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The Sunlight Foundation Blog
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Top Financial Services Committee Members Rely Heavily On Finance Campaign Contributions
One year after the biggest economic collapse since the Great Depression, Congress is still debating new financial regulations to protect consumers and prevent risk-taking in the financial sector. The House Committee on Financial Services is currently undertaking the important first step of writing, amending and voting on some of the pieces of the long-proposed financial regulatory reform. While debating these issues top committee members have been the recipients of disproportionate campaign contributions from the very industry that they are tasked with regulating.
Twenty-seven committee members have so far received over one-quarter of their contributions from the finance, insurance and real estate (FIRE) sector. This includes Chair Barney Frank, Ranking Member Spencer Bachus, four subcommittee chairs and four subcommittee ranking members. Of the twenty-seven, twelve committee members received over 35% of their contributions in 2009 from the FIRE sector. All contribution data was collected from the Center for Responsive Politics’ OpenSecrets.org.Ranking Member Bachus, a crucial decision maker on the committee, received 71% of his campaign contributions from the finance, insurance and real estate (FIRE) sector so far this year. (These numbers run from January 1-June 30.) For his career, the Alabama congressman receives 45% of his contributions from the FIRE sector. Bachus leads the committee in his reliance on FIRE sector campaign contributions. Bachus has taking a position in opposition to most of the regulatory reforms. Bachus recently stated in a hearing, “this is absolutely the wrong time to be creating a new government agency empowered not only to ration credit, but to design the financial products offered to consumers.”
Top Recipients of FIRE Campaign Contributions by % (2009) Name Party FIRE Contributions Total Contributions Percentage Spencer Bachus R $161,200 $226,930 71.04% Kenny Marchant R $25,000 $46,043 54.30% Paul Kanjorski D $215,200 $397,215 54.18% Greg Meeks D $114,900 $218,340 52.62% Mike Castle R $104,000 $200,027 51.99% Dennis Moore D $139,097 $275,480 50.49% Mel Watt D $23,000 $50,696 45.37% Melissa Bean D $269,800 $634,535 42.52% Ed Royce R $200,635 $504,418 39.78% Randy Neugebauer R $146,810 $384,205 38.21% Jeb Hensarling R $140,660 $371,731 37.84% Nydia Velazquez D $58,100 $164,750 35.27% View the bar chart Pennsylvania Rep. Paul Kanjorski is the Chair of the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises and is tasked with crafting many of the initial bills for the proposed financial regulatory reform. While undertaking this important work Kanjorski has had enough time to raise large sums for his reelection. Of the $397,215 that Kanjorski has raised in 2009, 54% of it comes from the FIRE sector. For his career, Kanjorski received 44% of his contributions from the FIRE sector. Of all Financial Services Committee members, only Kanjorski and Bachus receive over 40% of their career campaign contributions from the FIRE sector.
Kanjorski has stated that he will be watchful of the influence the finance and insurance companies hold in the committee, “”We must ensure that special interests do not weaken particular solutions to the point of becoming toothless.” Earlier this year, however, Kanjorski held a fundraiser that was thrown by lobbyists for financial services organizations. Kanjorski refused to release a list of attendees to the fundraiser.
Recently, Kanjorski has introduced a series of bills to reform the regulatory structure for the SEC, hedge funds and insurance. Many trade groups and companies that have donated to Kanjorski and other committee members are organizing to oppose large sections of the bills.
The industry has already had successes this year. Committee consideration of a bill to create a proposed Consumer Financial Protection Agency was delayed after industry trade groups sent a letter to the committee demanding they delay consideration. The bill was later changed to be narrower in focus than the original language.A Bloomberg report also notes that the derivatives lobby, headed by large banks JPMorganChase, Goldman Sachs and Credit Suisse, worked the New Democrats, including Rep. Melissa Bean, to get changes made to a bill aimed at filling holes in derivative regulation. Officials in the Obama administration stated that the resulting bill, released as a discussion draft, “created too many loopholes and had the potential to exclude all hedge funds and corporate end-users from oversight.” Bean received 42% of her $634,535 in campaign contributions in 2009 from the FIRE sector.
While top committee committee members are seeing the FIRE sector make it rain on their campaign committees, a number of less senior members are pulling in more modest sums. Thirty-five committee members receive 20% or less of their 2009 contributions from the FIRE sector. Ten of these thirty-five members received 12% or less from the FIRE sector so far in 2009, half of the 24% committee average.
These bottom twelve include Rep. Maxine Waters, who has received no money from the sector, and Rep. Ron Paul who has pulled in only $1,000 or 3% of his 2009 campaign haul. The other members in the bottom ten are Reps. Steve Driehaus (8%), Keith Ellison (8%), Mary Jo Kilroy (8%), Frank Lucas (9%), Carolyn McCarthy (11%), Alan Grayson (12%), Adam Putnam (12%) and Al Green (12%).
All campaign contribution data is courtesy of the Center for Responsive Politics (OpenSecrets.org) A CSV of the research is available. Feel free to use it, but please cite Sunlight and CRP/OpenSecrets.
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Financial Sector Spent $5 Billion on Political Influence
In the 10 years leading up to current economic crisis, the financial sector spent $5 billion on political influence, according to a report by the Essential Information and the Consumer Education Foundation. From 1998 to 2008, investment firms, commercial banks, hedge funds, real estate companies, and insurance companies spent $1.725 billion on political contributions and $3.4 billion on lobbyists.
The report highlights 12 policy efforts that were the focus of the heavy influence spending. For the most part, the policy efforts involved doing what Robert Kaiser says lobbyists do best, stopping action. This came in the form of blocking reform bills and blocking regulation. Sometimes these actions came in the form of passing legislation that the financial sector supported.
In the wake of the financial collapse, we need to fully reassess, not only the financial sector, but also the political sector. First and foremost, the lobbying disclosure laws need to be given real teeth by requiring real-time disclosure of lobbying contacts (within 24 hours of each meeting), along with the nature and substance of each contact. Without real lobbying disclosure we will only allow the hidden manipulation of our political system to occur again.
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Bailout Contracts Blacked Out
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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In Broad Daylight: K Street Reeling, K Street Rising
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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In Broad Daylight: No Taxpayer Funded Lobbying
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.
