Stories I’d like to see

The Dodd-Frank effect, unions and private equity, and Newt’s expenses

Steven Brill
Jan 31, 2012 13:19 UTC

1. The Dodd-Frank effect: Good, bad or both?

Although the Consumer Financial Protection Bureau, the mega-agency created by the Dodd-Frank financial regulatory bill, has only been in existence for about six months, all of the Republican presidential candidates and GOP congressional leaders have slammed the agency and called for its abolition. Their central charge is that the regulations it has already promulgated are strangling the financial system and disabling banks from making the kinds of loans to small businesses and potential homeowners that would reignite the economy.

For example, in the Jan. 23 Republican presidential debate Mitt Romney said he had spoken to a banker in New York who said he had “hundreds of lawyers” tied up trying to navigate the new regulations.

Some sophisticated financial reporter, or team of reporters, needs to dig into that – with specifics. What exactly is the new agency requiring that is gumming up the works? What new rules are drawing the most persuasive complaints? How burdensome are they? How many lawyers and others are actually involved who were not working on the same types of regulations before? What abuses are the new rules intended to prevent? Which ones, if any, really do seem indefensible and which ones, if any, seem smartly crafted and worth the extra burden?

The best way to do a story like this is to go to one big bank and ask for full, on-the-record access to those working in the trenches on compliance. Jamie Dimon of JPMorgan Chase, who has been a lead complainer, would be my first candidate; ask him to show us the trauma. Then enlist a community bank in the same show-and-tell. Dig in to every single detail, with no preconceptions. Either way, it’s a great story about how what happens in Washington affects Wall Street and Main Street.

2. Private equity and blue-collar workers:

The controversy over Bain Capital and Mitt Romney’s defense against charges that Bain is guilty of “vulture capitalism” call for a broader story about one of the most interesting ironies in American finance and business: As Romney has pointed out, private equity funds draw much of their investment dollars from – and make much of their money for – pension funds. And among the biggest of these pension funds are those whose beneficiaries are the most liberal-leaning, 99-percenter unions, particularly those representing teachers and other public employees. The same is true of venture capital funds, which, because they focus more on startups than private equity funds do, are perhaps more likely to fund businesses that threaten to disrupt an industrial status quo that unions might want to preserve.

Spotlight on Bain, Obama’s billion, and immigration madness

Steven Brill
Jan 3, 2012 13:20 UTC

1. Bain in the spotlight:

Private equity firms like to be, uh, private. With the exception of mega-firms like Blackstone, Carlyle and KKR, we rarely read about them, and even in those cases the ink is typically confined to the business pages. However, as it become increasingly likely that the founder of Bain Capital is going to be the Republican presidential nominee, a bright spotlight is likely to turn on Bain.

A smart story about Bain — which is one of the most successful, hardest driving firms in the industry — would start with the culture and business strategies Romney tried to instill as its founder. What kind of reputation did the firm have (and does it now have) for how it behaves at the deal table? Is its handshake good? Does it push too hard, or not hard enough? Are there certain types of businesses that it has avoided for strategic or civic reasons, such as tobacco companies? Did it and does it have any distinctive characteristics when it comes to minority hiring, treatment of women, and  charitable, civic or public service activities? (I’m thinking about that because of Romney’s own record, he says, of tithing 10% of his annual income.)

Does Bain have any especially aggressive policies with regard to tax avoidance or labor relations when it comes to the companies it controls? Are there any issues related to the sources of its funds, such as taking money from sovereign funds of rogue countries? Have any limited partner investors ever sued? If so, for what? (I doubt this is a sore spot, because from what I’ve heard its results have been good and its investors happy.)