Former Minnesota Gov. Tim Pawlenty made big news this week by stepping down as the co-chair of Mitt Romney's presidential campaign and accepting a job to lead the Financial Services Roundtable, an industry trade group that lobbies for banks and financial services.
Pawlenty is not the first former governor to head a financial industry trade group. The American Bankers Association is currently led by Frank Keating, a former governor of Oklahoma.
Here's Tom Wilson, CEO of Allstate and chairman of the roundtable, on the rationale for choosing Pawlenty:
As governor of Minnesota, Tim was a highly successful chief executive who created an environment for economic growth and job creation with a common sense and balanced approach to problem solving. He understands that while policymakers sincerely desire to improve economic opportunities for all Americans, they also have different political philosophies. Tim knows this and is able to create win-win solutions to difficult issues. He is exactly the kind of leader we need to continue to improve our industry's reputation, advocate firm-but-fair regulation and help maintain our global leadership of the financial markets.
But the Financial Services Roundtable, like other industry groups that hire prominent politicians of both parties, is probably looking to get more than management acumen for their money, said Richard Parker, professor of public policy and economics at Harvard's Kennedy School of Government.
"These people are always hired for their experience in terms of contacts," Parker said. "The experience is all about knowledge of other members of the inner core of party decision makers in the Congress or the White House or the agencies."
The hiring comes at a time when regulators are still writing key rules called for under the landmark Dodd-Frank financial reform law, many of which will influence banking rules and other consumer protections. I asked Parker if Pawlenty's hiring could be a sign the roundtable is trying to exert more control over that process and push it in a more industry-friendly direction. His answer?
"They should not exist if they aren't," he said. "That's what they're in business to do. They're a trade association, and in essence they're looking out for member interests in a period where a 2,300-page piece of legislation has a capacity for disruption of the market and the interests of the members of the trade association."
Big Business getting its way on government policy isn't always a bad thing, Parker says. He cites the example of the federal government giving away vast tracts of land to the builders of the U.S. railroad system, which eventually led to huge payoffs for the American economy.
But consumers should be apprehensive when they see powerful politicians go to bat for industry trade groups, he says. Legislators' and regulators' jobs are to make the best decisions for the country as a whole, and when public officials are swayed by banking and financial industry lobbying behind closed doors, the resulting policy "often does not meet the public interest smell test," he says.
Whatever the consequences for consumers, don't look for the practice to stop anytime soon, considering the rewards involved for former public officials. Parker thinks it's likely Pawlenty's salary will top $1 million per year, and that kind of compensation can be a powerful motivator.
What do you think? Should government officials become industry advocates who lobby their former colleagues after leaving office? Will industry influence lead to a less consumer-friendly version of Dodd-Frank regulations?
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