Obama's private equity alums

For all the fire directed at the private equity world this week – from Mitt Romney’s opponents in both parties – few major politicians can claim to have their hands clean when it comes to the financial services industry, and President Barack Obama is no exception.

Newt Gingrich and Rick Perry found that out the hard way: Gingrich took criticism for attacking Bain Capital while having one served on the board of Forstmann Little, while Perry came in for a grilling from Laura Ingraham over the thousands of dollars in campaign donations he’s taken from private equity executives.

And Obama may have some private equity questions of his own to answer, having both taken donations from the industry and appointed a number of private equity veterans to his administration.

The most prominent among them is Jack Lew, the new White House chief of staff, who was previously a managing director at Citi Alternative Investments. Nancy-Ann DeParle, a deputy chief of staff who helped lead the president’s health care reform effort, was a managing director at CCMP Capital.

Jeffrey Goldstein, the recently-departed undersecretary of the Treasury for Domestic Finance, was a managing director at Hellman & Friedman before he joined the administration. He’s returning to the private equity firm now that he has resigned. Former auto czar Steve Rattner came out of the world of private equity before briefly working with the administration, and defended Bain Capital from attacks in a POLITICO op-ed this week.

A number of Obama advisory board members and lower-profile appointees have also had private equity on their resumes. Mark Gallogly of Centerbridge Partners, and formerly of the Blackstone Group, was on the President’s Economic Recovery Advisory Board. Richard Parsons, the former Time Warner executive on the President’s Council on Jobs and Competitiveness, is also linked to Providence Equity Partners Inc. Walter Jones, the U.S. executive director of the African Development Bank, was a senior private equity executive with Gravitas Capital Advisors.

There are other private equity connections on the President’s Management Advisory Board, the Board for International Food and Agriculture Development, the National Infrastructure Advisory Council and the Advisory Committee of the Pension Benefit Guaranty Corporation.

In light of that, one private equity insider suggested to me in an email: “If President Obama plans to campaign against Mitt Romney and the alleged evils of private equity, then he will need to start by purging the ranks of his own administration.”

Obama campaign spokesman Ben LaBolt said otherwise, arguing that the president isn’t demonizing private equity or attacking financial services in general, but rather trying to hold Romney to account for misrepresenting his work at Bain Capital.

“The central premise of Mitt Romney’s candidacy is asking Americans to elect him based on his experience in his version of the ‘real economy.’ We agree with his opponents – describing his ‘real economy’ experience isn’t about demonizing free enterprise or someone’s ability to make a profit,” LaBolt said. “It’s about Mitt Romney being truthful about his experience, and what that experience and perspective might mean for someone seeking the Oval Office.”

He continued: “As his business partner said, Romney’s experience wasn’t about job creation. It was about outsourcing jobs, closing plants, laying off workers and making millions by bankrupting companies. That’s the type of economic philosophy that helped create the economic crisis, and voters have a right to know that and judge for themselves whether that’s what they want in a president.”

As the campaign moves forward, it’ll be up to Obama to make the argument himself that there’s a major, meaningful difference between coming directly out of private equity, and being friendly to the industry and bringing private equity executives into government. That may not be hard, given how tightly Romney has bound himself to Bain Capital, but it could force at least a bit more nuance into the Democratic argument. And it could end up isolating Romney and Bain as the targets of general-election attacks, rather than private equity more broadly.