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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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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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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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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Looking under the TARP
Recently, as part of our work with Pew on Subsidyscope.com, we’ve been taking a close look at the performance of investments made through the Treasury’s Troubled Asset Relief Program (TARP). My colleague Ryan Sibley and I investigated an inconsistency between the language Treasury initially used to describe the TARP Capital Purchase Program (CPP) and the language found in a footnote on the final contracts. In many cases the change may have diminished the value of Treasury’s investments; at a minimum, it’s resulted in confusion over the program’s actual terms. (Continue reading…)
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No Transparency for Bank Stress Tests?
Update: This FAQ from the Federal Reserve has a good run-down on the stress tests.
This week, FDIC chair Sheila Bair issued a statement to reassure bank shareholders against the threat of nationalization that “a ’stress test’ for some 20 of the largest banks this week will help federal policymakers determine ‘what type of additional capital investments the government may need to make.’” While this may help federal regulators assess the stability of the big banks, the public may remain largely clueless. This is due to a Treasury Department decision to not release the results of “stress tests.”
On February 11, the New York Times reported that “exams for 18 or so of the biggest banks are set to begin immediately, and the first results could arrive within weeks. They are not expected to be made public for every institution.” This seems less than adequate. Marc Ambinder of The Atlantic makes the point that results will be kept private except,
They don’t have to be. And won’t banks who’re found to be in good shape be eager to brag about their health? (“I’d image they’d want to should that from the mountaintops,” a government official told reporters today.”) Ok — so you have a bunch of banks revealing their test results — presumably, the banks that are healthy will be more open, leaving the banks that are less well capitalized keeping the secret. But won’t it then be obvious which banks are in real trouble?
After the missteps and general opacity of the first TARP, the level of trust among the public is quite low. Many would find the assertion that a bank is “healthy” as incredulous. What is needed is transparency for these “stress tests.”
Calculated Risk laid out a fairly good format for this back on February 12. They first explain that tested banks will likely fall into three categories: 1) Healthy. 2) In need of further TARP aid. 3) Nationalize or sell. Here’s what they say about releasing the “stress tests”:
The NY Times article suggests that the results will not be made public for every institution, but that will just lead to rumors and speculation. It would be better to announce the category of all 18+ banks at the same time (in 30 days or so). At that time announce the capital infusions for the category 2 banks, and the nationalization of the category 3 banks.
Do it all at once, band-aid style. The release of this information is vital to restoring the trust of the American people in the government’s effort to rescue the banking sector and restore credit.
The tests are described by the New York Times as follows: (Continue reading…)
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Political Influence in Bailout to be Investigated
Numerous outlets have reported, and catalogued here, that political influence – campaign contributions, lobbying – has been part and parcel of the bank recovery (bailout) plan passed by the Congress and carried out by the Treasury Department. The Center for Responsive Politics reports that bailout recipients spent $114 million on political influence over the course of 2008. According to the Los Angeles Times, the special inspector general for the bank recovery Neil Barofsky is beginning an audit into political influence in the bailout.
Amid growing public consternation with the federal banking bailout, the Treasury Department’s special inspector general has opened an examination of political influence in handing out some of the $350 billion in federal bank bailout funds, The Times has learned.
The audit, which has just begun, is broad in scope but will focus on lobbying activities by financial institutions and what the special inspector general, Neil Barofsky, has called “outside influences.”…
Sen. Charles E. Grassley of Iowa, the senior Republican on the Senate Finance Committee, asked Barofsky earlier this week for an investigation into possible political meddling in the Troubled Asset Relief Program, or TARP. Grassley has been among the most vocal critics of how the program is working.
Barofsky apparently had already decided on such an investigation. He disclosed his plan deep in a 189-page document sent to Congress on Feb. 6, saying he had begun a “general audit reviewing outside influences on the [TARP] application process.”
The investigation hints at what could be a long, drawn-out legal drama. Barofsky, a former federal prosecutor, has his own multimillion-dollar budget and is aligning his office with other federal law enforcement agencies, pledging “robust criminal and civil enforcement against those, whether inside or outside of government, who waste, steal or abuse TARP funds.”
It is imperative that the final audit results released by the special inspector general’s office be made available online as required under the recently passed Improving Government Accountability Act. This act requires, among other provisions strenghtening inspector general offices, that all inspector general reports be made available online 1 day after their release.
The possibility that political influence has effected the bank bailout exists and could be a serious problem for the continuance of the program. Aside from the review that Barofsky is preparing, new disclosure rules need to be enacted for lobbyists engaging with government officials in all bodies and at all levels.
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Track the Bailout on Subsidyscope
Starting today, the Subsidyscope Web site tries to bring a little order to the government’s bewildering economic rescue effort. A project of The Pew Charitable Trusts and the Sunlight Foundation, the site will offer data and analysis on federal market interventions of all types over the next several years. What better place to start than the bailout – the acronym-rich array of stock purchases, loans and loan guarantees that seems to grow bigger each day?
We begin by offering a database of transactions under the Treasury Department’s Troubled Asset Relief Program, better known as TARP. Here you can find the name of each institution that got TARP money; its location; its size (as measured by total assets); and the amount and date of the transaction. We also show a breakdown of the potential subsidy costs of these stock purchases and loans, as estimated by the Congressional Budget Office. TARP transactions become subsidies when the government pays more than market value for stock or makes loans at below-market rates. About a quarter of the $247 billion allocated by Treasury as of Dec. 31 constitutes a subsidy, the CBO reports. In our chart, you’ll see that the subsidy rates for some transactions – e.g., loans to General Motors and Chrysler, estimated by the CBO at 63 percent – are quite high. The average rate for all transactions is 26 percent.
We’ll add numbers, graphics and documents to the site in the coming weeks and months. The aim is to make Subsidyscope a source of comprehensive, easy-to-understand information on the bailout and other massive federal programs.
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Show Us the Legislation
As news spreads that a consensus Wall Street bailout plan is being finalized, and leaders negotiate between proposals submitted from the Treasury Department, Senator Dodd, Representative Barney Frank, and others, two separate conversations are taking place. One is public, as the nation struggles to evaluate the urgency of the economic situation, and to understand the best course of action. The other, however, is not public, as the compromises and deal making — the real stuff of urgent policy-making — are held in the dark.
The Sunlight Foundation is calling on Congress to publish the proposed bailout legislation as soon as possible, to give constituents and lawmakers themselves as much time as possible to examine the specifics of the proposal before it’s voted on. We will post the draft legislation to PublicMarkup.org as soon as possible, to give citizens a chance to weigh in on the proposal’s specifics.
Congress faces urgent pressure from the Administration and from constituents to act. Regardless of the course of action Congress ultimately chooses, this is a decision that must be made in full public view. If citizens don’t have a chance to evaluate the legislation, how can Congress possibly represent their constituents’ needs?
The need for sunlight is especially required for urgent or emergency legislation. All too often, Congress praises transparency as a democratic value, but violates it in practice. Any lack of transparency in consideration of this legislation would be especially ironic since lawmakers have blamed the current crisis on financial malfeasance that was hidden from public view.
We have called the relevant congressional committees and have asked for copies of the new consensus legislation. As soon we get it, we’ll be posting the text of the legislation online at PublicMarkup.org.
Now more than ever, Congress must represent the needs of all Americans, and to give everyone – citizens and lawmakers alike — a chance to participate actively in the legislative process.
Before the bailout proposal is considered by lawmakers, it must undergo an even more important test: evaluation and assessment by the public.
