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See also regulatory capture.



  • Source: Opensecrets.org Top 20 receiptants of political donations by industry subsector for 2008.

  • Insurance... $153,694,224
  • Securities & Investment... $95,828,107
  • Real Estate... $82,566,975
  • Commercial Banks... $49,579,046
  • Finance/Credit Companies... $32,776,612
  • Misc Finance... $21,573,300
  • Accountants... $13,966,160
  • Credit Unions... $6,154,200
  • Savings & Loans... $2,866,000

Effective January 1, 2008 Revised June 9, 20091 Section 1 - Introduction

Section 6 of the Lobbying Disclosure Act (LDA), 2 U.S.C. § 1605, provides that: The Secretary of the Senate and the Clerk of the House of Representatives shall (1) provide guidance and assistance on the registration and reporting requirements of this Act and develop common standards, rules and procedures for compliance with this Act; [and] (2) review, and, where necessary, verify and inquire to ensure the accuracy, completeness and timeliness of registrations and reports.

The LDA does not provide the Secretary or the Clerk with the authority to write substantive regulations or issue definitive opinions on the interpretation of the law. The Secretary and Clerk have, from time to time, jointly issued written guidance on the registration and reporting requirements. This document is both a compilation of previously issued guidance documents and our interpretation of the changes that were made to the LDA as a result of the Honest Leadership and Open Government Act of 2007 (HLOGA).

This compilation supersedes all previous guidance documents. This combined guidance document does not have the force of law, nor does it have any binding effect on the United States Attorney for the District of Columbia or any other part of the Executive Branch. To the extent that the guidance relates to the accuracy, completeness and timeliness of registration and reports, it will serve to inform the public as to how the Secretary and Clerk intend to carry out their responsibilities under the LDA.

Section 2 - What’s New

This revision has been written based upon comments received in the last six months and issues that have arisen as a result of the Secretary’s and Clerk’s statutory and administrative responsibilities.

Section 4: Lobbying Registration Language concerning the timing of an initial registration of a potential registrant has been modified to make clear that a registration needs to be filed at the earliest time that the potential registrant employs a person meeting the definition of a lobbyist.

Section 6: Quarterly Reporting of Lobbying Activities The language emphasizes that if registrants make the LDA Section 15 election, they may not subtract lobbying expenses for state, local, and grassroots lobbying activities from their total reported on Line 13 of LD-2.

Section 7: Semiannual Reporting of Certain Contributions Each lobbyist who is listed or is required to be listed on a LD-1 or LD-2 must file a LD-203 for the time period in which s/he was listed. Filers are expected to know the LDA requirements for listing on a LD-1 or LD-2, and must use reasonable care when completing and submitting forms.

Contributions to state and local candidates and to party committees not required to be registered with the FEC do not have to be disclosed on a LD-203.

A charitable organization established by a person before that person became a covered official, and where the covered official has no relationship to the organization after becoming a covered official is not considered to be an organization established by a covered official.

A covered official’s de minimis contribution to a charity (in proportion to the charity’s overall receipts of contributions) is not an indication of the covered official’s financing of the charity.

Costs relating to sponsorship of a non-preferential multi-candidate primary/general election debate for a particular office do not have to be disclosed on LD-203.

Section 8: Termination of a Lobbyist/Termination of a Registrant This section provides additional information regarding the circumstances under which a registrant may remove a lobbyist from its active lobbyist list. It also emphasizes that a lobbyist is only relieved from having to file a LD-203 for future semiannual periods by proper removal, on Line 23 of LD-2, for all clients for whom the lobbyist was listed.

The lobbying battle so far has taken place largely behind the scenes among Big Business, the companies that finance corporate America, investors and consumer groups. But as components of Obama’s plan have leaked, the fight over financial markets has become more public.

Labor and consumer groups that support most of Obama’s plan announced Tuesday they planned to take on what they see as the banking industry’s dominant position in Washington by stoking grassroots anger over the financial crisis. The new coalition, Americans for Financial Reform, includes roughly 200 organizations such as U.S. PIRG, the AFL-CIO and the AARP, and has a budget of $5 million.

Rob Johnson, a former chief economist of the Senate Banking Committee, said a market has developed in Washington for “buying and selling the rules governing our society.” Johnson is now an economist at the Roosevelt Institute, which is a member of the new coalition.

On nearly every nook of the administration’s plan, lobbyists will attempt to shift the regulations in ways large and small that could benefit companies for years to come. Some fear the bill, a priority for the administration and the Democratic Congress, will attract policy ideas outside to the scope of financial market reform.

“We are worried that any legislation will become a Christmas tree for unrelated proposals,” said David Hirschmann, president and CEO of the U.S. Chamber of Commerce’s Center for Capital Markets.

Dems and Repubs both receive substantial Wall Street support

Although painting Republicans as pawns of Wall Street is a cornerstone of the Democratic strategy to overhaul financial regulation, financial interests have given campaign money generously to both political parties for years.

"No one party has any firm hold on righteousness here," said David Levinthal, a spokesman for the Center for Responsive Politics, which tracks donations.

In the past two election cycles, when Democrats controlled Congress, the Democrats benefited most. So far in the 2010 cycle, the finance/insurance/real estate sector has given $65.2 million, or 56 percent of its contributions, to Democrats. Republicans have received $51.7 million.

People and political committees affiliated with securities and investment banking interests have been particularly kind to Democrats, giving them $21.7 million, or 63 percent of their donations so far.

Commercial banks, though, prefer Republicans; they've given GOP hopefuls $4.7 million so far, or 54 percent of their total.

According to the Sunlight Foundation, an independent research group, lobbyists with connections to the financial sector have hosted 10 fundraisers this year for members of the Senate Banking and Agriculture committees — six for Democrats and four for Republicans. The two panels wrote different parts of the financial overhaul bill.

None of that has stopped Democrats from insisting that they're the party of Main Street, not Wall Street.

Fin reform lobbyists host fundraisers for Senators

Since the beginning of 2010 through April, at least ten senators who sit on the Banking and Agriculture Committees are listed as beneficiaries of fundraisers hosted by lobbyists who have pressed Congress on financial reform issues. Both committees have recently worked on a bill to overhaul the financial regulatory system, which will likely be debated on the Senate floor next week.

According to Sunlight Foundation’s Party Time database, the fundraisers ranged from a “pre-St.Patrick’s Day” reception for Banking Committee member Jon Tester, D-Mont., on March 16 that asked for $100 to $1,000 in contributions, to a breakfast for Chuck Grassley, R-Iowa, of the Agriculture Committee on March 10 that asked for contributions ranging from $500 to $2,000. Grassley’s breakfast also featured special guest, Banking Committee member Robert Bennett, R-Utah.

Tester’s fundraiser was hosted by 28 people, at least two of whom have disclosed lobbying on financial reform this year: Mitchell Feuer who represents Goldman Sachs, the Citigroup Management Corporation, Barclays PLC, Genworth Financial, Visa U.S.A., the Appraisal Institute, FX Alliance LLC, the Farm Credit Council and the LCH.Clearnet Group, and Thompson Reuters; and Shannon Finley who represents the Edison Electric Institute, Rent A Center and the Home Depot.

The Grassley breakfast was hosted by two JP Morgan Chase & Co. lobbyists, Nathan Gatten and Steve Patterson. Both were listed on a lobbying disclosure form for the first quarter of 2010; the company reported spending $1.5 million to raise issues on Capitol Hill related to credit card transaction fees, the modification of home mortgage loans, the regulatory oversight of bonds, short-selling practices, and use of derivatives to hedge risk.

In addition to raising money for the beneficiaries, the lobbyists hosting the events also had a chance for face time with other influential lawmakers. In fact, at a fundraiser today, three powerful members of the agriculture committee–Minority Leader Mitch McConnell, R-Ky., and Sens. John Cornyn, R-Texas, and Chuck Grassley, R-Iowa., are listed as honorary hosts of a noon fundraiser for the Sen. George LeMieux’s, R-Fla, Protect America’s Future Political Action Committee.

Financial industry lobbyists find gaps in Dodd bill

Financial services industry lobbyists are combing Senate Banking Committee Chairman Chris Dodd's Wall Street reform bill for loopholes through which they can guide their clients -- and they're finding plenty of them.

One K Streeter sent HuffPost five pages (PDF) worth of "carve-outs." If you're designated as a Farm Credit System, say, you're exempt from systemic risk regulation, don't have to keep skin in the game when selling securitized bundles of loans and won't be overseen by Dodd's proposed Consumer Financial Protection Bureau.

"Obtaining a carve-out isn't rocket science," said a Republican financial services lobbyist. "Just give Chairman Dodd [D-Conn.] and Chuck Schumer [D-N.Y.] a shitload of money."

On MSNBC Tuesday morning, Sen. Bob Corker (R-Tenn.), a Banking Committee member who worked closely with Dodd, said there was "no question" that Dodd's draft contained loopholes. Corker mentioned a few hits from the carve-out list: "Private equity firms are left out," he said. "Hedge funds are left out."

The list shows that private equity funds and hedge funds join community banks in being exempt from a number of requirements, such as having to create a "risk committee," or having to pay into the $50 billion fund for liquidating systemically risky institutions that pose a "grave threat" to the system. Venture capital and private equity advisers are exempt from the section of the bill that requires hedge fund advisers managing more than $100 million in assets to register with the Securities and Exchange Commission.

Labor groups are concerned about the private equity exemptions.

"We are very concerned about the loopholes in the hedge fund title of the legislation," wrote AFL-CIO senior policy adviser Heather Slavkin, "particularly the exemption for private equity and the failure to allow the SEC to require that hedge funds and private equity funds make simple disclosures to investors and creditors."

The most significant carve-out in the House version of financial regulatory reform was for auto dealers. Sen. Sam Brownback (R-Kan.) is pushing an amendment that would put a similar carve-out in Dodd's bill. Military and consumer groups are adamantly opposed to the Brownback amendment (Click HERE for a PDF of a letter from the Military Coalition explaining its opposition).

Click HERE for a PDF with five pages of exemptions and exclusions from the bill.

The memo was first reported in the first edition of HuffPost's brand-new newsletter, HuffPost Hill. Sign up for the newsletter here. Click HERE for a PDF with five pages of exemptions and exclusions from the bill.

The memo was first reported in the first edition of HuffPost's brand-new newsletter, HuffPost Hill. Sign up for the newsletter here.

Substantial revolving door between Congress and banks

Concerned about seeing their huge profits cut, six big banks are leading the charge to weaken or block new financial regulations being considered in the United States Senate. To push their cause these banks have hired 145 former government officials–congressmen, staffers and executive branch officials–to lobby on Capitol Hill and in the executive branch.

The top six bank holding companies engaged in lobbying on financial regulation include Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley. According to the Center for Responsive Politics, these banks spent a combined total of $23.8 million lobbying Washington in 2009.

Former government officials accounted for seventy-one percent of all lobbyists hired in 2009 by these six banking companies. The company with the highest percentage of former government officials working as lobbyists is Goldman Sachs. Eighty-two percent of the lobbyists hired by Goldman Sachs previously worked in government.

Report blames revolving door for 'Too Big To Fail'

How have big banks preserved their "Too Big To Fail" status? With giant bags of money and an army of lobbyists who used to work in government, says a report to be released Tuesday by the SEIU, Campaign for America's Future and the Public Accountability Initiative.

The six biggest banks -- Goldman Sachs, Bank of America, JPMorgan Chase, Citigroup, Morgan Stanley, and Wells Fargo -- employ 243 former staffers and members of Congress as in-house lobbyists and via trade associations and boutique K Street firms. That's 33 chiefs of staff, 54 staffers from the House Financial Services and Senate Banking committees, and 28 legislative directors.

"Many of the revolving door lobbyists were key architects of financial deregulatory legislation during their time as congressional staffers," the report notes, "including Gramm-Leach-Bliley and the Commodity Futures Modernization Act."

The flipside of this phenomenon, which the report doesn't mention, is lobbyists taking jobs on the Hill. It's rampant: A HuffPost analysis of House Financial Services staffers found in December that 18 percent of current committee staff previously worked on K Street, mostly for banks -- and mostly Democrats. (After all, if people just went from the Hill to K Street, wouldn't it be more of a turnstile than a revolving door?)

Citi has hired 55 former staffers as lobbyists -- the most of the big six banks. Who are these people? The report, written by Kevin Connor of the Public Accountability Initiative, wants you to know: Click HERE to see their names and faces. The Public Accountability Initiative runs LittleSis.org, best known as an involuntary Facebook for lobbyists.

Some key members of Congress are losing patience with the revolving door thing. In April, Rep. Barney Frank (D-Mass.), chairman of the financial services committee, permanently banned a committee staffer from lobbying his committee after the staffer cashed out for a K Street job.

About those moneybags: The six big banks have spent just under $600 million since the bailout of Bear Stearns in March 2008 -- the dawn of the current TBTF era -- on lobbying, trade association activity, and political contributions. A huge proportion of that total is spending by trade groups like the American Bankers Association and the Financial Services Roundtable.

GAO on 2009 lobbying disclosure

While there are no specific requirements for lobbyists to create or maintain documentation related to disclosure reports they file under the LDA, GAO’s review showed that lobbyists were generally able to provide documentation, although in varying degrees, to support items in their disclosure reports. This finding is similar to GAO’s results from last year’s review.

For income and expenses, two key elements of the reports, GAO estimates that lobbyists could provide written documentation for approximately 89 percent of the disclosure reports. After GAO’s review, 15 lobbyists stated that they planned to amend their disclosure reports to make corrections on one or more data elements. As of March 18, 2010, 7 of the 15 amended their disclosure reports to make these corrections.

For political contribution reports, GAO estimates that 82 percent of the reports listing contributions could be supported by Federal Elections Commission (FEC) data or documentation provided by lobbyists. Among reports with no contributions listed, an estimated minimum of 3 percent of reports omitted one or more contributions that should have been reported. All of the lobbyists said that they did not report the information listed in the FEC database because of an oversight and plan to amend their reports.

The majority of lobbyists who newly registered with the Secretary of the Senate and Clerk of the House of Representatives in the last quarter of 2008 and first three quarters of 2009 filed required disclosure reports for the period. GAO could not identify corresponding reports on file for lobbying activity for about 11 percent of the registrants, likely because either reports were not filed or the reports that were filed contained information, such as client names, that did not match the registrations. The Secretary of the Senate and Clerk of the House routinely review the completeness of registrations and reports and follow up with lobbyists.

Most lobbyists felt that existing guidance for filing required registrations and reports was sufficient. However, GAO’s review of documentation and lobbyists’ statements indicates some opportunities to strengthen lobbyists’ understanding of the requirements. The Secretary of the Senate and Clerk of the House update guidance periodically to respond to issues and comments as they arise.

In response to an earlier GAO recommendation, the Office developed a system to help monitor and track enforcement efforts. The Office continues to refine the system to meet the requirements conveyed in GAO’s recommendation. To enforce compliance, the Office primarily focuses on sending letters to lobbyists who potentially violated the LDA by not filing disclosure reports. No civil actions or settlements with lobbyists have been pursued by the Office since 2005, although it is following up on hundreds of referrals each year.

Congress's transparency leaders

One question that always surfaces in my discussions about transparency and technology in Congress is, "Who in Congress gets it?" It's an unfortunate question to always hear, because it just isn't the right metric to be thinking about. More notable is the rapid acceptance of new technologies among members of Congress, their staff and, now, the Executive Branch.

When the Sunlight Foundation was founded three years ago, the number of lawmakers that were up to speed on the Internet could be counted on one hand. (My colleague Andrew Rasiej of the Personal Democracy Forum liked to joke that lawmakers didn't know the difference between a server and a waiter.) Three years ago, those using the Web for transparency likely registered around zero. But in the intervening years, Congress has adapted to the Internet at incredible speed.

Some may want to attribute this to the natural adoption of new technologies. Previous technological innovations, however, were adopted by Congress at a much slower pace. After first being proposed in the 1940s, televised proceedings were not adopted until 1979. The last congressional office not using computers went wired in 1995. It took eight years, from 1993 to 2001, for all lawmakers to have official Web sites. So the recent three-year period of adoption that we have seen for Internet technologies is impressive when compared to these other technologies.

When you think about it, this makes a lot of sense. Lawmakers have a pressing need to find more ways to connect, communicate and interact with their constituents. No politician wants to receive the defamatory subtitle "out of touch," and these technologies enable the kinds of two-way, or many-to-many, communications that members of Congress crave. You can see this in the almost obsessive thumb-chatter lawmakers like Sen. Claire McCaskill of Missouri or Rep. John Culberson of Texas have with their fans and constituents on Twitter.

And, while there are countless lawmakers who have taken to Twitter or Facebook to keep in touch with their constituents, or chiefly as self-promotional opportunities, some are also using their online presence to be as transparent as they can be.

Online transparency really came to the fore after the 2006-midterm elections, which featured a heavy focus on ethics in the wake of the Jack Abramoff lobbying scandal. Two lawmakers, then- Rep. Kirsten Gillibrand of New York and Sen. Jon Tester of Montana, were elected to Congress and almost immediately began posting their daily schedules to their official Web sites. Both won their seats thanks to the broad brush of corruption Abramoff left on Congress. Today, there are at least ten lawmakers who post online their daily schedule. Not all of this is superficial, either. A review of Sen. Max Baucus' schedule by the Sunlight Foundation's Paul Blumenthal revealed numerous meetings with health industry executives and lobbyists during the period that Baucus had been crafting a health-care compromise bill.

Rep. Gillibrand was also one of the first lawmakers to post both her earmark requests and her personal financial disclosure to her site, which she continues to do after being appointed to the United States Senate. Due to the successful push for earmark disclosure (something Sunlight has been very active in advocating), every lawmaker in the House and Senate are now required to post their earmark requests to their official Web site.

While some individual lawmakers have voluntarily used the Web to increase their ability to communicate and be transparent, what has really driven more online congressional transparency are recent legal and rules changes that have been championed by leaders of both parties. The adoption of many of these policies also help show how Congress has quickly adapted to the ways of the Web:

  • Both House and the Senate members post their roll call votes in XML format. This is particularly useful for advanced processing and analysis, making votes machine-readable, which should help fuel a renaissance of vote analysis and visualization.
  • Speaker Nancy Pelosi and Minority Leader John Boehner both played significant roles in reversing a Franking Rules policy that discouraged lawmakers from using social networking sites like Facebook, Twitter and YouTube.
  • The party leadership on both sides and in both chambers worked together to forge a policy with YouTube to allow the posting of congressional videos within the Franking Rules guidelines.
  • Both chambers will begin posting their expenditure reports online within the next year or two.

Under guidance from Speaker Pelosi, the Chief Administrative Officer will create a site (to be launched next month) for public perusal of the reports that disclose how representatives spend their "Member Representational Allowances" -- the federal funds allocated to support expenses such as staff salaries, official travel and administrative supplies. In the Senate, Sen. Coburn introduced an amendment requiring the Senate to post a searchable database of these reports by July 2011.

From these emblematic examples, it's clear that members of Congress understand the potential the Internet affords them to shine a light on their work and exponentially increase transparency. This will, ultimately, go a long way toward dramatically improving public confidence and trust of Congress. Lawmakers should be commended for the speed at which they are embracing the Web as it is now, but they need also to be poised to adapt to the coming wave of change, the real-time Web. In the real-time Web, we need real-time disclosure, but I'll save that for another post.

House leaders have repeatedly waived transparency rules

Ed Yingling, president of the American Bankers Association, and his staff gathering at the association’s Washington office to discuss their strategy in confronting the credit crisis. Source: NY Times
Ed Yingling, president of the American Bankers Association, and his staff gathering at the association’s Washington office to discuss their strategy in confronting the credit crisis. Source: NY Times

House Democratic leaders this year have repeatedly waived transparency rules aimed at providing members with enough time to read bills before they vote on them.

On at least two dozen occasions in 2009, the transparency rules have been shelved — including on votes on wage discrimination, climate change and children’s health insurance, according to statistics culled by the Sunlight Foundation, a nonprofit group.

After hearing from disgruntled voters over the August recess, six House Democrats defied their leaders by signing on to a discharge petition calling for action on legislation mandating that all bills be posted online 72 hours before a roll call vote. Since 1971, House rules contained a similar measure, but with a loophole: The read-the-bill rule could be waived by a majority of members.

House Speaker Nancy Pelosi (D-Calif.) has committed to allowing lawmakers to scrutinize the healthcare reform bill 72 hours before it is voted on, but other members say this policy should apply to all legislation, without exception.

Leaders of the majority party in the House frown upon their members signing discharge petitions.

Rep. Brian Baird (Wash.), one of the half-dozen Democrats who has put his name on the discharge petition, said vulnerable Democrats will take a hit politically back home if they don’t sign it.

Baird said, “This is a common-sense, oughta-be-done, good-of-the-country position. If you are not on that position, the question is, why not? And the answer is you are somehow being pressured not to get on it or you have to defend it [with] some arcane, workings-of-the-House, discretion-of-the-majority-leader [argument] — that’s a tough sell when at the end of the day you’re voting for something you haven’t read.”

Democratic leaders are leaning on members not to sign the petition, Baird said, but momentum is building for the measure. Rep. John Barrow (D-Ga.) signed it on Thursday.

Should the discharge petition attract 218 votes, the 72-hour bill would hit the House floor. At press time, it had 182 signatories, including all House

Republicans except Shelley Moore Capito (W.Va.), who has a policy against signing them. Rep. Greg Walden (R-Ore.) sponsored the discharge petition seeking a vote on the read-the-bill rule, which was introduced by Baird.

There are 35 Democrats who have backed Baird’s bill and not signed Walden’s petition, including Reps. Chris Carney (Pa.), Larry Kissell (N.C.), Eric Massa (N.Y.), Mike Ross (Ark.) and Charlie Melancon (La.).

Majority Leader Steny Hoyer (Md.), the second-ranking Democrat in the House, calls the concept “sound” but opposes Baird’s resolution because it’s not feasible.

“What if only one short word or amendment is made? It’s one thing initially for a bill to have a long time, but if you come out of a conference and they don’t change anything then, you don’t need 72 hours. Sometimes you are at the end of the session and you don’t have 72 hours,” Hoyer told The Hill in an interview last week.

Baird disagrees. He says that all the “shenanigans” happen in end-of-the-year catchall omnibus spending bills. Baird believes no bill should be exempt from the rule. His measure would require a supermajority (two-thirds) to waive the 72-hour requirement.

A coordinated campaign spearheaded by the Sunlight Foundation, Baird and GOP leaders has kept the pressure on rank-and-file Democrats to challenge their leaders, including President Barack Obama, who promised to give the public five days to read bills before signing them into law.

The White House has broken this campaign promise on at least a couple of bills.

A new Rasmussen poll of 1,000 voters found that 83 percent of the public wants Congress to post legislation online two weeks before voting on it.

ICE hires House Committee’s Roberson as lobbyist

House Financial Services Committee adviser Peter Roberson, whose job was to deal with banks and exchanges on behalf of Representative Barney Frank as new swaps legislation was crafted last year, has gone to work for Intercontinental Exchange Inc. as a lobbyist.

Roberson joined the Atlanta-based exchange’s Washington office as vice president of government relations, the first time Intercontinental has hired a dedicated lobbying staff, said company spokeswoman Kelly Loeffler. The company owns the world’s largest credit-default swap clearinghouse that would be governed by the House rules passed in December.

Intercontinental’s hiring of Roberson comes as Congress seeks to regulate the $605 trillion over-the-counter derivatives market for the first time in its 30-year history after the instruments complicated efforts to resolve the financial crisis in the wake of Lehman Brothers Holdings Inc.’s September 2008 bankruptcy. Roberson will help Intercontinental influence legislation as it moves through the Senate and is reconciled with the House version, said Craig Holman of Public Citizen.

“This is a classic example of a revolving door abuse,” said Holman, government affairs lobbyist for the Washington- based advocacy group that supports stricter lobbying rules. “He will be instrumental for Intercontinental.”

Loeffler said that the House has “strict ethics rules governing its members and former staff and Intercontinental has and will continue to abide by them.” She declined an interview request for Roberson, who joined the company last month.

"...The part of the bill that Roberson worked on -- derivatives legislation -- has been criticized as one of the weakest elements of the package. Since its passage, Frank has said that he would be pleased if the Senate is able to pass tighter derivatives regulation.

Roberson's first stint on K Street, according to the federal lobbyist database, lasted from 2000 to 2006, when he lobbied for the Bond Market Association. In 2006, BMA merged with the Securities Industry Association to form the powerhouse Securities Industry and Financial Markets Association. SIFMA is also home to former committee staffer Michael Paese -- Chairman Barney Frank (D-Mass.) banned his staff from communicating with him for two years and has instituted a one-year ban on communication with Roberson.

As soon as Roberson informed the committee in late January that he was in talks with the swaps brokers, Frank asked him to leave, said committee spokesman Steve Adamske. "The chairman wasn't happy about it and he immediately asked Mr. Roberson to leave and to go on either administrative leave or go on some accrued vacation time," he said. "And we will adhere to the absolute strictest interpretation of ethics laws and bar communication with him for a year or two years as we're required."

His ID, key card and internal access were revoked. But the legislation had already been written. "It was always obvious he was playing for the other side," said one Democratic staffer on the committee who dealt with Roberson who, he said, was one of two staffers excoriated by Frank during a fall committee staff meeting -- an unusually public rebuke -- for weakening legislation by conflated exchanges with clearing houses.

The chairman could elect to extend the ban beyond the required time, Adamske noted.

Roberson, however, is perfectly riding the legislative wave. He is not barred from lobbying the Senate, where the action is now taking place, with the reform bill approved by the House at the end of last year. A bill introduced by Sen. Michael Bennet (D-Colo.) would prevent that ethics arbitrage.

Roberson follows the Treasury Department's leading liaison to the Hill -- Damon Munchus -- out the revolving door. Munchus left for the Cypress Group, which lobbies on banking issues, consults clients on the status of legislation and invests its own money."

Chairman Frank bars Roberson from all contact with staff

Washington, DC - House Financial Services Committee Chairman Barney Frank (D-MA) today made the following statement about stories related to a recent staff departure from the House Financial Services Committee:

“Several people have expressed criticism of the move by Peter Roberson from the staff of the Financial Services Committee to ICE, after he worked on the legislation relevant to derivatives. I completely agree with that criticism. When Mr. Roberson was hired, it never occurred to me that he would jump so quickly from the Committee staff to an industry that was being affected by the Committee’s legislation. When he called me to tell me that he was in conversations with them, I told him that I was disappointed and that I insisted that he take no further action as a member of the Committee staff. I then called the Staff Director and instructed her to remove him from the payroll and provide him only such compensation as is already owed.

“Stories about this correctly noted that there is a one year ban on his interaction with members of the Committee staff, but I do not think that is adequate. I am therefore instructing the staff of the Financial Services Committee to have no contact whatsoever with Mr. Roberson on any matters involving financial regulation for as long as I am in charge of that Committee staff. Fortunately, examples of staff members doing what Mr. Roberson has done are rare, but even one example is far too much and that is why I wanted to make clear I share the unhappiness of people at this, and my intention to prohibit any contact between him and members of the staff for as long as I have any control over the matter.”

Chairman Frank bars Goldman Sachs lobbyist-aide

"A top lobbyist for Wall Street giant Goldman Sachs (GS.N) has been barred from communicating with members and staff of the U.S. House of Representatives Financial Services Committee, an aide to the panel's chairman said on Wednesday.

Democratic Representative Barney Frank has banished Goldman's Michael Paese, a former committee staffer, from dealing with the panel while it considers a long list of financial reform proposals, some directly impacting Goldman.

"Mr. Paese left our offices in September 2008, and was not allowed to communicate with any committee members or staff for a period of one year due to normal ethics restrictions that apply to all House and Senate employees," said Frank aide Steven Adamske in a statement.

"Out of an abundance of caution due to the nature of financial regulation reform, the chairman has extended Mr. Paese's recusal for another year," Adamske said.

Frank's committee is dealing with a heavy load of proposed legislation put forward by the Obama administration to tighten regulation of banks and capital markets following the worst financial crisis in generations.

In an example of the Washington-Wall Street revolving door culture, Paese was the committee's deputy staff director before he quit to work for the Securities Industry and Financial Markets Association as a lobbyist. Goldman hired him in April.

Paese could not immediately be reached for comment at Goldman's Washington, D.C., office. A spokesman for the firm in New York also could not immediately be reached.

Finance, insurance and real estate firms spend more money lobbying officials in Washington than any other sector of the U.S. economy, according to the Center for Responsive Politics, a non-partisan campaign finance and lobbying watchdog group.

Within that sector, Goldman is a powerhouse. Since 1989 its employees, their family members and political action committees have donated $31.2 million to U.S. political candidates -- topping all other banks and financial firms, the center said."

White House hosts financial leaders and lobbyists

"... The period of records released on Friday covers the period of time between Jan. 20 and July 31, but Eisen said future batches will be posted on an ongoing basis.

Major Wall Street bank CEOs were among those who visited the White House. The CEOs include John Mack, head of Morgan Stanley; Vikram Pandit, head of Citigroup; and Lloyd Blankfein, head of Goldman Sachs...

... Though Obama's administration has taken pains to distance itself from K Street, a number of prominent lobbyists also show up on the list, including Steve Elmendorf of Elmendorf Strategies, Tony Podesta of the Podesta Group and Heather Podesta of Heather Podesta and Partners.

The names of prominent lobbyists for financial firms and trade associations also show up on the list.

The lobbying trade association lobbyists include: Edward Yingling, head of the American Bankers Association (ABA); Camden Fine, head of the Independent Community Bankers of America (ICBA); Scott Talbott, of the Financial Services Roundtable and Fred Becker, of the National Association of Federal Credit Unions (NAFCU); and Dan Mica, of the Credit Union National Assocation (CUNA).

Yingling, for example, attended three meetings with the president on credit card issues and housing."

"On Friday, the White House released records of visitors to the executive mansion since President Obama took office through Sept. 15. Such releases will continue monthly, the White House said, adding that it will not disclose such information in some cases.

SIFMA hires multiple DC heavyweights

  • June 25 (Bloomberg) -- Wall Street’s largest trade group has started a campaign to counter the “populist” backlash against bankers, enlisting two former aides to Treasury Secretary Henry Paulson to spearhead the effort.

US Treasury lobbying issues

"Yesterday, I called the Treasury Department in one last ditch effort to find their TARP Lobbyist Contact Disclosure Forms. I did so as final due diligence before publishing this blogpost, earlier today, in which I evaluated the TARP lobbying disclosure rules. In it, I noted that the required disclosure forms were eerily absent from Treasury’s website.

This afternoon — voila! — 2 disclosure forms appeared. One form is dated 10/9/2009, and the other is dated 9/22/2009. Now, Treasury is required to publish these forms within 3 days of the lobbying contact, so we know that both of these forms were published outside of the 3 day window required by Treasury’s own rules. (At a minimum, they weren’t published here.)

What is also interesting is that there are only two lobbying contacts reported. This leads to a couple of possible implications: (1) Treasury has more forms to publish, perhaps some of which are late; or (2) Treasury has no more forms to publish right now. For the latter to be true, either no one has talked to Treasury about spending TARP funds over the last month, or the lobbying disclosure rules don’t have a lot of bite and missed capturing lobbying communications.

It will be interesting to see what appears on their website in the upcoming days and weeks. I am still waiting for that phone call back from Treasury about my question: where are the rest of the lobbying contact disclosure forms?

Kim N. Wallace was confirmed by the United States Senate Friday to serve as Assistant Secretary for Legislative Affairs. As Assistant Secretary of the Treasury for Legislative Affairs, Wallace will advise Treasury Secretary Geithner on legislative strategy, communicate Treasury's priorities to Congress and keep the Department informed of Congressional objectives and concerns.

"I am delighted to have Kim as part of our team. As the United States confronts a historic economic crisis, close coordination with Congress is essential to getting our economy back on track and Americans back to work. Kim is a trusted voice both at Treasury and on Capitol Hill," said Treasury Secretary Geithner.

Before coming to Treasury, Wallace was a Managing Director and head of the Washington Research Group at Barclays Capital. Previously, he served in the same position at Lehman Brothers Inc. until 1994. From 1989-1994, Wallace was a legislative aide for fiscal policy to then-Senate Majority Leader George Mitchell and worked as an analyst on the Senate Budget Committee, under then-Chairman Lawton Chiles.

Financial industry lobbying initiatives

Ongoing Congressional fundraising from Wall Street

HuffPost's Arthur Delaney from the front lines of our Republic's slow rot:

While President Obama begged Wall Street to play along with financial regulatory reform, Senate Republican leaders hobnobbed with lobbyists at a lunchtime fundraiser. Ostensibly, the fundraiser was for Sen. George LeMieux, the Florida Republican appointed by Gov. Charlie Crist to keep the seat warm for Senate candidate Charlie Crist. LeMieux is not running himself. ThinkProgress bloggerLee Fang noticed that LeMieux rolled up in a car with a Crist bumper sticker. Also spotted: Sen. John Cornyn; Sen. Richard Burr; and superlobbyist Charlie Black.

No sign of invitees Mitch McConnell or John McCain, but it's possible they somehow escaped the notice of the several reporters staking out the front door. The Democratic National Committee sent a camcorder guy who seemed to be zooming in on every single person who entered the building. The lobbyists mentioned on the invite boast a wide range of clients, including many in the financial services industry.

WATCH: ThinkProgress catches up with fundraiser attendees - video

Wall Street works to water down Dodd bill

Financial institutions and their allies mobilized lobbyists and fueled their media campaigns Tuesday in a swift response to a Democratic plan to rein in Wall Street and protect consumers in their banking and borrowing transactions.

The U.S. Chamber of Commerce prepared a $3 million blitz aimed at members of the Senate Banking Committee, and banking lobbyists prepared amendments and looked for friendly senators to advance them.

Senate Banking Committee Chairman Christopher Dodd unveiled a 1,336-page bill Monday that would give the government unprecedented powers to split up firms that threaten the economy, force the industry to pay for its most spectacular failures and create an independent consumer watchdog.

The financial industry's immediate objections put pressure on senators to weaken the bill and created a series of obstacles for Dodd as he attempts to navigate between the Senate's institutional need for bipartisanship and the pull of liberals and consumer advocates who want to crack down on Wall Street.

The Obama administration ramped up its own countercampaign Tuesday, sending Treasury Secretary Timothy Geithner on a round of television appearances to signal that the White House is not in a compromising mood.

"We are going to look for ways to make it stronger," Geithner said on Fox Business Network. "And we are going to resist efforts to weaken it."

Dodd hopes to get the bill through his committee next week, preparing it for action on the Senate floor sometime after Congress's two-week Easter recess.

The consumer bureau, which would be located within the Federal Reserve but have fairly autonomous powers, promptly emerged as the main industry target. Bank officials said Dodd unnecessarily separated the functions of the Fed and other regulators from the consumer agency. The chamber argued that the watchdog's reach would extend to small businesses.

"Our basic argument is that effective consumer protection can be achieved without creating a giant new bureaucracy with unlimited powers, unlimited scope to regulate businesses that had nothing to do with the crisis," said David Hirschmann, president of the Chamber's Center for Capital Markets Competitiveness.

The chamber is focusing its message in six states, five of them home to members of the Senate Banking Committee — Democrats Mark Warner of Virginia, Tim Johnson of South Dakota, Evan Bayh of Indiana and Jon Tester of Montana, and Republican Bob Corker of Tennessee, who attempted to negotiate a bipartisan deal with Dodd.

Also in the chamber's sights is Democrat Blanche Lincoln of Arkansas, who is facing a difficult re-election and who chairs the Senate Agriculture committee. The agriculture committee is helping write legislation governing derivatives, highly complex transactions blamed in part for the financial crisis. The chamber is working with a coalition of corporations that want to be exempt from some restrictions because they use derivatives as hedges against market fluctuations, not as investment opportunities.

The chamber mounted an earlier campaign against a House version of the legislation. The bill, which contained a freestanding consumer protection agency, ultimately passed on a strict party-line vote.

Hirschmann said the bureau proposed in Dodd's bill would have too many powers to write and enforce regulations, even on the smallest institutions on the basis of the bill's unspecified "abusive practices."

Dodd spokeswoman Kirstin Brost shrugged off the chamber concerns.

"Since when in the history of the United States have we seen consumer financial protections gone wild?" she said.

But Warner indicated that the provision could undergo revisions.

"In consumer protections there may be some changes that could be made," he said in an interview. "Chairman Dodd tried to strike a balance on this. I think it's a good starting point."

Besides their consumer protections concerns, the largest financial institutions also began raising alarms over Dodd's desire to prohibit bank holding-companies that have commercial bank operations from engaging in risky trades. The banking industry has interpreted Dodd's bill as ordering regulators to ban such proprietary trading.

But Dodd's bil,l while saying that regulators "shall" prohibit such trades, also states that such regulations will be subject to the "recommendations and modifications" of a Financial Stability Oversight Council chaired by the treasury secretary and composed of the heads of financial regulatory agencies.

"These areas of proprietary trading, private equity and hedge funds need extra scrutiny," Warner said. "I would be reluctant to prescribe what that action ought to be."

Banks step up lobbying efforts in 2010

Some of the largest banks in the United States are ratcheting up spending on lobbying intended to defeat proposed regulatory reform in Congress, records show.

Citing data contained in disclosure forms filed with Congress, the Los Angeles Times reported Monday lobbying expenditures rose 12 percent from 2008 to 2009 -- with eight banks and private equity firms reporting they spent $29.8 million last year on lobbying.

JPMorgan Chase & Co. spent $6.2 million -- an increase of 12 percent from 2008. Wells Fargo & Co. increased spending on lobbying by 27 percent and Morgan Stanley spent 16 percent more, the Times said.

Scott Talbott, a lobbyist for the Financial Services Roundtable -- which lobbies on behalf of about 100 large financial firms -- told the Times lobbying will become more intense in 2010, as Congress considers proposals by President Barack Obama to impose a new tax on big banks, limit their size and restrict their investment in private equity funds and hedge funds.

"This is a watershed moment," Talbott said "The industry will be changed forever after this year."

Ed Mierzwinski, a lobbyist for the U.S. Public Interest Research Group, said in years of working on bank issues, he had "never seen such a scrum of bank lobbyists as I have in the last year."

"It seems like everybody is out of work except for bank lobbyists," Mierzwinski said.

Small banks win CFPA exemption

Hundreds of small-town bankers had converged on Washington for their annual conference five months ago when Treasury Secretary Timothy F. Geithner, addressing them in the chandeliered ballroom of the Grand Hyatt, gave notice that the financial industry was about to change.

He offered them a glimpse of the Obama administration's plans to overhaul bank regulation, leaving them with the unsavory feeling they'd be facing more of it.

"He was very direct about the fact that this was a proposal that was going to be sweeping," recalled Chris Williston, president of the Independent Bankers Association of Texas. "That's when it started gearing up. We knew at that time we had a major battle on our hands."

That battle, which unfolded not only in the marbled halls of the Capitol but also in small communities in every corner of the land, culminated last week when lawmakers granted these firms a major concession, agreeing to exempt banks with less than $10 billion in assets -- 98 percent of all U.S. banks -- from a proposal for additional oversight. Unlike the country's biggest financial firms, these 8,000 smaller banks would not be subject to annual examinations conducted by a new federal agency responsible for regulating credit cards, mortgages and other loans to ordinary Americans.

While big Wall Street firms can each muster multimillion-dollar lobbying efforts and their top executives can pick up the telephone and reach senior government officials like Geithner, it was the collective voice of thousands of small bankers from Everytown, USA, capitalizing on their influence in their own communities, that turned this debate.

Wall Street has spent $224M to influence financial reforms

"Wall Street bankers make too much money. The latest example: Goldman Sachs says it has set aside $16.7 billion so far this year for compensation — or about $530,000 per employee. Not bad for a company that a year ago received $10 billion in federal money as well as $12.9 billion from the government's bailout of American International Group Inc.

Maddening? Sure. But forcing Goldman or any other Wall Street firm to pay employees less won't help a single unemployed American find a job. It won't help a single homeowner who can't afford his mortgage. It won't help a single credit card user whose fees keep getting jacked up.

If you want something to really make you angry, though, consider this number: $224 million. It's a lot less than $16.7 billion but it could pack far more punch. That's the amount the financial industry spent in the first half of this year to lobby Congress to water down regulations aimed at preventing another financial meltdown. And more money is expected to be on the way.

"There is so much happening in the financial sector to be upset about. The bonuses are the least of it," said Barry Ritholtz, who writes the popular financial blog "The Big Picture" and is the author of the new book "Bailout Nation." More importantly, we can't let the banks own Congress."

The worry is that the money used for lobbying could lead lawmakers to back down on their promises for reform."

Industry lobbyists = 1,479, consumer lobbyists = 58

  • Industry total = 1479 lobbyists
  • Consumer total = 58 lobbyists
  • Ratio of 25 to 1

  • Citigroup - 46 lobbyists
  • Chamber of Commerce - 46 lobbyists
  • American Bankers Association - 44 lobbyists
  • Prudential - 41 lobbyists
  • SIFMA - 36 lobbyists
  • Managed Funds Association - 31 lobbyists
  • Goldman Sachs - 29 lobbyists
  • American Insurance Association - 29 lobbyists
  • Charles Schwab - 28 lobbyists
  • Investment Company Institute - 28 lobbyists

Legislators receive Wall Street dollars

Wall Street has showered nearly $11 million on the Senate since the beginning of the year, and more than 15 percent of it has gone to a single senator: Democrat Chuck Schumer of New York. Schumer’s $1.65 million take from the financial services industry is nearly twice that of any other senator's — and more than five times what the industry gave to any single Republican senator.

While the industry has scaled back its political spending in the wake of last year’s economic collapse, data from the Center for Responsive Politics show that it’s still investing heavily in the Senate, where it’s likely to have its best shot at stopping — or at least shaping — the crackdown on Wall Street that President Barack Obama has proposed.

And it’s clearly looking to Democrats to do it.

Of the $10.6 million the industry has given to sitting senators this year, more than $7.7 million has gone to Democrats. Schumer got his $1.65 million; his New York colleague Kirsten Gillibrand took in $886,000; Senate Majority Leader Harry Reid of Nevada received $814,000; Senate Banking Committee Chairman Chris Dodd of Connecticut scored $603,000; Colorado freshman Michael Bennet got $401,000; and Agriculture Committee Chairman Blanche Lincoln of Arkansas— who will have a big say on the derivatives portion of regulatory reform — got $336,000.

“Democrats are holding the reins in Washington now with a Democratic-run White House and Congress,” said one financial services lobbyist. “It only makes sense that donors want to put their money into the coffers of those who are driving the agenda.”

Among Republicans, the biggest recipient of financial-industry money so far this year is Richard Shelby of Alabama. But although he’s the ranking Republican on the Banking Committee — ground zero for the regulatory reform bill in the Senate — he’s received just $313,000 from the industry this year.

That’s smaller than the haul for Bennet, the most junior Democrat on the Committee, or Lincoln, who isn’t even on it. And Shelby is the only Republican senator on the industry’s top-10 giving list.

The industry’s giving pattern this year may upend the traditional notion of Republicans as the bagmen for Wall Street. But it also reflects political reality: Democrats hold a commanding if not quite filibuster-proof majority in the upper chamber, and some of them may be willing to side with the financial industry on key aspects of the regulatory reform effort — even if that’s not immediately obvious from the Democrats’ populist rhetoric.

The Financial Services Roundtable, an industry association that gave almost $425,000 to members during the past election, says the issues — not the party — drive its donations.

“We support members that understand the issues facing our industry,” said Scott Talbott, the Rountable’s senior vice president of government affairs. “This is done on a case-by-case basis.” Democrats insist that industry money doesn’t influence their votes.

“Contributions don’t really affect — my basis of decision making is whether it’s going to be beneficial to Arkansans,” said Lincoln, who noted that financial services firms aren’t among her biggest contributors.

Schumer spokesman Brian Fallon says his boss “calls the shots the way he sees them” — regardless of who’s giving him money.

“The financial services industry is a vital part of New York’s economy, but he doesn’t hesitate to go after the institutions when they are wrong, such as with credit cards, corporate governance and overdraft fees,” Fallon said.

To compare the $1.7 million he’s gotten from the so-called FIRE lobby — that’s finance, insurance that’s not health insurance and real estate — with his positions on key elements of reform, you might think his donors are suffering from Stockholm syndrome.

Schumer, No. 3 in the Senate Democratic leadership and the former chairman of the Democratic Senatorial Campaign Committee, has offered scads of proposals that the industry doesn’t like on issues from corporate governance to derivatives to the creation of a new consumer watchdog for the financial world.

But his top donors include insurance company New York Life Insurance, private equity firm Lightyear Capital, futures clearinghouse MBF Clearing Corp. and real estate companies Rudin Management and Related Companies.

Quite a few financial insiders express frustration with Schumer, feeling he’s thrown the industry under the bus now that it’s politically popular to do so — after having collected mountains of cash from the industry to help the Democrats build their 60-vote majority in the Senate.

Others contend that, despite his positions on the hot-button debates surrounding the financial reform effort, Schumer remains an important ally for Wall Street on the technical issues that aren’t grabbing headlines, such as systemic risk regulation and capital requirements for financial institutions.

And on regulatory reform, much of what’s most important to financial firms exists in those more technical shadow lands.

“In the end, he still understands the operation of the marketplace,” explained one financial services executive.

Schumer is also a player on securities and exchange issues, an important area for the securities and investment firms that call New York home and that have given Schumer almost half of his industry checks this cycle — far more than any other member.

The hedge funds and private equity firms included in that giving also see him as something of a champion for them. Private equity, hedge funds, and venture capital firms gave him more than $707,100 during the 2010 cycle, nearly double what the industry has donated to any other member. Their support can be traced back to a 2007 battle over the “carried interest” bill that would have more than doubled the taxes paid by investment managers.

The legislation passed the House, but momentum petered out in the Senate — a victory some financial services lobbyists attribute to Schumer.

Schumer threatened to introduce legislation that would increase the taxes on carried interests for all industries, not just investment managers. His bill would have hit a litany of partnerships in industries far beyond private equity, such as real estate, oil and gas, and venture capitalists — a poison pill for most lawmakers. By spreading the pain, Schumer made it difficult for any lawmaker to vote for the bill.

In addition to collecting money from Wall Street for himself, Schumer has helped Gillibrand, the state’s junior senator, get her share of industry dollars.

Earlier this year, Schumer was instrumental in helping Gillibrand fend off possible 2010 challengers. In March, he co-hosted a $4,800-per-head fundraiser for her. And he’s spent time introducing her to audiences across the state and donors in the financial services world. Reid and Dodd need no introductions; the industry knows full well that it can use their help. Dodd has collected millions from the financial industry since his last reelection in 2004. But the Connecticut Democrat — who’s in for the toughest reelection fight of his career — says there’s little conflict between the industry donations and his legislative goals. Efforts to reform the system, says Dodd, will help the industry — particularly smaller players like community banks.

“It strengthens these financial services,” he says. “People that work for these institutions know what has to be done, too.”

All told, 19 of the 22 senators on Dodd’s Banking Committee have received checks from the financial industry this year, and each of those up for reelection in 2010 has received at least $180,000.

Finance lobby prevailed on big issues

Source: WSJ, July 1, 2009 "Finance Lobby Cut Spending as Feds Targeted Wall Street", WSJ, July 1, 2009

See WSJ graphic of spending by individual firms.

"The so-called FIRE lobby -- which includes finance, insurance (excluding health insurance) and real estate -- remains a top spender, to be sure, and has prevailed on some big issues. It won an accounting-rule change that gave banks more flexibility in how they value troubled assets, a change that will boost their apparent profitability. Also, banks beat back legislation that would have allowed judges to reduce homeowners' mortgage principal in bankruptcy.

The industry is gearing up for fights over the regulation of swaps and other derivatives, which were at the heart of last year's crisis. It is taking steps to delay an accounting rule that would force banks and others to bring some of their off-balance-sheet vehicles back onto their books next year, a change that could force some to raise additional capital. Lobbyists for hedge funds are pressing to head off strict regulation.

Financial firms also retain important Capitol Hill connections. Some lawmakers have said they won't take political-action-committee contributions from banks that have received taxpayer-rescue money. Rep. Frank doesn't accept PAC money from banks receiving bailout funds, nor personal contributions from their top executives. But he and others at the center of the regulatory overhaul still accept money from financial lobby groups, including those that have organized regulatory opposition.

Since 1990, the financial industry has made $2.2 billion in political contributions to lawmakers, more than any other industry tracked by the Center for Responsive Politics. Since 1998, the earliest available data, Wall Street has also been the top spender on lobbying activities, at $3.6 billion.

The banking industry lobbied to reshape financial markets over the decades, but didn't always get its way. Banks failed to curtail the growth of government-backed mortgage lenders Fannie Mae and Freddie Mac, which themselves lobbied lawmakers for permission to expand their reach. In other areas banks had significant victories. The banking industry pushed for the 1999 repeal of the Glass-Steagall Act, a 1933 law that kept banks out of the securities business. That effort alone, led by Citicorp, J.P. Morgan, Bankers Trust and Travelers Group, took 20 years, a dozen tries and more than $300 million in lobbying expenses. The campaign was supported by the Federal Reserve, which wasn't a recipient of lobbying largess but saw deregulation as good for the economy.

The industry's recent spending cuts can be largely attributed to the handful of huge players that either collapsed or were forced by the government to quit lobbying. Suspended lobbying by American International Group Inc., Freddie Mac, Fannie Mae, Bear Stearns Cos. and Lehman Brothers Holdings Inc. accounted for more than half the overall spending drop, or 5.5 percentage points, in the first quarter."

Wall Street goes to Washington

"In the old days, Washington was refereeing from the sideline," said Mohamed A. el-Erian, chief executive officer of Pimco. "In the new world we're going toward, not only is Washington refereeing from the field, but it is also in some respects a player as well. . . . And that changes the dynamics significantly."

Washington has become a dominant player. Over the past year, the Federal Reserve and the Treasury have injected trillions of dollars into frozen financial markets, snapping up unwanted bonds, extending guarantees to banks and slashing interest rates.

Three times as much U.S. taxpayer money has gone into propping up a single firm, insurance giant American International Group, as the world spent a decade ago during the financial rescue of South Korea, then the world's 11th-largest economy. And the emergency bailout of financial firms that Congress approved last year has cost nearly as much as the first five years of the war in Iraq.

Now the Treasury and the Federal Reserve are embroiled in everything from credit cards and home loans to auto manufacturing, from overseeing executive pay to shaping boards of directors.

In response, senior executives of major financial companies are traversing the Beltway to meet lawmakers in person for the first time. Firms such as Fidelity Investments, BNY Mellon and even Goldman Sachs, which has prospered in the crisis relative to many other banks, are opening additional offices or bulking up their staffs in the capital.

For decades, the federal government has played a key role in financial markets through regulation, public spending and monetary policy. But the government has now established itself as never before as the most dynamic actor in the still ailing economy. That prominence is sure to fade as the rescue programs wind down. Yet Wall Street executives say the legacy could be enduring.

The relationship "has changed in the sense that it's clear that every one of the firms, including Goldman Sachs, recognizes that they would not exist today had the government not stepped in when it did," one former senior bank executive said..."

AIG lobbying against mark-to-market

Reuters reports June 26, 2009 "Early in April, the Financial Accounting Standards Board (FASB) relaxed the mark-to-market rules, which require assets to be valued at what they would fetch in a current market transaction. It also issued guidance that would let lenders take smaller losses on impaired assets such as mortgage-backed securities.

Herz said some major companies, including federal bailout recipient American International Group Inc (AIG.N), had sought political intervention into accounting standards.

"While that is their right... politicization of accounting standard setting by special interest risks undermining public confidence," he said. Herz said about a year ago, AIG's then-Chief Executive Martin Sullivan spent time in Washington trying to convince lawmakers there were no problems with the insurer's credit default swaps and that it was "all this bogus fair value (mark-to-market) accounting."

The federal government has since used billions of dollars in taxpayer funds to prop up AIG, which nearly collapsed because of its exposure to credit default swaps.

Now business groups are eyeing another set of FASB rules that could could force banks to move more off-balance sheet assets onto their books when they take effect in 2010.

Asked if he expected another effort to get FASB to soften its stance, Herz reiterated that the new off-balance sheet rules "become final next year."

GE -- lobbying champion

Source: General Electric is once again the lobbying champion Beltway Confidential, The Washington Examiner, July 21, 2009

"General Electric spent more on lobbying in this year's first quarter than any other company, newly filed federal lobbying reports show. The company shelled out $7.2 million for lobbyists in April, May, and June--that's $160,000 each day Congress was in session.

The only other company to spend more than $6 million was Chevron, and GE almost equalled the Chamber of Commerce's lobbying budget.

GE is perenially atop this list, according to the Center for Responsive Politics. The company has spent $187 million on lobbying over the past decade, 44% more than runner-up Northrup Grumman.

Why? Because no other company is so intimately tied up with government -- a dynamic that has only intensified in the Obama administration.

GE is a defense contractor, sure, but it has increasingly positioned itself as a public-policy profiteer."

A list of a financial issue lobbying by GE in the 2Q 2009:

  • HR 3068, TARP for Main Street Act of 2009
  • HJ res 3, Relating to the disapproval of obligation under the Emergency Economic Stabilization Act of 2008
  • SJ res 2, Relating to the disapproval of obligation under the Emergency Economic Stabilization Act of 2008
  • HR 384 TARP Reform and Accountability Act
  • S 414, Credit Cardholder's Bill of Rights Act of 2009
  • HR 627, Credit Cardholder's Bill of Rights Act of 2009
  • HR 1606, New Automobile Voucher Act of 2009
  • HR 1106, The Helping Families Save their Homes Act of 2009
  • HR 786, To make permanent the temporary increase in deposit insurance coverage
  • HR 1214, The Payday Loan Reform Act of 2009
  • HR 1728, The Mortgage Reform and Anti-Predatory Lending Act of 2009
  • S 664, The Financial System Stabilization and Reform Act of 2009

The Lobbying Manual

  • Link to the webpage of the Office of the Clerk of the House of Representatives (lobbying disclosure)
  • Link to the webpage of the Senate Select Committee on Ethics (which contains a summary of the new gift and travel rules, among other things)
  • Link to the webpage of the House Committee on Standards of Official Conduct (which contains a summary of the new rules)

Latest Obama restriction is likely to reduce lobbyist registrations

"More lobbyists are expected to terminate their registrations because of the White House’s announcement this week that federal agencies should not appoint them to advisory boards.

It is unclear how many people will be affected by the decision, but at least 1,000 federal advisory committees report to the General Services Administration under the Federal Advisory Committee Act, and many of them now include registered lobbyists.

Calman Cohen, president of the Emergency Committee for American Trade, a pro-trade coalition of business leaders, sits on a 27-member panel that provides advice to the Commerce Department on trade policy in the electronics industry. He is one of 14 panel members who were registered to lobby last quarter for clients that include IBM, Oracle and eBay Inc.

Cohen said he hopes the White House will institute a waiver process to exempt lobbyists from the policy, much like they have done with an executive order Obama signed on the first day of the administration to stop the revolving door between K Street and government. “I would hope a way can be found to take account of all citizens, whether they are a lobbyist or not, when it comes to the design of trade policy to benefit the United States,” Cohen said.

The announcement was made in a blog post on the White House’s website on Wednesday by Norm Eisen, special counsel to the president for ethics and government reform. He said the administration recognized lobbyists often act in the public interest by serving on agency boards and commissions, but that President Barack Obama made a promise during his campaign to tamp down on the influence of special interests.

“If we are going to change the way business is done in Washington, we need to make sure we are not simply continuing the practices of the past,” Eisen wrote.

The announcement said that lobbyists serving on advisory panels may finish their terms but should not expect to be reappointed. Eisen also wrote that the White House would monitor the new policy and make changes to it if necessary.

Doug Pinkham, president of the Public Affairs Council, said the White House position is “absurd” and the administration does not understand how private-sector expertise can help the federal government. He said lobbyists are bound to de-register as lobbyists while continuing to help their companies."

IMF - "Lobbying and a fistful of dollars"

Has lobbying by financial institutions contributed to the financial crisis?

This paper uses detailed information on financial institutions’ lobbying and their mortgage lending activities to answer this question. We find that, during 2000-07, lenders lobbying more intensively on specific issues related to mortgage lending (such as consumer protection laws) and securitization:

  1. originated mortgages with higher loan-to-income ratios,
  2. securitized a faster growing proportion of their loans, and
  3. had faster growing loan portfolios.

Ex-post, delinquency rates are higher in areas where lobbying lenders’ mortgage lending grew faster.

These lenders also experienced negative abnormal stock returns during key events of the crisis.

The findings are robust to

  1. falsification tests using information on lobbying activities on financial sector issues unrelated to mortgage lending,
  2. instrumental variables strategies, and
  3. a difference-in-difference approach based on state-level lending laws.

The financial industry’s lobbying about U.S. mortgage rules may have contributed to the recent financial crisis and may pose a threat to the entire industry’s stability, according to a report published by three International Monetary Fund economists.

The economists found institutions that lobby the most also have more lax lending standards, tend to securitize more of their mortgages and have faster growing loan portfolios. The delinquency rates are also higher in areas in which these companies’ lending grew fastest, the report showed.

“Our analysis suggests that the political influence of the financial industry can be a source of systemic risk,” Deniz Igan, Prachi Mishra, and Thierry Tressel said in the conclusion of their report. “It provides some support to the view that the prevention of future crises might require weakening political influence of the financial industry or closer monitoring of lobbying activities.”

Regulators worldwide are pressing firms to improve risk oversight after the world’s biggest banks and brokerages reported more than $1.7 trillion in writedowns and credit losses since 2007 tied to the global financial crisis. In the U.S., the Obama administration this month extended the $700 billion financial-rescue program until October.

The authors favored a “moral hazard” interpretation of their findings, where financial companies lobby seeking looser lending standards because they expect to be bailed out during a crisis or because they favor short-time gains.

Spending on Lobbying

The authors obtained their data using U.S. laws requiring companies and organizations to provide detailed information on their lobbying activities, according to the report.

The report noted that 16 out of the 20 lenders that spent the most on lobbying between 2000 and 2006 received funds under the U.S. Emergency Economic Stabilization Act.

Spending by finance and real estate industry companies accounts for about 15 percent of overall lobbying in any election cycle, the report said. Spending on lobbying was $479,500 per firm in 2006, compared with $300,273 for defense firms and $200,187 for construction companies, the authors said."

These results suggest that lobbying may be linked to lenders expecting special treatments from policymakers, allowing them to engage in riskier lending behavior.

EU lobbying Registers of Interest Representatives/Lobbyists

Source: Register of Interest representatives of the European Commission and List of Lobbyists accredited to the European Parliament.

In an effort to enhance transparency for citizens, the European Parliament and European Commission have established registers aimed at providing information about the interest representatives (lobbyists) who engage with European institutions with a view to influencing policy formation and the decision-making process.

By opening this voluntary Register, in the context of the European Transparency Initiative, the European Commission wishes to let citizens know which general or specific interests are influencing the decision-making process of the European Institutions and the resources mobilized to that end.

Representatives of organisations who wish to access the Parliament regularly for lobbying purposes must request accreditation and sign up to Parliament's code of conduct in this regard. The list of accredited lobbyists and organisations is published online.

Australia to ban "success fees"

"QUEENSLAND Premier Anna Bligh will ban "success fees" for lobbyists and today flagged an overhaul of political donations rules as part of an attempt to reshape the relationship between politicians and big business.

The ministerial code of conduct, the pecuniary interests register and the way misconduct is investigated will also go under the accountability microscope.

Ms Bligh outlined her intentions at the Australian Public Sector Anti-Corruption Conference in Brisbane, releasing a discussion paper - foreshadowed in The Australian today - on integrity in government.

Her comments came amid damning criticism from the state's corruption reformer Tony Fitzgerald and shortly after the row over political lobbyists and their success fees claimed its first victim when Enhance Corporate general manager Ross Daley was sacked over revelations in The Australian of a secret $1 million payment."

Transparency International global study

"...The report said that clear-cut bribery was only part of the problem.

It pointed to nepotism, favouritism and informal understandings between businesses, officials and politicians in many places that led to inefficiency and gross waste of resources.

The "revolving doors" between public office and the private sector were also a path to "deceitful public procurement deals where non-competitive bidding and opaque processes lead to immense waste and unreliable services or goods", it said.

Lobbyist impact

The group's global programmes director, Christiaan Poortman, said he hoped the weight of the financial crisis would not lead policymakers at the G20 summit in Pittsburgh to water down corruption-fighting efforts.

"It is not just a question of tackling corruption in business - it is also important for financial and economic stability and the ongoing reforms of the global financial architecture," the report said.

And Mr Poortman argued that corruption acted as a catalyst for the global financial crisis - because ratings agencies had a conflict of interest and "turned a blind eye to high levels of risk", something he said was "a form of corruption".

Transparency International said that while many firms had committed to fighting corruption - their efforts often fell short of what had been promised.

It called on companies to issue regular reports on action they were taking to fight corruption, and to reveal any financial support they gave to political parties, lobbyists and governments. The report points to the corrosive impact of 16,500 lobbyists working to influence the European Union in Brussels.

And in the US, corporations spent an average of $200,000 a year on lobbying every politician elected to state legislatures, it said."


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