There was a time not so long ago when those that had made their fortunes on Wall Street, altruistically left seven and eight figure jobs in order to benefit politicians with their experience and knowledge of fiscal policy. Those days are long past and the stream has reversed course.
Morgan Stanley (MS) and Goldman Sachs Group, Inc. (GS) TO Those With Washington Experience
Now, Goldman Sachs Group, Inc. (NYSE:GS) and Morgan Stanley (NYSE:MS) among others, are offering jobs to those that have Washington experience and more importantly connections. As Congress, regulators, and reformers are looking to end the days of Wall Street running the U.S. economy as a whole, traders, bankers, and institutional investors are looking to hedge their bets with those who have an ear or the influential down the seaboard.
“It has really turned around, and it’s now much more about Wall Street collecting political knowledge and influence,” said Charles Geisst, a Wall Street historian at Manhattan College. “And no matter what people on Wall Street will tell you, they remember their 1930’s and 1940’s history very well, and they know they lost those battles and they are determined not to lose this one.”
Geisst is of course referring to post 1929 regulations put in place on investment firms and banks following the crash of 1929. While during the Clinton years most of the regulations put in place in the 1930’s were stripped away or had their teeth removed, there is little doubt that their a number of firms that fear the full implementation of the Dodd-Frank financial reform rules, heaven forbid.
Last month, Morgan Stanley (NYSE:MS) announced it had hired Michele Davis as a managing director and global head of corporate affairs; she joins Jake Siewert, managing director and head of corporate communications at Goldman Sachs Group, Inc. (NYSE:GS) as just two recent examples of those being hired because of their ability to make senior fiscal policy makers listen to them. Davis, served as a chief adviser to Treasury Secretary Hank Paulson (a former Goldman CEO) during the height of the financial crisis, while Siewert simply served as counselor to Treasury Secretary Timothy Geithner and wore many hats, including press secretary, under President Bill Clinton.
While those two represent just a couple of recent examples, Politico.com just highlighted a list of others who are tripling their salaries (pre-bonus) here.
“There is absolutely a value to banks hiring these people, and it is about connections and relationships and that opens the door to potentially inappropriate influence,” said Rep. Jim Himes (D-Conn.), who worked as an investment banker at Goldman Sachs Group, Inc. (NYSE:GS) for more than a decade.
