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New treasurer's moves get politicos' attention

Since he took office in January, Treasurer Timothy Cahill has been running his corner of state government like a man determined to prove his victory was based on more than a catchy slogan coined by a 10-year-old.

He has ousted Treasury employees and consultants hired by his predecessor, Shannon P. O'Brien. He has stepped up efforts to get more residents gambling, introducing more frequent games and longer hours for keno, and reinstating advertising for the state lottery. He nudged aside the state's primary banker, FleetBank Financial Corp.

For these moves and more, Cahill, who rose above a crowded field last year with a campaign ad that etched his daughter Kendra's slogan "Tim for Treasurer" on voters' memories, has set tongues wagging on Beacon Hill. The most notable of his decisions was his August firing of James Hearty, the respected director of the pension fund's investment board. The sudden move -- he gave Hearty no notice beforehand -- led to the protest resignations of two equally respected board members. Cahill had already chosen Hearty's replacement, Steven Weddle, a fund manager working in South Africa.

The Hearty decision has longtime observers wondering: Is Cahill a man of steely will, or a neophyte with a political tin ear? "He has completely mishandled the management situation at the pension board," said Dominick Ianno, executive director of the state Republican party, who voiced a sentiment shared by many Beacon Hill Democrats reluctant to speak on the record. "He handled it in a completely political manner."

Governor Mitt Romney has demanded that Cahill not install Weddle, and instead appoint a committee to conduct an open search.

But if Cahill, 44, is perturbed by the criticism, it didn't show in a recent interview in his spacious office. Besides, he has enough support on the nine-member Pension Reserves Investment Management Board to go ahead as he planned, he said.

"I had to make a decision [as to] what was more important, Jim Hearty's future or the system's future," Cahill said. "And the system overrides everything. I tried to be as fair with him as possible."

Cahill said he wanted Weddle in place quickly. Hearty declined to comment.

Cahill's hires are among his proudest achievements in his nine months as treasurer. The former Quincy city councilor ran a cafe called Handshakes for 12 years and Norfolk County's finances for six; He now has more than 500 employees and oversees funds totalling tens of billions of dollars more than what he is used to managing. He knows what he doesn't know, he said.

"I'm the first one to say I've been a Quincy guy all my life," he said. "So it's of benefit to me to reach out beyond my experience and beyond my background, and bring in good people. I'm not afraid of people who are smarter than me, and there are plenty of them. And I think it helps me succeed."

Cahill said he is drawn to outsiders because they are more likely to shake up the status quo. He owes the Beacon Hill regulars no loyalty: A long shot until just before last year's election, he was hardly inundated with gestures of support from the usual suspects. He has fewer favors to return than the typical statewide politician, so he can afford more innovations, he said.

He credited his new cash manager, Tim Brooks of Indiana, with putting out to bid the state's banking contract, held by Fleet for 14 years. Now, Sovereign Bancorp of Pennsylvania will manage funds and disbursements worth $30 billion a year, and Cahill said the new contract will save the state $5 million to $6 million over the next three years.

But the process to rebid the state's banking services was already well underway before Cahill took office. O'Brien says her cash manager had the requests for proposals almost complete by the time she left office, but she held off sending them as a courtesy so Cahill could make the final decision.

While he places enormous value on the outsider perspective, Cahill is also mighty loyal to those who stuck with him before most people knew who he was. He hired his brother-in-law, Jay Jerahian, to a $57,000-per-year job in the Treasury's abandoned property division. And he made his campaign manager, Doug Rubin, who had had no firsthand experience in public finance, his first deputy treasurer. Both are qualified for their jobs, Cahill said. Sticking by him in the campaign "tells me they'll be with me through thick and thin," Cahill said. "None of them were looking for anything, because nobody thought I could win."

He remains close, too, with his friend Thomas F. Kelly III, a former deputy treasurer under Robert Q. Crane, who left the treasurer's office in 1991 and earned a reputation for running a patronage-laden operation.

Kelly, an investment consultant, is a neighbor of Cahill's and one of his chief campaign fund-raisers. More than $120,000 of the money Kelly raised for Cahill was from money managers, many of whom are in search of pension fund business Cahill helps control, and in office, Cahill continues to raise thousands of dollars from money managers, many of them from out of state.

The treasurer insists those donations will reap no rewards for money managers who don't deserve the business. He also points out that he refuses to take contributions from Treasury employees. Indeed, he said, his reputation for integrity has led to frustration in the past, as he watched other politicians "speeding by me, trading on their positions, and having a much larger war chest."

"I really draw a line, and as long as I can continue to draw that line, I'm not concerned about the public perception that I might be taking money from some businesses [seeking contracts from the state]," he said. "As long as it's fair and spread out, I can always draw the line."

Nor will Kelly get special access, Cahill said. "It's the nature of the business that people will make assertions and make connections," he said. "But again, I don't feel anybody should be penalized because they live next door to me either. . . . He doesn't get any more access to me than anyone else."

Joseph C. Sullivan, the former Braintree legislator who was tapped to head the State Lottery for the new treasurer, said his friend of 20 years will prove himself worthy of his office by the end of his first term. Said Sullivan: "He is thinking differently, trying to be creative, trying to be prudent."

Yvonne Abraham can be reached at

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