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GOP Industry Choices Bewilder Democrats

Judging by the decision of two prominent trade associations this week to tap Republicans to run their organizations, you might be fooled into thinking Tom DeLay is still in office and the K Street Project — an effort to install loyal GOPers into top lobbying jobs — is still in full swing.

A double dose of job announcements began Tuesday when the Managed Funds Association declared it was bringing on Rep. Richard Baker (R-La.) to run the group. On Wednesday, the Securities Industry and Financial Markets Association said its new chief will be Tim Ryan, a JPMorgan Chase executive who was nominated to the Treasury Department by President Bush (though he later withdrew his name from consideration).

Some K Street observers say the moves show that corporate and association search committees are giving less consideration to party affiliation and more to sheer expertise than before, or the hires are a strategic choice to prove that in the long run, bipartisanship always is the most effective strategy.

But most Democratic lobbyists — a beleaguered class before the 2007 Democratic Congressional takeover — say the two decisions have left them bewildered.

“There’s a lot of head-scratching over these decisions,” said one Democratic lobbyist, who would only speak on condition of anonymity. “Most people think that Democrats are going to pick up seats in Congress and could take the White House. A lot of people look at these hiring decisions and think that companies and groups haven’t come to terms with the electoral realities.”

Other Democrats had even stronger words on the new hires.

“The same geniuses that brought you collateralized debt obligations and the subprime teaser [adjustable rate mortgages] have now decided that the best strategy for defending all their interests in Washington is to put Republicans in charge of their largest trade associations,” said one in-house Democratic lobbyist at a Wall Street firm. “These are the so-called Masters of the Universe and they haven’t a clue about who’s running Washington.”

This Wall Street lobbyist said that appointing GOPers to the top jobs in an industry where several other top groups — such as the Financial Services Forum and the Financial Services Roundtable — are controlled by Republicans will hurt Wall Street’s agenda on Capitol Hill. (The Private Equity Council, however, is led by a Democrat.)

“These associations don’t speak the same language as the Democratic chairmen,” this lobbyist said. “You want someone in these top jobs that can serve as an early-warning radar. And you’re not going to get a staffer for [Financial Services Chairman Barney] Frank [D-Mass.] that’s going to pick up the phone to call Tim Ryan and give him the heads-up that they’re about to screw him in a hearing.”

Another Democratic lobbyist, who also only would speak on background, said K Street Democrats are “shaking their heads.” Not only because SIFMA and MFA have chosen Republicans, but that MFA tapped Baker, whose own party passed him over for the ranking member slot on the House Financial Services Committee, where he is currently the No. 2 Republican.

“Republicans don’t like him,” said this lobbyist. “If they did, he’d be ranking member on the committee. From a strategic perspective, I don’t understand.”

This lobbyist added, “It’s going to take the fall elections before it completely hits [the business community] that Democrats are going to be around for a while.”

Yet another Democratic lobbyist said that Ryan’s hire at SIFMA makes “a little more sense because he has an established track record on economic policy. But Baker, I don’t get it. He isn’t known as someone with good relationships with Democrats or Republicans.”

John Endean, president of the nonpartisan American Business Conference, said he interprets the GOP lobby hires as defensive moves by SIFMA and MFA.

“Why would you choose a Republican? Because if you think of yourself as being on the defensive, holding against what you regard as bad policies from Democrats, you’re going to have to rally Republicans,” said Endean, who is not affiliated with either political party.

“It’s a self-defensive measure, a circle-the-wagon mentality. What it tells you is that in the near term, they’re going to have very much a defensive lobbying strategy.”

Party labels aside, however, both of the financial services hires have experience on issues related to the Wall Street industry.

“These are both folks that understand from a regulatory standpoint what the industries are up against,” said Ivan Adler, a lobbying recruiter at The McCormick Group. “With those two hires, they get folks who understand the regulatory landscape really well and can navigate through the possible turbulence on the Hill that would affect their industry.”

He added, “There’s a trend toward bipartisanship.”

Charlie Ingersoll, senior client partner in the association and government practice at search firm Korn/Ferry, agreed that the pendulum has swung to the middle.

“What’s changed from several years ago is that now trade associations are looking for people who have deep contacts on both sides,” he said. “Several years ago, they were looking for people who had deep Republican credentials. Now they are open to people who are either Democrats or Republicans.”

Republican lobbyists say the SIFMA and MFA hires are a positive sign that trade associations and potentially other corporate jobs won’t rule out GOPers.

“Philosophically, Republicans are aligned with SIFMA and managed funds,” said a Republican lobbyist. “All these jobs, the Republican position is the one that’s most sympathetic to their positions.” He pointed to such issues as Democrats’ proposed tax increases on private equity partnerships and hedge funds, which MFA represents.

But hedge funds and their employees have given far more campaign cash to Democrats, indicating that at least on one level, the industry is more in line with Democrats, according to a survey of campaign donations by the nonpartisan Center for Responsive Politics.

So far for the 2008 election cycle, the hedge fund crowd has given $4.2 million to Democrats and $1.1 million to Republicans. The total financial services sector has contributed nearly $80 million to Democratic coffers and $66.3 million to Republicans, according to the CRP.

Another GOP lobbyist said the Democrats’ gripes are ill-timed, especially since the Democratic party ushered in new ethics and lobbying laws that, among other things, outlawed the practices of the K Street Project.

“In my opinion it’s like someone complaining that the AFL-CIO didn’t hire a Republican during the Democrats’ years in the wilderness,” said this GOP lobbyist. “You never heard Democrats suggest that the trial bar or green groups or unions hire Republicans. These are capitalist jobs, and that’s just the way it is.”

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