Morgan Stanley <3s Pawlenty

| Tue Jun. 7, 2011 5:30 AM EDT

In Chicago later today, Republican presidential candidate and bank bailout flip flopper Tim Pawlenty will deliver his first major speech on the economy, an address his campaign promises will offer a "specific plan for boosting the economy and creating jobs." Central to that grand vision: stimulating innovation and investment by slashing cumbersome, job-killing regulation.

Which, as the Center for Public Integrity's Peter Stone reports, should be music to the ears of Pawlenty's friends on Wall Street—particularly those at Morgan Stanley. In the 2010 election cycle, executives at the banking giant donated nearly $80,000 to Pawlenty's PAC. Morgan Stanley, meanwhile, was paid over $700,000 in 2009 for managing stocks for the Minnesota State Board of Investment, the group that oversees the state's government pension fund. Adding to Pawlenty's ties to the company: Morgan Stanley executive Bill Strong is one of the co-chairs for Pawlenty's campaign, and has led his fundraising effort.

This could prove problematic, writes Stone, given Morgan Stanley's current legal woes:

Late last month in a deal with the Justice Department, a unit of Morgan agreed to pay $2.35 million to settle charges that it wrongfully foreclosed on 17 active duty military personnel. 

Back in 2009, Morgan struck an agreement with the SEC to pay a $500,000 fine to settle allegations that its Nashville office misled customers by not revealing ties it had to money management firms it recommended and then received commissions from.

In May 2010, Morgan Stanley was reportedly facing a criminal probe by the SEC and Justice into whether it misled investors about its packaging of mortgage-backed securities. Last month New York Attorney General Eric Schneiderman opened a similar probe into Morgan Stanley and two other Wall Street firms.

Despite his anti-bailout stance-of-the-moment (and curious history of going back and forth on the matter), Pawlenty's going to have a tough time explaining to Iowa caucusers why a tainted institution like Morgan Stanley has played such a central role in getting his presidential campaign off the ground. And if they end up taking a closer look at his pro-busness, anti-regulation gubernatorial record, they'll quickly gain a much sharper understanding of the interests he represents.