If ever there was a doubt that campaign contributions effect the votes of lawmakers, look no further than today’s Op-Ed from Amy Showalter in Roll Call. Showalter is the President of the Showalter Group, providing advice to corporations and trade associations on how to leverage grassroots pressure and PAC contributions in their lobbying efforts. Showalter’s Op-Ed attempts to reveal why certain lawmakers changed their votes on the recent bailout legislation. In doing so, Showalter winds up higlighting the seedy behavior of feeding campaign contributions to lawmakers in exhange for votes and the stealth nature of grassroots lobbying. On PAC contributions she writes:

Rep. Joe Knollenberg (R-Mich.), who faced one of the toughest re-election fights in the House, told the Associated Press that he changed his mind after he received telephone calls from General Motors Corp. chief executive officer G. Richard Wagoner Jr. and other auto and corporate executives. “I’ve never talked to as many bank presidents in my life, over my entire life,” he said.

Knollenberg has received $131,500 from GM since he started serving in Congress in 1993, according to Federal Election Commission records, illustrating another “predictor of influence success.” Our survey showed that giving a legislator the maximum allowable political action committee contribution is a predictor of persuasion success.

Lobbyists representing the housing, financial, auto and other business sectors pushed hard for the bailout bill. Several of the lawmakers who changed their minds have received campaign contributions from those industry PACs.

Schmidt has received $70,100 from American Financial Group Inc., a Cincinnati-based insurance holding company, and $16,500 from the American Bankers Association since she was elected to Congress in 1989.

Rep. Judy Biggert (R) was the only Illinois lawmaker to change her mind about the bailout package. Since she began representing her suburban Chicago district in 1989, she has received $45,000 from the National Association of Realtors, $39,500 from the National Automobile Dealers Association and $37,548 from the ABA.

Most lawmakers say they aren’t influenced by campaign contributions, but the recent bailout votes suggest otherwise. We found that the most successful influence attempts typically include campaign contributions. In other words, a PAC contribution represents “exchange” and cements relationships.

While campaign contributions do have to be disclosed to the public, they are only disclosed in quarterly filing reports. This prevents the type of real-time oversight that could be occuring if these “exchanges” were made available to the public as they happened.

Showalter also emphasizes the need for lawmakers to here from “key influentials” in their district. These are often business leaders or small business owners who can be engaged in a grassroots lobbying campaign organized by trade associations. After the initial failure of the bailout bill in Congress, the business community, along with AARP, began a huge grassroots campaign to get business owners to call their congressmen and senators to push for passage of the bill. That grassroots push provided the many examples that Showalter uses in her Op-Ed to show the importance of constituent communications and likely pushed the bill to its ultimate, overwhelming success.

While coalitions that often engage in this type of manufactured grassroots pressure are required to disclose their activities under the Honest Leadership and Open Government Act, the actual effort of grassroots lobbying is still left untouched by disclosure requirements. In the world according to Showalter, a pro at influencing lawmakers, the best ways to get to a lawmaker’s heart are still through means not fully policed by disclosure laws.

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A couple of days ago, I blogged about the need for transparency in the bailout. The Emergency Economic Stabilization Act of 2008, or H.R. 1424, does contain Section 105 where reporting requirements can be found. The section says that the Secretary of the Treasury is required to report to Congress 60 days into the bailout and every 30-day period thereafter on the actions taken, the actual obligation and expenditure of funds over that period, and a detailed financial statement of all activity, transactions, costs, etc.

The second sub-section requires the secretary to compile “tranche reports” once the $50 billion and $100 billion commitment levels are reached. Earlier this week, Treasury released their first report. And the law requires Treasury to produce a written report on the state of the financial markets and regulatory system and submit it to Congress no later than April 30, 2009. But as OMB Watch said, ProPublica is steps ahead of Treasury by compiling a better, more up to date list than the mandated government reports. This is obviously one sign of the need for even better transparency.

Also, The New York Times reports that of the $350 billion released by Congress, only $60 billion is left to be doled out. That means that the spending of the money far outpaces disclosure. Paul Blumenthal, my Sunlight colleague, has already blogged about that. Certainly a little more timely transparency is warranted than the receipt of some report in April, over five and a half months from now.

Can this administration even define what the words real-time, on line, downloadable data means?

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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.

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Here’s an opportunity for the new Administration. Develop a model system for government transparency in the context of bailout of Wall Street.

ProPublica has been doing an admirable job of providing some transparency for the financial bailout by the federal government, including putting it all in perspective. They are keeping a running tally of the banks that have announced preliminary approval by the Treasury Department for participation in the bailout, along with the dollar amounts to each bank. They are going to update the list as they receive more information. And here’s a chart providing some historical perspective, with a bubble chart representing the size of the 13 U.S. government bailouts of corporations (and one city) since 1970, calculated in 2008 dollars. They’ve also set up another chart listing the results of each bailout.

Others are keeping an eye on what’s going on. Bloomberg News is demanding that the Federal Reserve comply with congressional demands for transparency in the $2 trillion bailout of the banking system (BailoutSleuth.com says that it’s more like $2.5 trillion). In September, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson promised Congress they would open the books. Currently, Congress and the American people have no idea where their money is going or what securities the banks are pledging in return. Bloomberg has filed both a Freedom of Information Act and a federal lawsuit hoping to force disclosure.  We going to dig a bit deeper into this and see if we can figure out what the requirements for transparency are.

This is a real opportunity for the Obama team. Make reporting on the bailout a model of the transparent government that they have so strongly advocated. Daily reporting, online in usable data formats would be a good place to start.

Update: From Columbia Journalism Review.

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There is only one lobbying game in town: grabbing for bailout bucks. Changes at the Stevens trial, while more stories unfold regarding the Alaska senator’s earmarking. Earmark disclosure in the Senate is still woefully inadequate. All of that in today’s news:

What’s bad for the goose, is good for the gander. Crisis in business tends to mean profits for lobbyists, especially when the private sector is seeking direct payments from the government. The AP reports that the quest for a piece of the $700 billion bailout pie is currently the only lobbying game in town. I can see the scene now, blue power suits swarming past Albert Gallatin as they enter the Treasury Department building on Pennsylvania Ave. to beg for their clients like so many street corner hobos. I can’t wait for those 4th quarter lobbying disclosures.

The judge hearing the charges against Sen. Ted Stevens replaced a juror after attempts to contact a juror on leave for the death of her father failed. The judge instructed the jury to begin deliberations anew today. Meanwhile, the AP reports on another questionable earmark Sen. Stevens sought and received for a campaign contributor Bob Persons. Persons, an Alaska restauranteur, is also the provider of the nearly $3,000 massage chair that is at the center of one of the seven charges filed against the senator. The new earmark revelations show that after seeking $10 million for road projects in Girdwood, Alaska, Sen. Stevens pushed hard for the state transportation agency to use $2.7 million in funds to pave a road connecting directly to the Double Musky Inn, a Cajun restaurant owned by Persons. Stevens insisted that the road paving project be priority number one, despite it ranking sixth in importance on a list of road projects.

The Salt Lake Tribune reports that Sen. Bob Bennett finally released a list of his defense earmark recipients, but only due to confusion between his office and the Defense Appropriations Subcommittee. Unlike in the House, senators are not required to reveal the recipients of earmarks. Instead, they operate on a voluntary disclosure agreement, with 50% of senators revealing who they earmark funds to. Sen. Bennett has not been one of those 50% until now after the subcommittee told his staff that they were going to make the information public also. The subcommittee never did release the earmark information, but Bennett did. The Senate should scrap voluntary disclosure and institute mandatory earmark disclosure requirements as the House has done.

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If I remember correctly, Treasury Secretary Hank Paulson sat in a committee hearing and pledged transparency in the operation of the ongoing bailout of the nation’s financial sector. After initially proposing a plan that would have had no oversight or transparency, Paulson reversed course under committee grilling and promised transparency. That promised transparency must be so good because I sure can’t see it.

Bailout watchers report that bailout contracts written by Treasury are redacted, including how many bailout bucks banks are set to receive. Other contracts for accountants are also riddled with redactions. The Treasury Department needs to fulfill its promise of transparency by not redacting its contracts and loans during this incredibly expensive time for taxpayers.

If you want to follow more about this story, ProPublica and Mark Cuban’s Bailout Sleuth are the best resources for tracking bailout transparency right now.

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Third quarter lobbying disclosure reports tell the story behind financial services lobbying in the lead up to the Panic of ‘08 and the ultimate bailout. Jurors now get to decide Sen. Ted Stevens’ fate. That and more in today’s news round-up:

Two competing articles from The Hill and Congressional Quarterly wind up telling the same story. The Hill’s article is titled, “K Street earnings fall.” The CQ article’s opening sentence states, “K Street emerged from the third quarter of 2008 looking substantially better off than Wall Street.” Both are certainly true; I have yet to hear of a lobbying firm being nationalized. The main thrust is that, despite falling lobbying expenses, financial services companies, in particular, can no longer afford to look at lobbying expenses as “discretionary expenses.” While I’m not sure that they ever did - the return on investment in lobbying is usually in the tens of billions for these companies - it is certainly true that lobbying is a lifeline for some companies right now. Lobbying was also a part of what got the financial services and housing industry into this mess, consistently opposing any oversight or regulation that could have prevented the precipitous slide into panic. As lobbying will be so important to these companies in the future, Congress should impose new disclosure requirements on lobbyists, especially those operating for companies receiving bailout bucks. I think something like this would be more than fair.

After a bipolar performance by the Stevens defense and a repetitious pounding from the prosecution during closing statements the jury will finally get to decide whether the Alaska Senator falsely concealed gifts he received when filing his financial disclosure forms. We await their decision. This is how I’m imagining the scene in the jury room right now.

Sunlight’s Nancy Watzman takes a look at Sen. Elizabeth Dole’s fundraising parties over at Party Time, “The deep connections that Dole enjoys thanks to her extensive GOP pedigree–she served in two cabinet posts and of course is married to former Senator Bob Dole (R-KS)–is evident when you dig into the meat of the invitations.”

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AIG says it won’t spend bailout funds on lobbying, as other financial services welfare recipients acknowledge that lobbying expenses will need to be scaled back. That and Sen. Stevens does himself a disservice on the stand.

The Wall Street Journal and the Politico report that AIG, in the face of withering criticism, will suspend all lobbying activities while it is majority owned by the federal government. AIG initially refused to halt lobbying even after it had received a $120 billion bailout from the government. Sens. Dianne Feinstein and Mel Martinez sent a letter to AIG demanding that they not spend taxpayer dollars on lobbying activities. Sen. Feinstein also told the Politico that she will introduce legislation that would ban all bailout recipients from using taxpayer money on lobbying expenses. Feinstein’s efforts signal of new lobbying backlash in Congress. Perhaps, instead of this targeted, temporary response Congress insisted that all lobbyists file full disclosures that list the official lobbied, the issue or bill lobbied on, and all other activities related to lobbying within 24 hours of any contact. If we are trying to get to the root of the problem in the economic crisis, we need to get to the root of the governmental crisis that prevented action from being taken earlier.

Up until yesterday, the trial of Sen. Ted Stevens had been wholly unremarkable, except for the apparently pathetic effort by the prosecution. Yesterday, however, Sen. Stevens did himself no favors by redefining words in the dictionary that are key to his trial - words like “gift.” On the stand, Stevens insisted that a $2,695 chair given to him by Alaska restauranteur Bob Persons and that he has kept at his Virginia residence for seven years was not a gift. Stevens told the jury, “He bought that chair as a gift, but I refused it as a gift. He put it there and said it was my chair. I told him I would not accept it as a gift.” The prosecutor asked Stevens where the chair is now, to which the senator replied, “In our house. We have lots of things in our house that don’t belong to us, ma’am.” This trial was probably headed towards acquital before Stevens took the stand and said this. A gift isn’t a gift if you say it isn’t a gift; and we sure do have a lot of those at our home. That is not what the defense was hoping for. Also troubling for Sen. Stevens is the apparent admission that he misused Senate staff by having them handle his and his wife’s finances.

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A month ago, at the advent of the global economic crisis, the federal government loaned the nation’s largest insurer, AIG, $120 billion to keep it from collapsing, effectively giving the U.S. taxpayer an 80% equity stake in the company. Questions have been thrown around about whether or not the company will continue its lobbying practice despite being 80% owned by the government. Yesterday, ProPublica reported that AIG will continue to lobby. Today, the Wall Street Journal reports that the lobbying will be aimed at reducing regulations and easing oversight of mortgage lenders:

AIG is currently working to ease some provisions in a new federal law establishing strict oversight of mortgage originators, according to state regulators. The law requires that originators be licensed by the states, and that they supply comprehensive information so state regulators can track their activities.

The goal of the new rules is to hold originators accountable if they engage in the sorts of improper or fraudulent lending that ultimately contributed to AIG’s downfall. The law was passed by Congress in July as part of a sweeping housing-industry rescue package.

In the second quarter lobbying filings of 2008, AIG spent $3 million, much of that to block these efforts at oversight. Overall, this year AIG spent $6.7 million on lobbying expenses.

It seems absolutely inappropriate for a company kept alive by the federal government to continue to influence lawmakers and executive branch employees, especially as it concerns oversight that appears intended to stop the type of abusive behaviors that led not only to the near collapse of AIG itself, but to the global economic crisis.

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As the Senate moves forward today with the newest version of the bailout bill (now being referred to as the “rescue plan”), Sunlight has been feverishly parsing the text of the new proposal, as provided by the Senate Banking Committee.

We have finished the first part of the bill, Division A, which is now posted for review and commentary on PublicMarkup.org.

If Congress released the data behind the bills they consider, in real time, at the same time as bills are released, then public review and processing would be much MUCH easier. (Details on what that would take are available in this chapter of the Open House Project report.)

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