Washington Ties Help Boutique Banks Land Key Treasury Roles
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In 2008, it was Eric Cantor’s job as a congressman to help drum up support for the bank bailouts as the economy was sinking. Now he’s on the other side.
Cantor, who later became the House Majority Leader, played a role in helping his investment bank,Moelis & Co., score akey mandate this week in helping the U.S. Treasury Department dole out loans that are part of its historic rescue package, according to people familiar with the matter. He is working on the project alongside the firm’s Chief Executive Officer Ken Moelis, who once counted now President Donald Trump as a client.
Perella Weinberg Partners LP was helped by its chairman of advisory, Bob Steel, who worked at the Treasury Department during the last crisis, the people said. Formerly the undersecretary for domestic finance, Steel is now working on the mandate along with the firm’s Chief Executive Officer Peter Weinberg.
Moelis was tapped to work with cargo carriers and contractors, while Perella is helping to allocate loans to companies critical to national defense, which could includeBoeing Co.
Representatives for Moelis and Perella declined to comment.
PJT Partners Inc., the independent advisory firm run by Paul Taubman, was also tapped to work with passenger airlines.
For banks, the roles are more about the prestige than money. Treasury Secretary Steven Mnuchin said Thursday that there would be no big fees for banks, which would receive what they would for charitable work. He reiterated that the loans won’t be bailouts.
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Boutique banks have fewer conflicts than larger banks, mostly because they don’t lend. The large U.S. banks have existing credit lines with the airlines industry, where a more than $50 billion bailout package has been made available.
The difficulties will come with how to dole out that package: Who gets what, and how will it be used? Guggenheim’s co-chairman Jim Millstein, the Treasury’s restructuring chief in the wake of the last financial crisis, told the Financial Times that the government should also be taking stakes in some U.S. companies as part of the aid.
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His investment bank, Guggenheim Securities, has also been been in talks to helpAmerican Airlines Group Inc, according to a source familiar with the matter. Reuters first reported those talks. American Airlines didn’t immediately comment.
— With assistance by Max Abelson, and Mary Schlangenstein
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