WASHINGTON (AP) — In a recruiting coup, former Republican Sen. Dan Coats said Wednesday he’s preparing to challenge Democratic Sen. Evan Bayh of Indiana in November, a potential matchup already generating tough talk.

The GOP has sought new opportunities to pick up seats and cut into the Democratic majority on Capitol Hill after Republican Scott Brown’s recent upset in a special Senate election in Massachusetts.

Coats, who retains strong name recognition even though he’s not an Indiana resident now, would bring a high profile to the race, where Republicans believe the two-term incumbent may be vulnerable. Coats is a conservative Republican, while Bayh is a moderate Democrat who toyed with running for president in 2008. Some polls suggest Bayh could be vulnerable.

Coats’ first message was pounding away on “the failure by our leaders in Washington to listen to those they were elected to represent,” particularly on what he considers out-of-control spending.

He said that while Indiana families have “sacrificed to make ends meet during these tough economic times, our elected officials in Washington continue to run up massive deficits, recklessly borrowing and spending record amounts of taxpayer money.”

But Coats can hardly position himself as a Washington outsider. He was a senator for 10 years before deciding in 1998 against seeking re-election, avoiding a race with then-Gov. Bayh. Since then, he has served as ambassador to Germany under former President George W. Bush and worked as a lobbyist in Washington for unpopular financial companies, including Credit Suisse and Bank of America. Coats was a lobbyist for the latter when it took $25 billion in bailout funds. Bank of America has since paid the money back.

Sensing a difficult race if Coats is the nominee, Democrats quickly made it clear they would spotlight Coats’ lobbying work

“Coats is a Washington, D.C., insider who lined his own pockets as taxpayers spent $700 billion bailing out Wall Street banks,” said Eric Schultz a spokesman for the Democratic Senatorial Campaign Committee. “Hoosiers won’t ignore Dan Coats’ decade as a lobbyist working the system to gain special favors for the banking industry at the time of financial collapse and at the expense of working Americans.”

At least four other Republicans have said they will seek the nomination in the May 4 primary, and Coats is in a race to secure the necessary signatures in the next few weeks to qualify for the ballot. Coats said in a statement he has authorized supporters in Indiana to try to gather signatures from voters by the Feb. 16 deadline.

Though Coats is now a resident of Virginia, the Constitution merely requires that he be an “inhabitant” of Indiana when elected.

Republicans intend to make an issue of Bayh’s support of President Barack Obama’s agenda, including health care legislation and the economic stimulus.

When Coats retired in 1998, he said he was tired of constantly raising money to run for office. Bayh went on to defeat the mayor of Fort Wayne, Ind., and won re-election comfortably in 2004, even as President George W. Bush captured a second term.

Posted 2/4/2010