Giant banks tap former government officials to carry fight over Wall Street reform

A coalition favoring greater accountability in government revealed in a new report that the giant banks hired over 240 former government officials to lobby against Wall Street reform. -db

May 11, 2010
By Chris Frates

The nation’s six largest banks and their trade associations have hired more than 240 former government officials-turned-lobbyists to represent them in the fight over Wall Street reform, according to a new report by several progressive groups.

The Service Employees International Union, Campaign for America’s Future and the Public Accountability Initiative will release the report Tuesday as part of a new campaign aimed at taking on the lobbyists who represent the financial services industry.

Throughout the debate, progressive groups and their allies have targeted banks, but the report marks the first time they are singling out lobbyists by name with plans to march on their offices.

“We’re going to lobby the lobbyists a little bit and let them know the anger that’s building about the role they play in warping and undermining democracy in this country,” said Stephen Lerner, SEIU’s financial reform campaign director.

The idea is to make individual lobbyists and their firms as politically toxic as Goldman Sachs and other big banks have become, Lerner said.

The report cites 243 government insiders turned lobbyists working for the industry. Of those, 202 used to work in Congress, and the rest served in the White House, Treasury Department or government agencies. The list includes 33 former chiefs of staff, 54 former staffers to the House Financial Services Committee or Senate Banking Committee and 28 former legislative directors.

The report also estimates that six banks – Goldman Sachs, Bank of America, JPMorgan Chase, Citigroup, Morgan Stanley and Wells Fargo – and their trade organizations have spent about $600 million since the first major federal bailout of Bear Sterns in March 2008. Between 2008 and 2009, the six big banks spent about $69 million on campaign contributions and lobbying, according to the report.

The American Bankers Association, the Securities Industry and Financial Markets Association, the Financial Services Roundtable, the Financial Services Forum, the Futures Industry Association, the International Swaps and Derivatives Association and the Consumers Bankers Association spent $263 million on lobbying, policy work, salaries and conferences in 2008. The report assumes the same spending in 2009.

But at least one bank mentioned in the report, Citigroup, challenged the report’s findings. The report said Citigroup employs the most revolving door lobbyists with 55, but Citi spokeswoman Molly Millerwise Meiners said the report is mistaken.

“Citigroup employed fewer internal and external consultants than reported, and that number has consistently trended downward since the beginning of 2009. As of the lobbying disclosure report filed in the first quarter of 2010, Citi has a total of 36 in-house and outside consultants on staff,” she said. “We have an obligation to our employees, shareholders and customers to advocate our positions to policy makers.”

The report also calls Elmendorf Strategies the “top big bank lobbying firm in Washington,” according to the report. Founded by Steve Elmendorf, a former top aide to House Democratic leader Dick Gephardt, the firm also employs Jimmy Ryan, a former top aide to Senate Majority Harry Reid and a former head of Citi’s Washington office. The firm made $1.4 million representing the industry last year, the report said. Elmendorf declined to comment.

But Glenn Spencer of the U.S. Chamber of Commerce hit back against the unions.

“What this report ought to look at is the virtual extortion of political contributions from unwilling union members and the failure to properly register senior leaders as lobbyists,” he said. “Those are the issues that need explaining.”

And one financial services lobbyist defended his trade, saying unions shouldn’t expect banks to refrain from hiring lobbyists unless they’d be willing to do the same during a major reform like a rewrite of the National Labor Relations Act, for instance.

“The financial services industry is one of the most regulated sectors of the economy and for people to be shocked that they would want to be involved in talking about how the regulations will affect them when this is likely to drive how business gets done for the next generation shows either a shocking degree of naivete or a high level of political ignorance,” he said.

On May 17, progressive groups including National People’s Action, SEIU, Jobs with Justice and the AFL-CIO plan to converge on K Street to protest and “let them see the kinds of people who are losing their homes and getting caught by the payday lenders … they’re representing and let them see the human face of that misery,” said Robert Borosage of Campaign for America’s Future.

Borosage said part of the push will include advocating for an open conference committee process should the Senate pass reform. Closed-door negotiations between House and Senate leaders put reformers at a disadvantage, he said.

“The most powerful interests can buy the most powerful former members and the most well-connected former staffers to take their arguments into the inner sanctum,” Borosage said. “They have an enormous amount of credibility and access behind closed doors.”

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