Former House majority leader Eric Cantor is seeking a post-political life on Wall Street, joining boutique investment bank Moelis & Co to a salary of $1.8m a year and the price of a Manhattan apartment.
The move comes only two months after Cantor, a stalwart of the Tea Party, lost a Virginia Republican primary election to David Brat, a relatively unknown college professor.
Cantor’s title at Moelis will be vice-chairman, an honorific that suggests a job with little day-to-day management responsibility and a focus on relationship-building with the chief executives of major companies, who are clients of the firm.
Moelis & Co, founded by Wall Street veteran Ken Moelis, is an investment banking firm that advises big companies on mergers and acquisitions, sans the big-ticket lending that distinguishes banks like Citigroup and Bank of America. Firms like Moelis, along with rivals Evercore Partners and Perella Weinberg, are called “boutiques” to distinguish them from leviathan “financial supermarkets” including Citigroup, Bank of America and JP Morgan Chase.
The new salary from Moelis is more than double what Cantor made as a member of the House of Representatives. This year at Moelis, Cantor will get $1.8m, including a base salary of $400,000, another $400,000 in cash and $1m in a stock grant that vests over three to five years. In 2015, Cantor stands to make up to $2m, including a $1.2m bonus. He will also be “reimbursed for the reasonable cost of a New York City apartment for his first 12 months and a hotel equivalent rate thereafter”, according to a federal filing by Moelis.
Finance and real estate firms were Cantor’s biggest campaign donors in the past year. Together, the two industries donated over $1.9m to his leadership Pac and failed re-election efforts, according to the Center for Responsive Politics.
Cantor’s banking-friendly stance appears to have been a reason for his hiring, according to a statement from CEO Ken Moelis: “Eric has proven himself to be a pro-business advocate and one who will enhance our boardroom discussions with CEOs and senior management as we help them navigate their most important strategic decisions.”
Still, Cantor’s Wall Street-friendly stance was a thorn in the side of some of the voters in his party and his district. The Tea Party Citizens Action fund, an 18-month-old political action committee, greeted Cantor’s move with sarcasm.
“After Dave Brat’s victory in June, many analysts accused Eric Cantor of paying more attention to Wall Street than to the people of Virginia’s 7th District,” the Pac’s national director of communications, Kevin Broughton, said in a statement. “He certainly didn’t waste any time validating that theory.”
Still, Cantor’s move to a smaller, less well-known Wall Street firm is notable for being part of a recent trend in which Washington policy makers try to gain distance from the disasters of the 2008 financial crisis and subsequent bailouts.
Smaller, less controversial firms have become appealing to political leaders who leave the modest pay of public office to seek lucrative employment on Wall Street. Former Treasury secretary Tim Geithner, similarly, chose to lead his post-Washington career at Warburg Pincus, a private equity firm that manages $35bn but is almost entirely unknown to people outside the finance profession. Five-star general David Petraeus, who resigned as director of the CIA over a sex scandal, joined private equity firm KKR in 2012 – a firm known to the American public, if at all, as the major player behind the RJR Nabisco takeover enumerated in Barbarians at the Gate.
Big banks once drew the biggest political names, as Lehman Brothers and Credit Suisse First Boston both did when they hired the late diplomat Richard Holbrooke. Similarly, Citigroup famously hired former Treasury secretary Robert Rubin in 1999 after he argued in favor of the company’s plans to merge into a financial supermarket in contravention of the securities laws of the time. Former Federal Reserve chairman Alan Greenspan joined not one, but three Wall Street firms in 2007: bond-trading firm PIMCO, hedge fund Paulson & Co, and Deutsche Bank.
One of the most infamous – and successful – cases of such “revolving door” hirings was the Swiss bank UBS’s hiring of former senator Phil Gramm in 2003. Gramm co-authored the Gramm-Leach-Bliley Act, a seminal piece of legislation that reversed the Glass-Steagall Act and allowed commercial banks and investment banks to merge. Gramm helped advise financial services companies including Visa and built up UBS’s lobbying arm.
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