Cantor Brings Congressional Connections To Wall Street Job
ROBERT SIEGEL, HOST:
One of the biggest political upsets in years took place in June. That was when House Majority Leader Eric Cantor lost his bid for the Republican nomination for his Virginia Congressional seat. But Cantor didn't have to spend much time looking for a new job. Last week the New York investment bank Moelis and Co. said that it was hiring Cantor to provide what it called strategic guidance to the firm. NPR's Jim Zarroli looks at what Wall Street firms hope to get when they hire former politicians.
JIM ZARROLI, BYLINE: In Congress Eric Cantor was known for cultivating deep ties to Wall Street and it's safe to say it's surprised no one when he immediately turned to Wall Street to start his life's second act. Stephen Spaulding is policy counsel at Common Cause.
STEPHEN SPAULDING: He didn't take a vacation. He took a vacation to Wall Street to negotiate a contract where he can sell his - sell his connections.
ZARROLI: Cantor who worked in real estate development before entering politics will be vice president and managing director at Moelis and also serve on its board. He will be paid $1.2 million in cash next year and also get $400,000 in stock options. In return Cantor provides Moelis with some huge potential benefits. For one thing Spaulding says, a politician like Cantor has deep connections on Capitol Hill.
SPAULDING: He knows who to call. He knows decision-makers and he can gather extraordinarily valuable political intelligence before it hits the newspapers - frankly before it even hits the market.
ZARROLI: Spaulding says Cantor is barred from lobbying his former colleagues for a year after he leaves office, but that seems not to have bothered his new employer. Spaulding says Cantor can still help the firm by plotting strategy and giving advice. David Stowell professor of finance at Northwestern's Kellogg school says that's especially important for financial firms right now because the landscape of Wall Street is changing. The Dodd-Frank financial overhaul bill has set in motion a long series of regulatory changes that firms are still learning to deal with.
DAVID STOWELL: I think a lot of investment banks have had to rethink their relationship with the government and it doesn't surprise me to see some investment banks bringing in talented former government people to help them understand better what's going on in Washington D.C. from a regulatory point of view.
ZARROLI: And it's not just the domestic landscape that's being altered. Financial regulations are changing all over the world and Stowell says politicians such as Cantor often have relationships with powerbrokers in other countries. Finally there's the prestige factor. Nothing impresses potential clients like having an important retired politician on the payroll. Burt Elie is a banking consultant.
BURT ELIE: They can be somewhat of a draw in terms of bringing in clientele - at least I think that's the hope. Some former congressmen are better at this than others.
ZARROLI: Elie says Wall Street operates a lot differently than Washington and politicians who are used to a certain amount of deference may not be so great at client relationships. There is of course nothing unusual in Cantor's move to Wall Street. Government officials of both parties regularly make the move to the financial sector when they leave office. It's the old revolving door of politics and Democratic Senator Elizabeth Warren of Massachusetts told Yahoo News that it's a big problem.
(SOUNDBITE OF ARCHIVED RECORDING)
SENATOR ELIZABETH WARREN: It worries me about what happens if people in government are looking for that next job, you know, yeah I'm working now - you know, not as much money as I could be making but when I leave here that's where I'm headed.
ZARROLI: Warren says if government officials know that they may be asking the people they regulate for work one day it has to change the way they interact. Because politics is a fickle business and as Eric Cantor found out, you never really know when you may be looking for a job. Jim Zarroli, NPR News.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.