WASHINGTON ― Evan Bayh, the former Indiana senator seeking to regain his old seat, spent the last year of his time in office meeting with corporate recruiters to line up his next job.
Back in 2010, when Bayh first announced his retirement from the Senate in an op-ed in the New York Times, he explained that he was leaving the institution because it had become too dysfunctional. Over the next few months, he offered a set of reforms he said would make the chamber a better place ― like it was when he watched his father serve there 35 years ago.
Bayh told Ezra Klein, then of The Washington Post, that he was quitting the Senate because he wanted “to be engaged in an honorable line of work.” Klein called that line “the single most pervasive and devastating critique” of the Senate he’d ever seen.
What Bayh was actually doing during his final year in office, it turns out, is an even more devastating critique.
In October, the Associated Press obtained a copy of his Senate schedule and reported he held “more than four dozen meetings and phone calls with headhunters and future corporate employers.” A campaign spokesman told the AP, “It was entirely ordinary and even important for him to meet with industry leaders to insist upon regulatory changes.” Bayh was, after all, a member of the banking committee, which in 2010 was debating the Wall Street reform bill known as Dodd-Frank.
The AP didn’t publish his schedule and offered few details of the meetings, but The Huffington Post has independently obtained a copy. Meeting with corporate headhunters is acceptable under Senate rules, since headhunters typically don’t have specific interests to litigate before the Congress. But the job of headhunters, of course, is to connect companies with potential job candidates ― even when that candidate may be a senator who still has considerable influence over the legislative agenda those companies care about.
The job titles of four of the people Bayh met with were at the time “chief talent officer”; “global head of human resources”; “senior vice president, talent acquisition leader for campus recruiting, executive recruiting and commercial banking”; and “global head of talent acquisition.” Those are not the sort of executives a senator meets with to talk about legislation.
Bayh’s spokesman warned about relying on the schedule, adding that Bayh’s Senate opponent would be a far worse occupant of the seat. “This alleged schedule is incomplete, missing more than 40 percent of the votes Evan took in 2010, and clearly not a reliable source of information on how Evan Bayh’s time was spent,” he said. “Hoosiers know that Evan Bayh has always stood with them, and will see through this transparent effort to hand a Senate seat to a known tax cheat who voted to risk the privatization of Social Security.”
Bayh’s campaign has come under a brutal onslaught in the past several weeks, and a race in which he was comfortable ahead is now neck and neck, putting Hillary Clinton’s ability to fill the vacant Supreme Court seat in jeopardy.
The next president could end up appointing as many as three additional new justices. Republicans have suggested that if they maintain control of the upper chamber, they will prevent Clinton from making appointments, triggering a full-blown constitutional crisis, and slowing progress on everything from LGBT rights to the environment to immigration, civil rights, reproductive freedom and the role of money in the political system. Bayh’s race could tip the balance.
When Evan Bayh met with Credit Suisse Americas CEO Rob Shafir for the first time in 2010, it really was for official Senate business. Bayh, Shafir and Credit Suisse lobbyist Michael Williams sat down in his Senate office in the Russell building on April 15 for a meeting described as “Volcker Rule and OTC derivatives provisions.”
Bayh would later play a leading role in watering down the Volcker Rule, which was an effort to prevent banks from gambling with taxpayer-backed assets. The Senate passed the final version of the Dodd-Frank financial reform bill that included the rule on July 15, with Bayh voting to approve it.
A little more than a month later, on Aug. 23, Bayh met with Credit Suisse CEO Brady Dougan at the bank’s New York office. Two weeks later, he met again with Shafir. This time it was at Shafir’s office in New York rather than Bayh’s Senate office.
A week later he had a call with Credit Suisse Investment Bank CEO Eric Varvel. On Sept. 27, he met in person with Varvel and Bruce Ling, Varvel’s chief of staff, in New York. That same day he met with Pamela Thomas-Graham, and this one was the giveaway: She was global head of human resources.
According to the schedule, the hotel tab was picked up by “EBC.” The source who provided the document to HuffPost said the notation is shorthand for the Evan Bayh Committee, meaning it was paid for by his campaign fund (politicians are allowed to keep their campaign funds running even if they are not planning to run for re-election, as was the case with Bayh at that time). The expense was justified by a breakfast he did that morning, a fundraiser for New York Sen. Kirsten Gillibrand held at the office of Centerview Partners, a boutique investment bank. Bayh may have seen a familiar faces there; on June 7, he had met in the same office with Centerview’s co-founder Blair Effron. A Centerview spokesman declined to comment on the meetings.
On Oct. 1, Bayh also traveled to Charlotte to meet with Bank of America executives. Mike Flood, a headhunter at the firm Westwood Partners, paid for the hotel in Charlotte, putting to rest any question of whether the trip was job-search-related. His schedule lists him meeting with Andrea Smith, whose title was global head of human resources, and Karen Kirchner, whose mouthful of a title was “SVP, Talent Acquisition Leader for Campus Recruiting, Executive Recruiting and Commercial Banking.” Kirchner has since left the bank, and declined to comment.
The Bank of America courtship had started earlier that year. Bayh had lunch with Jim Forbes, who ran the bank’s private equity arm, on June 12. A month later, on July 12, he met in Bank of America’s New York office with Sallie Krawcheck, the head of the global banking division, just days before Bayh played a major role in weakening the Volcker Rule.
Bayh met with the bank’s then-president Brian Moynihan in his New York office on Sept. 2, and a month later he was in Charlotte talking with HR. And three days after his Charlotte meeting, he flew to Boston to meet with Anne Finacune, who was Bank of America’s global head of marketing, branding and government relations at the time. According to the schedule, Michael Sherman, whose title was global head of talent acquisition, met Bayh in the lobby and escorted him up to Finacune’s office.
For good measure, Bayh also met with executives at the private equity firm Advent International and Bain Capital, made famous by its former founder Mitt Romney’s 2012 White House run, while he was in Boston. (A spokeswoman for Bain declined to comment. Advent did not return request for comment.)
Bayh stayed at the Nine Zero Hotel during that trip. It added, “NOTE: A high level quiet room away from the elevators and ice machine has been requested. Extra pillows have been requested as well.” The more pertinent detail, however, is this one: “Payment Note: Mike Flood” ― the headhunter from Westwood Partners. A spokesman for Bank of America declined to comment.
The Investment Banking and Private Equity World
Bayh also entertained meetings with two other types of businesses who may have been willing to pay him millions of dollars for his experience: small investment banks and private equity firms. Over the course of 2010, the departing senator met or stayed with executives at five boutique investment banks ― Allen & Co., Centerview, Evercore, Moelis, GH Partners ― and 11 private equity firms ― Advent, American Securities, Apollo, Bain, Carlyle, Centerbridge, Silver Lake, TowerBrook, Providence Equity, KKR, General Atlantic ― in addition to well-connected bankers at larger firms.
Why might these companies have wanted to hire Bayh? Besides his history of trying to push financial-industry-friendly language into bills, they valued Bayh’s core skill set: Powerful people would return his phone calls. That’s pretty much the definition of influence peddling, but it’s also the definition of the job of senior investment bankers and private equity executives. People like Bayh get paid to know lots of people and figure out what those people think about things.
Bayh’s schedule for March 1, 2010, shows his apparent private equity and investment banking job hunt in full swing. The day started at the Upper East Side’s members-only Links Club, where Bayh had breakfast with Bob Rubin, a board member and senior executive at Citigroup. (Rubin had helped steer the firm to mortgage securities disaster and almost $500 billion in total bailouts, and previously served as the co-head of Goldman Sachs and as the Treasury Secretary under Bill Clinton.) After breakfast, Bayh was scheduled to meet with Roger Altman, the co-founder of boutique investment bank Evercore, whose career has whipsawed between finance and government for more than three decades.
Then Bayh had lunch with Glenn Hutchins, who co-founded the $26 billion private equity fund Silver Lake and a month later lobbied Bayh on behalf of the PE industry in a meeting in his Senate office. (A spokeswoman for Hutchins declined to comment.) After lunch, he met with Jon Ledecky, the wealthy now-owner of the New York Islanders, before meeting with another then-Citigroup executive, investment banker Ned Kelly, who was then one of the bank’s top dealmakers and had previously overseen its private equity and hedge fund investments. (Kelly also previously worked at private equity giant Carlyle Group.) A spokesman for Citigroup declined to comment on Bayh’s meetings with Rubin and Kelly.
Bayh then shifted themes and went to tape an episode of the Charlie Rose Show in his New York studio, where he complained that Republicans were hyper-partisan and progressives on the left thought of accepting “half a loaf … as in some ways being a sellout.” Washington is dysfunctional and American voters, he said, need to think about their role in the problem. “After all,” Bayh said, “we do vote these people in. All of us, and I have said this to myself, need to take a long look in the mirror and say, OK, who are we rewarding?”
After that pause for a moment of conspicuous public introspection, Bayh ended his day with a visit to Goldman Sachs’ old 85 Broad Street headquarters to meet with John Rogers, the firm’s well-Rolodexed chief of staff who began his career in the Ford White House and worked for the Reagan and H.W. Bush administrations. (A Goldman spokesman also declined to comment.)
Back In Washington
While all this Wall Street job hunting as going on, Evan Bayh was still technically a senator. And as a senator, there were things he could do to help the industry. One of those things was working to preserve the carried interest, the preferential tax rate that hedge fund and private equity managers pay.
In June, Bayh voted against a bill that would have narrowed the loophole, and was a “key player” in negotiations to water it down. Bayh says that he has always been in favor of closing the carried interest loophole, and that vote was more about his disagreements with the spending provisions of the bill rather than the tax provisions. That may be true, but at the time Bayh cast his vote, the public had no way of knowing he was deep into his job hunt with private equity managers and others whose main legislative concern was to kill that effort to close it.
Apollo Global Management spent $1.5 million lobbying against the measure, and had an extraordinary amount of money at stake. Since 2010, they’ve clocked more than $6 billion in carried interest gains. Bayh met with Apollo’s founder Leon Black twice in 2010, and then went on to work for the company. His latest financial disclosure form lists somewhere between $5.7 million and $20.9 million in wealth directly tied to Apollo.
More important, perhaps, was his work on the Volcker Rule. Bayh was among the senators pushing to allow exemptions for “trusts, sweep accounts, a broader set of insurance companies & affiliates, feeder funds, hedge funds with seed capital, and most firms in Massachusetts,” former Treasury Secretary Tim Geithner wrote in his book Stress Test, citing an aide’s account of the Senate wrangling over the law. “The amendment ended up looking like Swiss cheese.”
What makes progress in Washington so difficult is that there are a nearly infinite number of access points for industry to nudge policy in a direction that’s more favorable, especially when public attention is focused elsewhere.
One of those moments is immediately after a bill passes. Passing legislation is just the first step. Next comes the process of writing the regulations that implement the law. After that, there are often court challenges. As the industry looks to influence both, they benefit if they can base their arguments on “congressional intent,” and there is plenty of jockeying to establish what that intent was.
For the Volcker Rule, that fight began the day Wall Street reform ― known as Dodd-Frank ― passed the Senate, on July 15, 2010. Bayh voted for the legislation, and according to the federal record engaged in what’s known as a colloquy with the bill’s sponsor, Sen. Chris Dodd (D-Conn.), shortly after passage.
“With respect to the Volcker Rule, the conference report states that banking entities are not prohibited from purchasing and disposing of securities and other instruments in connection with underwriting or market making activities, provided that activity does not exceed the reasonably expected near term demands of clients, customers, or counterparties,” Bayh told Dodd. “I want to clarify this language would allow banks to maintain an appropriate dealer inventory and residual risk positions, which are essential parts of the market making function. Without that flexibility, market makers would not be able to provide liquidity to markets.”
Banks like Credit Suisse and Bank of America of course care a lot about this, as do some of their biggest customers: investors who buy and sell huge chunks of stock and debt. To investors like Apollo, hedge fund founder Eric Mindich, Oaktree’s Howard Marks, BlackRock founder Rob Kapito, or AllianceBernstein’s CEO Peter Kraus, each of whom Bayh met with in 2010, being able to buy and sell securities fast and relatively cheaply from big banks is a crucial part of how they operate. If the securities markets became harder to trade in and out of, it would be harder for them to make money. (Spokespeople for Apollo, Mindich, BlackRock and Oaktree declined to comment. AllianceBernstein did not return a request for comment.)
Dodd responded that Bayh was right. “The gentleman is correct in his description of the language,” he said, according to the record.
At a banking committee hearing two months later, Bayh asked regulators if they were familiar with his colloquy, and whether they were taking it into account when writing regulations. They assured him they were.
When the CFTC issued the final regulations in 2014, Bayh’s colloquy was cited directly.
As influential as that colloquy may have been, it may never have happened. The Congressional Record is a combination of things that happened on the floor and in hearings, as well as things that have been added into the record with the consent of the rest of the body.
The wording Bayh used, like a lot of bank-speak, doesn’t sound like spoken English ― “I want to clarify this language would allow banks to maintain an appropriate dealer inventory and residual risk positions.” A review of C-SPAN for that day, cross-checked with the Congressional Record, finds Bayh never rose to speak. What’s far more likely is that Bayh’s colloquy never happened in real time, but was written and submitted for the record after the fact.
The Bayh language was cited in regulatory lobbying by the parent company of the New York Stock Exchange, the Association of Institutional Investors, Fidelity and SIFMA, as well as a 2012 comment to regulators from a group of financial institutions led by Apollo Global Management.
Bayh had gone to work for Apollo the previous year.
Ben Walsh worked for Rogers for a portion of his time at Goldman Sachs.