat to run it. In that political climate, hiring someone like Pawlenty—wrong party, a history of being hostile to banks—seems kind of stupid.
Well, this is the financial services roundtable.