Making Government Transparent and Accountable
The Sunlight Foundation uses cutting-edge technology and ideas to make government transparent and accountable. Underlying all of our efforts is a fundamental belief that increased transparency will improve the public's confidence in government
The Sunlight Foundation Blog
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TARP Recipient Banks Need to Disclose Political Giving
Today, the Center for Political Accountability (CPA), a non-partisan group working to create transparency and accountability with corporate political spending, announced that they are leading a nationwide shareholder initiative to address the lack of disclosure of certain kinds of political giving by banks receiving TARP money.
The initiative, supported by 23 shareholder advocates, is calling on 19 companies that received more than $1 billion in TARP funds to disclose and require board oversight of their political spending with corporate funds. Only three financial groups — Prudential Financial Services, American Express and Capital One — have agreed to do so. Bruce Freed, CPA’s executive director, said that, as a matter of course, banks should be open and above board with their political spending. This is especially true now that they have received huge amounts of bailout funds from the government. Unfortunately, many have resisted. “A safe and sound financial system must be based on transparency and accountability,” he said.
The CPA-lead initiative sent each bank a letter calling for disclosure of political spending (including soft money contributions and payments to trade associations and other tax exempt groups used for political purposes) to help rebuild shareholder and public trust in financial services institutions. Unfortunately, the banking industry has lagged behind other industries in adopting disclosure. As of mid February, CPA reports, more than 52 leading U.S. public companies, including more than one-third in the S&P 100, have disclosed political giving, including Merck, Dell, General Electric, Pfizer, Hewlett Packard, FirstEnergy, Procter & Gamble and Aetna.
The initiative sent letters to the following institutions: Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, PNC Financial Services, Regions Financial Corp, SunTrust Banks, Fifth Third Bancorp, BB&T, Bank of New York Mellon, KeyCorp, CIT Group, Comerica, State Street, Marshall & Ilsley, Northern Trust, Zions Bancorporation and Huntington Bancshares.
It’s outrageous that the Congress didn’t include a provision in the Emergency Economic Stabilization Act passed last fall that would require disclosure of this type of political spending. And it’s doubly outrageous that the banks are refusing to disclose as due course of receiving public funds.
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Lobbying Spurs Changes in Bailout Plan
In what may be considered one of the greatest feeding frenzies since the Night of Living Dead, lobbyists are working hand-in-foot to get their clients, even if they do not fit the profile, a piece of the $700 billion bank bailout pie. From plumbers to boat dealers, automakers to credit card companies, the type of companies applying for bailout bucks expands by the day.
On Monday, American Express, a credit card company, was approved to receive bailout money. You may ask yourself, “Why American Express? They don’t fit the profile required under the TARP law.” The New York Times, in an article detailing the lobbyist frenzy, explains the logistics of who is able to receive funds under TARP authorization:
Under the terms of the $250 billion capital purchase program announced last month, cash infusions are available to “qualifying U.S. banks, savings associations, and certain bank and savings and loan holding companies, engaged only in financial activities.”
The massive lobbying effort put forth by corporations and industry groups has led to an expansion of those included in the bailout. For others, including American Express, the best option was to have the Treasury Department reclassify them as a bank holding company, thus making them eligible. According to the New York Times, both GE Capital and GMAC, the financial arm of General Motors, are also attempting to reclassify as “a bank or savings and loan holding company.”
The lobbying is intense, putting Treasury Department staffers at the front lines under extreme pressure. Some are even receiving calls from lobbyists representing clients with no interest in receiving funds, like hedge funds, who are trying to gather intelligence for trading in markets. Other companies are hiring lobbyists for the first time to get a piece of the pie.
At this moment there is no way to gauge lobbyist activity outside of the reporting of some journalists. In this “ocean of money” lobbyists operate at depths not viewable by the public. The public will not get to see how much money is being spent until the next quarterly reports are released. Even then, lobbyists are not required to list their contacts with government officials and do not need to list the specifics of what they are lobbying for. In the quest for bailout bucks, the public will never truly be able to know what is going on as more and more companies try and get a piece of the pie.
If we are going to dole out $700 billion in taxpayer money the government ought to mandate real disclosure for lobbyists. Just as important as how the bailout bucks are spent is how the bailout bucks are acquired. Lobbyists are playing a vital role in helping all sort of corporations and organizations gain access to the bailout pie. They must disclose their activities fully if there is to be real transparency in the bailout give away.
Here’s a good place to start.
