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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Mike Stern Uncovers “Treasury’s Lobbying Loopholes”
Mike Stern has found some answers to the question of how, and on what terms, did “Mark Patterson, the former Goldman Sachs lobbyist who now serves as chief of staff to Treasury Secretary Tim Geithner, [] join the administration without a waiver of the Obama Executive Order regarding former lobbyists.”
Mr. Stern’s FOIA request to Treasury turned up 2 internal memos detailing what Mr. Patterson could — and could not — work on. But this raises further questions in Mr. Stern’s mind. How did Treasury come up with its list of verboten activities? Why doesn’t the ban on Mr. Patterson’s activities encompass all the tasks he performed for Goldman Sachs, as disclosed in its Lobbying Disclosure Form?
I must add, why wasn’t this done through a publicly disclosed waiver in the first place? I’ve found it hard to get answers from Treasury about other issues related to TARP, so I wonder if this is part of a pattern of behavior.
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Treasury Imposing “Terms of Use” to Access TARP Data
In an astonishing move, the Treasury Department is requiring users to agree to “terms of use” before they can access and download TARP Transaction Reports in spreadsheet format. This requirement undermines the rationale for releasing the data, may implicate federal law, and is simply foolish. It also sets a bad precedent.
The TARP Transaction Reports, which contain detailed information on the government’s Wall Street bailout, are available in PDF format going back to November 2008. Only now are they being published online in a much more useful spreadsheet format, known as XLSX, thanks to President Obama’s Open Government Directive. The Report accompanying the Directive lauds the release of these weekly transaction reports as “improving transparency of federal bank supervisory activities as well as the investment activities of financial institutions.”
The “terms of use” that accompany the TARP reports, reproduced in full at the bottom, require users to:
- Affirm that they have read and understood the site’s privacy policy and disclaimers,
- Acknowledge that the terms of use may be modified at any time, which the user agrees to accept,
- Clearly cite Financialstability.gov on all reuses of data accessed or retrieved from Financialstability.gov,
- Clearly state that neither Financialstability.gov nor the U.S. Government vouches for the data or analyses derived from the data after it has been retrieved from the website.
Users who refuse to click “accept” are not permitted to download the data. (Continue reading…)
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A Closer Look at CRS’s Recent Report “Lobbying and the Executive Branch”
The Congressional Research Service just released a report entitled “Lobbying and the Executive Branch: Current Practices and Options for Change.” It reaches an unsupported conclusion about the effect of the administration’s lobbying disclosure rules, and also contains several factual and analytical errors. Ultimately, the Administration needs to do more to disclose lobbying contacts online, in real time, in one place, and in machine readable formats.
Changing the “relationship”?
The big story is CRS’s conclusion that the “[c]reation of restrictions on federally registered lobbyists’ access to executive branch departments and agencies has already changed the relationship between lobbyists and covered executive officials.” (emphais added) However, the report does not explain the sense in which the term “relationship” is used, or whether these rules have changed the effectiveness of lobbying efforts and opened up the policy-making process to the public.
Unsurprisingly, Obama Ethics Advisor Norm Eisen hailed the report’s findings on the White House blog, writing:
We’re pleased that CRS recognized a fact that is apparent everyday to those of us who work in government: The president’s historic restrictions on lobbying are having a significant impact in making sure that the government serves the public interest and not special interests.
Mr. Eisen and CRS may be right that these new rules have rebalanced the role that lobbyists play in Washington. Indeed, the administration notes its efforts with regard to disclosing and limiting lobbying on the Main street and Wall street bailouts, its request that lobbyists not serve on advisory boards, and imposing new ethical requirements. However, we don’t have enough information to reach the conclusion that these rules have had a significant impact. There’s a lot more that should be done.
Errors in the CRS Report
The report erroneously states (p. 4) that the EESA (a.k.a. TARP or the Wall Street bailout) lobbying rules came into effect in January, when the rules were not issued until September. Although the Treasury Department issued a press release on January 27, 2009, stating that it would issue these rules, an August Investigator General report criticized Treasury for not promulgated the rules, which were published online in September. (Indeed, Mr. Eisen’s blogpost says September 10th is the date). Thus far, only four lobbying contacts have been disclosed, with the earliest reported contact being in September. Treasury deserves little credit for its late and lackadaisical approach to disclosing TARP lobbying contacts. (Continue reading…)
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Executive Branch Lobbying Disclosure Rules Presentation
Earlier today, I gave a presentation on the executive branch’s lobbying disclosure rules to the American Bar Association’s Section of Administrative Law and Regulatory Practice at their 2009 Administrative Law Conference.
My slides from the conference are available below.
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Not My Bank, Not My Problem Part II
Yet another member of Congress has been found pushing the Treasury Department for TARP funds despite having a long-standing relationship with that bank. One year ago, Rep. Luis Gutierrez wrote to Treasury urging them to consider bailing out the Puerto Rico-based Banco Popular labeling it a special and urgent case. This was without revealing that Gutierrez had received tens of thousands of campaign contributions from bank executives over the years and that his wife worked as senior vice president from 2005 to 2007 until she was abruptly fired. The Hill has the full story:
The financial crisis erupted last fall, and Popular recorded a $700 million loss in the fourth quarter alone. The firm had an annual loss of $1.2 billion in 2008.
In October 2008, the bank sent letters to several lawmakers, including Gutierrez, “to ensure participation” in TARP, said Teruca Rullan, senior vice president of corporate communications at Popular. “Communicating directly with members of the U.S. Congress was a prelude to secure capital in this historic financial juncture,” she wrote in an e-mail to The Hill.
Popular was no stranger to Washington’s ways. Gutierrez received close to $15,000 in campaign contributions since 1997 from the bank’s executives, according to the Center for Responsive Politics. The last donation came in 2004.
Apart from the contributions to Gutierrez, bank officials have given more than $113,000 to both Democratic and Republican lawmakers since 1989, according to the center.
As the bank grew, it also hired some of the most prominent firms on K Street, spending close to $2.9 million on lobbying since 2003.
New lobbying rules for TARP funds promulgated on September 10, 2009, state that members of Congress cannot lobby Treasury for funds out of the TARP program. Instances like Gutierrez’ (or those of Rep. Maxine Waters or Sen. Daniel Inouye) may have been the catalyst for prohibiting Congress from lobbying for specific bank bailouts.
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TARP Lobbying Disclosure: What a Difference a Day Makes
Yesterday, I called the Treasury Department in one last ditch effort to find their TARP Lobbyist Contact Disclosure Forms. I did so as final due diligence before publishing this blogpost, earlier today, in which I evaluated the TARP lobbying disclosure rules. In it, I noted that the required disclosure forms were eerily absent from Treasury’s website.
This afternoon — voila! — 2 disclosure forms appeared. One form is dated 10/9/2009, and the other is dated 9/22/2009. Now, Treasury is required to publish these forms within 3 days of the lobbying contact, so we know that both of these forms were published outside of the 3 day window required by Treasury’s own rules. (At a minimum, they weren’t published here.)
What is also interesting is that there are only two lobbying contacts reported. This leads to a couple of possible implications: (1) Treasury has more forms to publish, perhaps some of which are late; or (2) Treasury has no more forms to publish right now. For the latter to be true, either no one has talked to Treasury about spending TARP funds over the last month, or the lobbying disclosure rules don’t have a lot of bite and missed capturing lobbying communications.
It will be interesting to see what appears on their website in the upcoming days and weeks. I am still waiting for that phone call back from Treasury about my question: where are the rest of the lobbying contact disclosure forms?
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The TARP Lobbying Rules: What They Say And What They Mean For Transparency
In September, the Treasury Department released its TARP lobbying disclosure rules, nearly eight months after a press release heralding their creation, and a month after an Inspector General report bluntly urged Treasury to promulgate the rules. The rules require that the Treasury Department document communications through which companies lobby for TARP funds. Commonsense rules that increase transparency regarding lobbying communications can have the beneficial effect of reducing the likelihood and appearance of corruption, fostering better dialog, and enhancing the public’s faith in the political process.
The rules promulgated by the Treasury Department attempt to meet the great challenge of improved transparency, but fall short of their potential. They are hard to understand, difficult to apply, and full of contradictions and omissions that undermine stated policy objectives. The rules should be clarified, rewritten, simplified, and broadened.
My initial review of the rules identified some key differences between the TARP lobbying rules and the stimulus lobbying rules, which were issued over the summer and document lobbying over recovery dollars. In the following sections, I analyze the TARP lobbying rules in considerable detail. Before doing so, here are two measures the Treasury Department should consider.
First, Treasury should implement an online searchable lobbying database of all disclosures required under the rules, which is updated in real-time. The public database should be searchable by date, communicant, subject matter of the conversation, and so on. The burden of collecting that data could be reduced by allowing staff to submit reports online.
Regardless of whether this database is built, all of the documents that the lobbying rules require be disclosed should be available in an easy-to-find place online. So far, I have been unable to find the lobbying communication reports on Treasury’s website. The rules require that those reports be made available online within 3 days of a disclosable communication taking place. A phone call to Treasury seeking assistance with finding the disclosures has not yet been returned.
Second, Treasury (and the administration generally) should reconsider the format it uses to promulgate rules. Short, terse, lawyerly language, such as that contained in the TARP lobbying rules memo, is difficult for most people to follow. Treasury should use straightforward language, and define all key terms. Moreover, linguistic sign posts, such as improved headings and sub-headings, would provide a welcome roadmap. Furthermore, adding charts and decision trees to help explain the rules would provide a welcome complement to dense prose.
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Rep. Frank Extends Communication Ban on Former Staffer Turned Lobbyist
Michael Paese used to be the chief of staff to Finance Committee Chair Barney Frank until he took a job as a chief lobbyist for Goldman Sachs last September. Congressional ethics laws forbid former staffers from contacting the office or committee of their previous employment for one year. Paese’s year was about to be up, just in time for him to lobby his former employer and coworkers as they took up work on an extensive financial regulation package. Frank, however, took the rare step of prohibiting Paese from communicating with any staff of the committee for an undetermined amount of time to avoid any appearance of a conflict of interest.
This continues a trend in Washington where decision makers understand where the the lines of a conflict of interest could be crossed. The White House has instituted new lobbying policies for both the TARP and stimulus funding (with many loopholes, as Daniel Schuman has pointed out). A former lobbyist turned chief of staff to Rep. Jim Matheson turned down an invitation to a lobbyist thrown party. And now, Frank has refused to allow his staff to talk to one of Goldman Sachs’ prime hires.
This could point towards a moment where Congress could enact further lobbying reforms to strengthen those passed in the 2007 ethics bill. More transparency should be shed on the meetings between lawmakers, staff and lobbyists. Simple disclosure of names and clients simply serves to provide a listing for lawmakers to know who they are talking to and does little to provide real information to the public.
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Treasury Releases TARP Lobbying Rules
According to the Hill, yesterday the Treasury Department released its rules regarding “Communications With Registered Lobbyists And Other Persons About Emergency Economic Stabalization Act Funds.” The rules are available on Treasury’s web site, but there’s no press release and no obvious hyperlink as of the time I am writing this blogpost, nearly a day later.
In late August, I wrote about the Special Inspector General’s report that dinged Treasury for taking so long to release its rules for TARP (financial bailout) lobbying. It took Treasury 226 days to release these rules, since January 27th when the agency issued a self-laudatory press release announcing its plan to “develop new rules to increase transparency and curtail potential lobbyist influence.”
Having now (quickly) read the TARP lobbying rules, they pretty much follow the Recovery Act lobbying rules initially promulgated on April 7 and revised on July 24.
Here are a few differences between the TARP lobbying rules and the final stimulus lobbying rules that I’ve noticed so far:
- The TARP lobbying rules permit communications regarding a specific project once it has received preliminary approval, whereas the stimulus lobbying rules don’t allow those communications until the project has been awarded. Thus, the TARP rules leave open a window of opportunity for lobbying between “preliminary” and “final” approval. I don’t have a sense of how long that window is open or the “final” approval process.
- The TARP lobbying rules are a bit unclear (at C(iii)), but seem to permit oral communications with Treasury employees regarding applications for financial assistance that, instead of encompassing all federal employees, encompass only federal executive agency officials. The stimulus lobbying rules are much broader, and permit communications with more federal and some state officials. Treasury’s closing these exceptions may have the effect of reducing the amount of outside pressure placed upon the agency to spend money. These rules have also cut Members of Congress out of the lobbying picture — reducing the ability of lobbyists/financial interests to get Members of Congress to lobby for them. It is unclear (but unlikely) that doing so raises Constitutional questions regarding Congress’ oversight powers.
- Both sets of rules allow oral communications regarding particular projects right up until a formal application is filed, as contrasted with the interim version of the recovery act lobbying rules that stopped oral communications when the government official thought that a proposal would be filed. As a result, both the final stimulus lobbying rules and the TARP lobbying rules allow lobbying right up until the last moment. This may allow more give and take between the government and those engaged in lobbying, but may also increase the possibility of undue influence.
Considering the nearly-identical nature of the TARP lobbying rules with the stimulus lobbying rules, it is curious why it has taken so long for Treasury to promulgate these rules, and why it seems to have done so in such a quiet manner.
The similarities also cause me to wonder whether this iterative process of producing lobbying rules may lend itself to creating regulations that could ultimately have much broader applicability.
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Former Treasury Official Thought TARP Lobbyist Rules Were Political
Not sure what I think about this, but former TARP czar Neil Kashkari, appointed under President Bush, told the TARP Inspector General that he thought that the lobbying rules announced earlier this year for TARP recipients were political in nature. The lobbying rules have yet to be fully written and implemented, but are expected to closely track those imposed on lobbyists seeking stimulus funding. It appears that this is simply Kashkari’s opinion on the rules and not any admittance of fact.The Washington Times reports the statement by Kashkari in a way that makes it seem that he is revealing something more than his own opinion. (This makes me think of this great post by Michael Scherer at the Time Magazine blog on the media’s obsession with simulacrum.) That being said, Kashkari’s opinion on the rules does raise questions considering the Treasury Department has yet to announce a full set of rules for lobbyists and has yet to implement them nearly eight months after announcing them.
Considering that the administration also announced rules for the stimulus spending that were met with intense opposition from lobbyist groups, the likelihood that these rules were announced solely for political purposes seems doubtful. What I’m really wondering is: why has the Treasury Department slow-walked the implementation of lobbying rules and who is behind that?
