An Alternative Minimum Tax (AMT) patch, a mental health parity bill, a package of tax break extensions, and tax breaks and relief for victims of natural disasters, specifically Hurricane Ike. These don’t sound like they have any relation to the relief of an financial crisis, but, as of today, they will all play a major role. The new massive bailout package — sorry, “rescue” package — introduced in the Senate includes all of these measures. The inclusion of these measures could help push the underlying Emergency Economic Stabilization Act through Congress or torpedo it by injecting inter-chamber politics into an already tense political situation.

At the heart of the tacked-on legislation is a combination of an AMT patch and tax break extensions for corporations and renewable energy investments. Senate Democrats, most prominently Sen. Max Baucus, believe that the inclusion of these measures will help draw the support of House Republicans who previously voted down Monday’s bailout bill. However, this measure is already drawing the ire of House Democrats, including Blue Dogs and Majority Leader Steny Hoyer.

The AMT/tax break extension package was previously passed by the Senate, but House leaders, pushed by Hoyer and the Blue Dogs, intended on shelving the proposal due to its failure to abide by pay-as-you-go rules (providing offsetting cuts to go with revenue reductions). The inclusion of the package in the bailout bill will revive the animus between the two Democratic factions. Hoyer has already stated that the inclusion of the “tax extenders” is “controversial” and was included only because “they thought that’s the only way they could get it passed.” Of course, the Blue Dogs, being prominent supporters of the bailout bill, may find themselves in a situation where this compromise is the best they can get.

Seeing as how every vote counts at this point — the bailout only needs 12 votes to pass in the House — the inclusion of the mental health parity legislation previously passed by the House could help sway one or two votes. The chief Republican cosponsor of the bill, Rep. Jim Ramstad, voted against the bailout bill on Monday. Also, one the bill’s seven cosponsors, Rep. Pete Stark, also voted against the bailout. The inclusion of the defining bill of Ramstad’s career, as he retires this year, could be enough to sway this one vote into the “yes” column.

In classic congressional fashion, the Senate has decided to use a crisis piece of legislation as a way to push through a massive package of other priorities forcing an inter-chamber factional battle to come to a head. The inclusion of this controversial legislation could also serve as a remedy to the current failure in the House.

Poison pill or appeasing antidote? We’ll wait and see.

4 Comments

Congress took a real step today toward legislative transparency, proactively posting the proposed bailout legislation in public, online, in advance of floorconsideration.

To give citizens a chance to fully digest and comment on the proposed legislation, we’ve posted the text of the legislation to PublicMarkup.org for public review.

On Friday Ellen blogged a request for legislative transparency, calling on Congress to release the bailout draft as early as possible:

The Sunlight Foundation is calling on Congress to publish the proposed bailout legislation as soon as possible, to give constituents and lawmakers themselves as much time as possible to examine the specifics of the proposal before it’s voted on.  We will post the draft legislation to PublicMarkup.org as soon as possible, to give citizens a chance to weigh in on the proposal’s specifics.

Any lack of transparency in consideration of this legislation would be especially ironic since lawmakers have blamed the current crisis on financial malfeasance that was hidden from public view.

Before the bailout proposal is considered by lawmakers, it must undergo an even more important test: evaluation and assessment by the public.

Today, Congress responded, and Speaker Pelosi and the House Financial Services Committee posted the bill they’ve designated as the final version.

From remarks Speaker Pelosi delivered at a press conference today:

Before I yield to Senator Reid, I just want to tell everyone that I am now informed that at this moment, you can find the plan on financialservices.house.gov, and then if not there, on speaker.gov. It’s there for all Americans to see, for our Members to read so they can make the important decision they have to make tomorrow in the House.

I also want to say that later when this bill passes and is implemented, all of the transactions related to this legislation will be on the Internet within 48 hours and that represents change. That transparency, that oversight, will be very important to the health of our economy.

In the midst of rare political urgency, as congressional leaders are pushed well beyond their comfort zones, facing the Bush Administration, unclear political consequences, a skeptical public, and posturing from the presidential candidates, Pelosi chose to assert the role of an empowered public.

Ellen identified two shortfalls in transparency; one real, helping cause the finance situation, and one potential, as Congress responds with legislation.  Speaker Pelosi’s statement addresses both.

First, on finance data, Pelosi says “all of the transactions related to this legislation will be on the Internet within 48 hours…”  While I don’t know finance well enough to speak to the details of publishing such data, I can say that this is the same sort of transaction tracking transparency that has made FedSpending.org (and USASpending.gov ) immensely successful — the same transparency that the individual US states are experimenting with (as Grover Norquist recently noted on The Next Right ).

On the second point, Speaker Pelosi points the public to the two sites where the legislation had just been posted.  Now, putting legislation online is nothing new.  THOMAS has been around since the mid 1990s.  Referencing online access to legislation in the midst of intense negotiations, whipping, and public pressure, however, is.

The expectations here, of course, are much higher than with most legislation.  The dollar amounts are enormous, the legislative process has slipped into urgency-mode, and rank-and-file lawmakers are scrambling to establish a position.

Regardless of the incentives facing congressional leadership, and regardless of the substance of the bill, this episode shows one thing very clearly: the bar for public disclosure has been raised.

Ellen, in her post, also points out the distinction between public dialog and “compromises and deal making — the real stuff of urgent policy-making.”  If public dialog is going to remain separated, to some degree, from “the real stuff of urgent policy-making,” as it is sure to in a legislature controlled by centralized party leaders, then the role of the informed public needs to be clearly staked out, asserted, and defended.

Even if many Americans dislike this legislation, and even if much of the legislation was created in informal pre-legislative meetings, public scrutiny and input has been welcomed into that process.

The legislative process, just like finance regulation, depends on public scrutiny for stability and legitimacy.  It’s good to see Congress recognize both.

3 Comments

As news spreads that a consensus Wall Street bailout plan is being finalized, and leaders negotiate between proposals submitted from the Treasury Department, Senator Dodd, Representative Barney Frank, and others, two separate conversations are taking place. One is public, as the nation struggles to evaluate the urgency of the economic situation, and to understand the best course of action.  The other, however, is not public, as the compromises and deal making — the real stuff of urgent policy-making — are held in the dark.

The Sunlight Foundation is calling on Congress to publish the proposed bailout legislation as soon as possible, to give constituents and lawmakers themselves as much time as possible to examine the specifics of the proposal before it’s voted on.  We will post the draft legislation to PublicMarkup.org as soon as possible, to give citizens a chance to weigh in on the proposal’s specifics.

Congress faces urgent pressure from the Administration and from constituents to act. Regardless of the course of action Congress ultimately chooses, this is a decision that must be made in full public view. If citizens don’t have a chance to evaluate the legislation, how can Congress possibly represent their constituents’ needs?

The need for sunlight is especially required for urgent or emergency legislation. All too often, Congress praises transparency as a democratic value, but violates it in practice. Any lack of transparency in consideration of this legislation would be especially ironic since lawmakers have blamed the current crisis on financial malfeasance that was hidden from public view.

We have called the relevant congressional committees and have asked for copies of the new consensus legislation.  As soon we get it, we’ll be posting the text of the legislation online at PublicMarkup.org.

Now more than ever,  Congress must represent the needs of all Americans, and to give everyone - citizens and lawmakers alike — a chance to participate actively in the legislative process.

Before the bailout proposal is considered by lawmakers, it must undergo an even more important test: evaluation and assessment by the public.

8 Comments

Two years ago, I was named Time’s person of the year and now I own an insurance company, two mortgage brokers, and I’ll soon own nearly $1 trillion worth of stock. I am so proud of me.

Luckily for me, financial services lobbyists are summoning the economic advisers of both presidential campaigns to help them draft policy positions on how to deal with my newly acquired assets and any future purchases.

It is the “dirty little secret in town,” said one financial-services lobbyist — that after lambasting lobbyists on the stump, the candidates need their counsel on how to respond to a crisis with origins too complicated for most industry outsiders to understand.

…

This week, two of the biggest financial groups in Washington, the Financial Services Roundtable and the Mortgage Bankers Association, have drawn in members from across the country to grill economic advisers from both campaigns, develop policy positions and urge prudence as both parties struggle to craft a regulatory stance on the deepening crisis.

Does this mean that Phil Gramm will be sitting across from himself?

The Legal Times blog reports that the Justice Department will release a number of documents and audio recordings related to the trial of Sen. Ted Stevens. One of those audio recordings of Stevens reveals him to be incredibly cheap. “Ted gets hysterical when he has to spend his own money,” says Alaska restaurateur Robert Persons to VECO chief Bill Allen. Stevens won one battle, to obtain Allen’s medical records. Allen is the government’s primary witness and has a history of mental health problems related to a motorcycle accident.

The Ethics Committee is pushing ahead with an inquiry into Rep. Charles Rangel’s financial disclosure snafus. Consensus has yet to take place as Ethics interim Chairman Gene Green and Ranking Member Doc Hastings released dueling letters on the form of the investigative subcommittee.

I think that someone already did this. He’s totally never on TV, so I can’t remember his name.

As I’ve already written about here, the Fannie Mae and Freddie Mac PACs are now shuttered, ending an era of boundless campaign contributions used to keep lawmakers out of their business. Thanks to those campaign contributions and the subsequent lack of oversight, I now own these two mortgage giants.

Which leads directly to a Quote of the Day, from Eric Brown’s Political Activity Law Blog:

We’ll have “public funding” before we know it, given all of these government bailouts of companies with PACs… AIG, Freddie Mac, Fannie Mae…

5 Comments

The complete meltdown in subprime mortgages has caused a total makeover of the investment industry. The effect of the makeover on Wall Street will trickle down to Washington, with diminished campaign contributions, lobbyists out of work, and new bills and regulations to wrangle over.

First came the government takeover of Fannie Mae and Freddie Mac. The home loan giants were two of the biggest names in the Washington influence game over the past decade. The two organizations spent a combined $200 million on lobbying over the last ten years and, since 1990, have contributed $19.5 million to political campaigns. It is no wonder that Fannie and Freddie avoided the crucial scrutiny that they needed over the last ten years. And now, Fannie and Freddie’s lobbying shops are shuttered, their political contributions are cut off, and they will no longer throw extravagant fetes for lawmakers and cabinet secretaries.

Yesterday’s collapse of Lehman Brothers, the Bank of America takeover of Merrill Lynch, and today’s AIG firesale, will cause similar aftershocks in Washington. Since 1989, these companies have contributed millions to federal candidates for election:

Merrill Lynch - $14.7 million

Lehman Brothers - $9.2 million

AIG - $9.7 million

The fall-off in campaign contributions from these companies will likely spread to the entire securities and investment industry. The Wall Street Journal points out that during the 2008 election cycle securities and investment contributions are the 2nd largest source of money for Democratic candidates and the 3rd largest source for Republicans. Already those contributions have slowed over the summer months preceding this crisis.

Lobbying spending is likely to shift, but probably not drop-off. Since 1998, Merrill Lynch spent $39.3 million on lobbying in Washington. That account will likely be wiped out for now, as Bank of America takes over for them. Lehman Brothers, which was denied help during their collapse, is a smaller player in Washington with $6.3 million in lobbying expenses since 1998. The events of the past few days have completely wiped out the lobbying enterprises of two companies that spent over $45 million over the decade.

The securities and investment industry is one of the biggest spenders on lobbying Washington. Since 1998, this industry has pumped $551 million into influencing decision makers in Washington. Over the past two years, 2007-2008, the industry spent over $132 million on lobbying.

With the raft of new legislation and regulations about to break through like storm surge over New Orleans levees, the industry, despite its massive financial problems, can’t afford to cut their lobbying expenses. Some lobbyists may wind up out of a job, but there will always be new ones to take their place.

(All totals calculated from data available at OpenSecrets.org.)

0 Comments

Politico seems to be suggesting that Wall Street has just discovered Washington. They’ve been here a long time.

“Wall Street Comes to Washington” is the title of the Securities Industry and Financial Markets Association event convening Thursday. Attendees will be entertained by media celeb Tucker Carlson and will hear from House Minority Leader John A. Boehner (R-Ohio). They’ll have dinner with Sen. Richard Burr (R-N.C.) and Rep. Joseph Crowley (D-N.Y.), and they’ll participate in panel discussions about the ongoing credit crunch and the regulatory future for their industry.

This industry doesn’t have trouble attracting lawmakers to their lobbying-fest. They represent Rep. John Boehner’s fifth largest source of campaign funds; and Sen. Richard Burr’s seventh largest. As for snaring Rep Joseph Crowley’s? No problem. They are his largest contributor.

0 Comments