Roundtable's Pawlenty: A Blunt Boss Set for Long Haul

Here's what you need to know about Tim Pawlenty, the new leader of the Financial Services Roundtable.

He's nice, as in "Minnesota nice," where he was born and bred. And normal. Clearly comfortable in his own skin, Pawlenty isn't out to impress you with who he knows or where's he's been. He's even self-deprecating, joking that his recent presidential campaign was "shorter than Kim Kardashian's marriage." (Which actually isn't true.)

Barbara A. Rehm

While not the least bit flashy, Pawlenty is smart and quick on his feet; in just a month he's nearly mastered the fine art of financial policy speak.

Finally, true to his Midwest roots, Pawlenty speaks plainly.

Roundtable board members vetting Pawlenty for the job asked him what he thought they needed to do to restore the industry's reputation.

"I said stop doing stupid things," he recalls in an interview. "You get trust by earning it. You don't get trust by just declaring you are owed trust."

It's not hard to imagine Pawlenty emerging as an influential voice in the years to come as the financial services reform debate continues. And it's clear the Roundtable's new chief executive plans on sticking around; this isn't a pit stop in his political career.

In the interview, Pawlenty called the Roundtable job "a unique and transformative career opportunity," one that he planned to pursue for "five or 10 or 15 years."

The Roundtable announced Pawlenty's hiring in September, just seven weeks before Election Day. Because he co-chaired Mitt Romney's campaign, the news arched eyebrows all over town. Was Pawlenty jumping ship? Surely in line for a big job in a Romney administration, he must have figured the former Massachusetts governor would lose, right?

"The timing was suboptimal," Pawlenty concedes. "But Mitt and I communicated about it directly. He understood completely. It wasn't a comment at all about his chances."

Pawlenty then explained how he views his new job.

"When you hire someone into this position, I don't think you hire them for the next 12 months or 24 months," he says. "I think you look at it over the next five or 10 or 15 years. You look at it as a career move."

Bingo. Pawlenty is done with politics. Or perhaps it would be more accurate to say he's done politics.

Pawlenty, who just turned 52, was first elected to the Eagan (Minn.) City Council when he was 28 years old. He was elected to the state House of Representatives four times and was eventually elected governor of Minnesota twice, serving from 2003-11.

A Main Street conservative, Pawlenty is religious, leans right on social issues and opposes tax increases.

His profile went national during the 2008 campaign when Sen. John McCain considered Pawlenty as a potential running mate. When McCain selected Sarah Palin, Pawlenty went back to running Minnesota.

Flash forward to the 2012 campaign; Pawlenty decided to run for president. He formed an exploratory committee in March 2011, officially launched his campaign that May and threw in the towel in August after losing the Iowa Straw Poll to fellow Minnesotan Michele Bachmann.

Pawlenty is proud that he governed a blue state in the tradition of Hubert H. Humphrey, Eugene J. McCarthy and Walter Mondale. (Pawlenty succeeded Jesse "the Body" Ventura of World Wrestling Federation fame and the Reform Party.)

"I've got a record of being an executive, and functioning in a bipartisan environment," he says. "You can't be a leader in Minnesota, a Republican in a Democratic state, without having some bipartisan tendencies and capabilities."

True enough, but when Pawlenty was running for president he did criticize both the bankers he now represents and the Democrats he'll be lobbying.

"Listening to the debate in Washington, a pattern seems to be emerging: folks at the bottom of our economy get a handout, folks at the top get a bailout, and the rest of us get our wallets out," Pawlenty wrote in his autobiography, "Courage to Stand."

"The average person is being squeezed from every direction, and the liberals in Washington appear out of answers. Probably because they never had them to begin with."

It gets worse.

In June 2011 Pawlenty said, "I went to Wall Street and told them to get their snouts out of the trough, because they are some of the worst offenders when it comes to bailouts and carve-outs and special deals."

Asked how he finessed that statement during his interview for the Roundtable job, Pawlenty said he turned it into a positive.

"It's actually a strength, because they could have gone and hired a Wall Street banker or somebody with a finance background from Wall Street," he says. "I've been fairly blunt and candid about these things, and put a little fresher and different face on it. And frankly they [the industry] need it."

(Of course this argument — that the Roundtable would have been worse off if it had hired "someone from Wall Street" — ignores the fact that trade associations often hire former politicians. Pawlenty's predecessor at the Roundtable, Steve Bartlett, was a Republican congressman from Texas, and when the American Bankers Association went looking for a new CEO in 2010 it, too, selected a former governor.)

The Roundtable was created in 1993 when the Association of Reserve City Bankers merged with the Association of Bank Holding Companies. When the legal walls separating banking from brokerage and insurance were eliminated in 1999, the Roundtable broadened its membership to include brokers and insurers. Today it represents most of the 100 largest financial services firms.

Over time, the association has tacked on a legion of specialties: information technology, foreclosure relief, housing policy, identity theft, financial stability, industry reputation.

Two big questions face Pawlenty: does the membership structure still make sense, and has the proliferation of causes diluted the organization's effectiveness?

The market integration envisioned by the Gramm-Leach-Bliley Act hasn't materialized as expected. The most glaring example is insurance. Rather than dive deeper into banking, insurers, especially in the wake of the Dodd-Frank Act, are selling their banking units.

The Roundtable's current chairman is the head of Allstate, which dissolved its bank last year. Pawlenty laughed when I suggested the Roundtable might dump its insurance members.

"We value our members," he says. "And keep in mind, our members are satisfied. … our membership is growing."

He said the group is stronger for bringing the perspectives of all three slices of the financial services industry together.

"There is value in volume, both in terms of perspective and in terms of energy and in terms of the impact that that has on policymakers," he says. "If you had a world where they heard from one banking organization, they got one letter and one visit that would be a different feel and impact than if they got five letters, five visits."

Pawlenty brushed aside the fact that insurers and bankers are on opposite sides of big policy fights like the government's identification of nonbanks that pose a threat to the financial system. He said the Roundtable's strength is its diversity, and his challenge is to find the broad issues that can unite members.

"If you can find those things that overarch the membership — not every member every time every issue, but many of the members on many of the issues most of the time — then you've got a very powerful coalition."

Cybersecurity is an example, he says.

Asked whether he feared The Clearing House may be usurping the Roundtable, Pawlenty didn't bite. "Their membership is banks. They have a business side of the house, which is their clearing function, and then they have comment, regulatory letter writing, which we coordinate with," he says. "They are one of our sibling organizations in the area of regulatory advocacy, particularly as it relates to comment letters, and we work together with them very closely."

Fourteen of the Clearing House's 18 members, he says, belong to the Roundtable. In this era of cost-cutting, does he think bankers need both groups? "I think it has to be both. They don't lobby like we lobby and then we have 85 other members that bring a lot to the table in terms of resources and perspective."

As for the second question — is the Roundtable trying to do too much? — Pawlenty says he's studying it.

"It is part of my job to assess exactly what you are asking and make recommendations to the board," he says. "No organization can just stay the same. Staying the same is not an option. … I acknowledge your point and it is something I am going to be working with our members on and making sure we are hearing what they perceive as value in the organization and responding to that and delivering it.

"That may well require us to beef up some areas like cybersecurity and there may be some areas that we look at and say, 'You know what? There are five other groups chasing those things' and we might de-emphasize those."

Pawlenty is also focused on Dodd-Frank implementation, and legislative attempts to temper the law.

While he doesn't expect change to come quickly, Pawlenty figures even the industry's harshest critics know the economy can't grow without "healthy, vibrant and stable" financial institutions.

"People climbed out from underneath the avalanche of the crisis, and there is always a little postcrisis PTSD that occurs, so it takes a little time for everybody to get their sea legs back underneath them," he says. "People still have some pretty fresh memories of 2008 and the aftermath, but they also have an appreciation for the fact that the economy needs to get moving again."

This recognition will unfold over time. "It's not going to happen overnight. It's not going to happen in one moment. It's probably going to unfold over five or 10 years, in increments," he says.

"And again, you don't just get trust. You earn it."

Add patient to the list of adjectives used to describe Pawlenty.

Barb Rehm is American Banker's editor at large. She welcomes feedback to her column at Barbara.Rehm@SourceMedia.com. Follow her on Twitter at @barbrehm.

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