Republicans Turn to Lazard Banker to Topple Al FrankenCraig Giammona and Kathleen Hunter
Investment banker Mike McFadden wants to trade a career at Lazard Ltd. for one in politics and is making his finance background a chief argument for unseating U.S. Senator Al Franken in Minnesota.
That approach carries considerable risk as just 14 percent of Americans hold a favorable opinion of Wall Street firms, a NBC News/Wall Street Journal poll in September 2013 showed.
Still, Minnesota is where voters elected former professional wrestler Jesse Ventura governor in 1998 and a decade later sent Franken to the Senate after his career as a comedian and “Saturday Night Live” star. McFadden is aiming to win points as the latest outsider seeking office, saying he’d be a different kind of lawmaker.
“Senator Franken and the Democrats have no idea what I do,” McFadden said in an interview when asked whether his 20-year career in investment banking could be turned into a political liability. “They don’t have a clue, just like they don’t have any idea how to run this economy.”
Republicans need a net gain of six seats in November’s election to take control of the Senate. Franken’s seat has been viewed as safe for Democrats -- an April 24-28 poll of 800 likely voters by Boston-based Suffolk University showed the incumbent with a 15 percentage-point lead over McFadden. And Minnesota leans Democratic. President Barack Obama won it easily twice, in 2012 beating Republican Mitt Romney by eight points.
Yet Minnesota Republicans have coalesced behind McFadden, potentially making the race more competitive. The state party endorsed McFadden at its May 30 convention, and he’s favored against an underfunded candidate in an Aug. 12 primary.
McFadden, a 49-year-old father of six, has taken a leave of absence as co-chief executive officer of Minneapolis-based Lazard Middle Market, a unit of the investment bank that advises midsize companies. He said he’s prepared to face attacks similar to those leveled against Romney, whose wealth and work at Boston-based Bain Capital LLC, the private-equity firm he co-founded, became a political issue in the presidential contest.
McFadden has a net worth between $15 million and $57 million, according to his financial-disclosure filings.
“I believe strongly that the demonization of business that took place in 2012 by President Obama and Senator Franken is reckless,” McFadden said. “The majority of Minnesotans believe that. They know we need people with experience solving problems to go to Washington and get the country back on track.”
Franken, 63, already is drawing a contrast between himself and McFadden’s financial ties. He released an ad last week touting his “fight against Wall Street” that highlighted his 2010 effort to create an independent board to oversee the credit rating of financial products.
“Wall Street wasn’t happy about that, but I don’t work for them, I work for you,’ Franken says in the ad.
Franken’s campaign also has emphasized his work in the Senate to persuade the Commodity Futures Trading Commission to combat price speculation in oil markets that he contends is driving up gas prices.
These issues will play well with Minnesota voters, particularly as Franken tries to use McFadden’s investment banking credentials against him, said Larry Jacobs, a political science professor at the University of Minnesota’s Humphrey School of Public Affairs.
‘‘The Democrats are going to try and nail McFadden as the incarnation of a Wall Street fat cat, as they did with Mitt Romney,” Jacobs said.
Republicans, he added, “are going to paint Al Franken as President Obama’s handmaiden in passing Obamacare,” referring to the Patient Protection and Affordable Care Act that the senator supported.
Franken has the fundraising advantage in the race. He collected $10.9 million in the 15 months that ended March 31 and had $5.9 million on hand, according to campaign-finance records.
McFadden, who announced his candidacy in May 2013, raised $2.09 million through March 31, with support from Wall Street veterans such as Robert Greenhill and Daniel Loeb. The Republican had $1.8 million on hand at the first quarter’s end.
Lazard employees have given McFadden more than $118,000 and he has taken in $433,154 from the securities and investment industries, according to the Center for Responsive Politics, a Washington group that tracks campaign contributions.
Franken spent about $1.5 million on campaign commercials through June 30 and is responsible for 82 percent of the ads airing on broadcast television in the race, according to New York-Based Kantar Media’s CMAG, an advertising tracker. The most frequently shown spot focuses on jobs and it features Franken in factory settings.
Two outside groups are also running ads. The American Petroleum Institute has aired 470 spots urging Franken to support the Keystone XL pipeline, which TransCanada Corp. wants to build across parts of the U.S. American Encore, a nonprofit group that isn’t required to disclose donors, paid for 134 commercials criticizing Franken and Obama for supporting new federal rules governing nonprofits.
Given the state’s political slant and the fundraising differential, “a lot of things have to go right for Republicans to win statewide in Minnesota right now,” said Nathan Gonzales, deputy editor of the nonpartisan Rothenberg Political Report in Washington.
“Minnesota falls into the category of races where I think Republicans are trying to get a credible candidate in place so that if the cycle swings increasingly in the Republicans’ direction, they’ll have someone there to take advantage,” Gonzales said.
Franken’s seat is one of eight held by Democrats that Rothenberg rates as “safe Democrat.”
In his bid for a second term, Franken may be dogged by the nation’s sluggish economic recovery and Obama’s declining approval ratings in polls. Still, McFadden isn’t well known in Minnesota, which gives Democrats the opportunity to turn his ties to Wall Street into a liability, Jacobs said.
Trying to guard against that, McFadden’s campaign has briefed Minnesota reporters on the differences between private equity and investment banking. The campaign also hired a former Romney consultant to advise McFadden on how to speak to voters about his banking career.
McFadden’s supporters also are going on the offense, casting Franken as a Washington insider in an election year characterized by anti-incumbency sentiment.
“You’ve got a senator that’s been there six years, has done very little or nothing, and you’ve got somebody who knows something about growing jobs, knows something about bringing people together, knows something about getting things done, who’s extremely accomplished,” said former Republican Senator Norm Coleman, whom Franken defeated in 2008. “Al Franken is now Washington, and Washington isn’t very popular in Minnesota or elsewhere.”
Franken declined to be interviewed, both in person and through a spokeswoman.
“Al Franken has a considerable lead in Minnesota and I expect that he will hold it,” Colorado Senator Michael Bennet, chairman of the Democratic Senatorial Campaign Committee, said in an interview. He added that the committee is prepared to step in and buoy Franken should the race tighten.
“We’re just going to have to make the decisions on a week-by-week basis, depending on what’s going on,” Bennet said.
Franken won his seat by 312 votes, defeating incumbent Coleman after a prolonged recount. He strengthened his standing with Minnesota voters since then by keeping a low profile on national issues and focusing on constituent services, said Aaron Brown, a political columnist for a newspaper in Hibbing, Minnesota.
“His mission has been to demonstrate that he’s not a comedian,” Brown said. “He’s showed that he’s serious about being a senator and not just a talking head on the national scene who happens to have Minnesota after his title.”
As voters start paying more attention to the contest and McFadden gets more scrutiny, Jacobs said the Republican needs to broaden his base of support to include more independents.
“McFadden needs to tap into the frustration with Washington as rancorous and unable to get its work done,” he said. “There’s a longstanding populist streak here that Jesse Ventura was able to tap into.”
Raised in Nebraska, McFadden graduated from the University of St. Thomas in St. Paul -- where he played on the football team -- and then got his law degree at Georgetown University in Washington. He worked as an attorney at Cravath Swaine & Moore LLP in New York for about a year, returning to Minnesota in 1993 to join the investment bank Goldsmith Agio Helms & Lynner LLC.
McFadden was appointed co-CEO of Goldsmith when it was purchased by Bermuda-based Lazard Ltd. in July 2007 and later renamed Lazard Middle Market.
This week, he set out on a trip across Minnesota, with plans to visit each of its 87 counties. He plans to keep his pitch simple and direct.
“I’m very proud of my business background,” he said. “I know how to get us back on the road to growth and prosperity. The Democrats know how to drive us into a ditch.”