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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REPOST: Next Banking Committee Chair Has Ties to Financial Sector
Note: I wrote this over the summer when the possibility existed that Sen. Chris Dodd would be moving from the Banking Committee to the Health, Education, Labor and Pensions Committee. With Dodd’s retirement announcement, I figured it would be useful to revisit. I have removed some of the introductory text as it is now irrelevant, but can be viewed at the original posting here.
Sen. Tim Johnson of South Dakota is next in line to replace Sen. Dodd and has similarly close ties to the financial sector.
According to Open Secrets from 2003-2008, Sen. Johnson has pulled in $1,407,958 from the finance, insurance and real estate sector. While this pales in comparison to Sen. Dodd’s $9,097,107 over the same period of time, it accounts for 20% of the South Dakota senator’s campaign haul. Sen. Johnson’s finance contributions are aided by the importance of South Dakota to the finance and credit industries. These companies only need to abide by the regulations of the state within which they are incorporated and South Dakota has some of loosest regulations for bank holding and credit card companies. This has led to a large number of credit and banks companies locating in the small plains state, providing for tens of thousands of jobs. (Continue reading…)
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Political Influence Slows Action
The idea that overt political influence by large organizations like the banking industry, and the larger financial services industry, has, and is, blocking serious action in the legislative branch and executive agencies is spreading. As is the solution: more transparency. Here’s Bloomberg columnist Michael Sesit:
Finance companies — commercial and investment banks, insurers, investment-management companies, private-equity firms and hedge funds — have spent fortunes on lobbying efforts and campaign contributions, purchasing access, good will and clout.
The result has often been slack regulation and poor discipline to the detriment of the public, markets and, as has recently been shown, the institutions themselves. Look at how lawmakers barred the Commodity Futures Trading Commission from regulating derivatives.
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Just restricting the amount of money spent on elections won’t solve the problem of influence-peddling. But it would help to create a fairer system.
The pervasive role of lobbyists also needs to be curtailed. What’s needed is much more transparency in their activities. For ethics restrictions to work, “there must be an open, publicly accessible reporting system where every executive-branch appointee records meetings with registered lobbyists during and after working hours, both inside and outside the office,” former U.S. attorney Whitney North Seymour Jr., wrote last month in a letter to the New York Times.
Spot on. Even go a step further and have the same rules apply to senators, congressmen, their staffs and Congressional- committee staffs.
The message is clear: The U.S. government isn’t for sale.
(Emphasis added.) Amen to that.
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Wall Street to Washington
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.)
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What a little Sunlight can tell you…
Earlier this month, The Washington Post reported how targets of a Senate investigation have showered Washington with campaign contributions, in an apparent attempt to buy some love and avoid sanctions. In July, the Senate Permanent Subcommittee on Investigations issued a report alleging that two European-based banks, USB of Switzerland and LGT of Liechtenstein, served as tax havens for wealthy Americans, costing the federal treasury up to $100 billion a year.
The Post article states that officials with the banks have given more than $2 million this year, $98,000 in June alone, to congressional and presidential campaigns. USB spends close to $1 million a year on lobbying and is traditionally a big campaign giver. But so far this cycle the Swiss bank’s contributions have surpassed what it gave in the whole 2006 election cycle. The Post quotes a bank spokesperson as saying the bank’s giving is in no way related to the Senate investigation. The article didn’t say, however, whether it was said with a straight face.
