Wall Street lobbyists swarm over financial overhaul bills

McClatchy NewspapersJune 8, 2010 

WASHINGTON — The top 10 lobbying firms that are working on financial regulatory overhaul legislation represented 130 clients and raked in more than $30 million in fees from them during 2009 and the first quarter of this year, according to a study that the Center for Public Integrity, a watchdog group, released Tuesday.

However, with lawmakers running scared before November's congressional elections, that arsenal of lobbying influence may not be as formidable as it sounds.

While some "good government" groups denounced the lobbyist spending, other experts and several lawmakers said it would have little impact because members of Congress were more concerned now with easing voter anger than with pleasing Wall Street.

"We're not stupid," said Sen. Orrin Hatch, R-Utah, who isn't up for re-election this year but saw his fellow Utah conservative Republican Sen. Robert Bennett fail to win his party's nomination last month because angry voters viewed him largely as a creature of Washington's big-spending culture.

Others thought the report may not have gone far enough.

"They probably spend a lot more than that report said," said Sen. Bernard Sanders, a Vermont independent who's one of the Senate's most outspoken liberals. "I know people say it doesn't matter, but if it didn't matter, they wouldn't spend that much."

The study noted that lobbying firms aren't required to itemize fees per issue, so "the exact dollar amount they earned from working specifically on financial reform remains unclear." It said that 850 businesses and organizations spent "at least $1.3 billion" to lobby on financial restructuring and other issues during 2009 and the first quarter of 2010, and "experts say it's a safe bet that several hundred million dollars was spent specifically on lobbyists in the financial debate."

The most sweeping overhaul of financial regulations since the Great Depression passed the House of Representatives in December and the Senate last month. Negotiators from both chambers are expected to begin merging the two bills into final legislation this week.

Lobbyists are avidly engaged in helping them.

Many of the lobbying shops employ former high-level congressional staffers to buttonhole their ex-bosses and colleagues on Capitol Hill. The chief financial lobbyist for the firm Clark Lytle & Geduldig, which retains 20 clients on financial overhaul, is Sam Geduldig, former political director for House Republican leader John Boehner of Ohio, the Center for Public Integrity report said.

"The money spent absolutely makes a difference," said David Arkush, the director of the Congress Watch division of Public Citizen, a government watchdog group. "If you build an echo chamber around (lawmakers), especially if you surround them with friends and former staffers, it certainly exerts pull."

Lawmakers face a dilemma as they try to balance corporate and consumer interests. Polls have shown for some time that constituents are outraged over Wall Street's behavior and actions, which they think led to the nation's 2008 economic collapse.

However, voters are also wary of too much government control of private business. A Pew Research Center survey in March, for instance, found that 61 percent of Americans thought that stricter federal regulation of financial institutions was needed. A similar Pew poll last week, after the Senate passed its sweeping financial overhaul bill, found more reluctance, however.

Either way, nervous incumbents in competitive races appear to taking their cues more from voters' attitudes than from lobbyists' visits, according to Brad Coker, the managing director of Mason-Dixon Polling & Research.

"The more competitive the district, the angrier the voters. That will trump money. Big-money Washington isn't popular," Coker said. "But if you're in a district and don't have a competitive challenger, that's where lobbyists may have more influence."

A Public Citizen and Center for Responsive Politics report earlier this month found that financial service sector businesses — including investment firms, insurance companies and real estate companies — have commissioned 1,447 former federal employees to lobby Congress and federal agencies since last year, including 73 former House and Senate members.

"Even for well-intentioned, goodhearted members of Congress ... they are in a bubble that's bound to affect their view as to what the total is in terms of policy options," Arkush said.

Several lawmakers scoffed Tuesday at the notion that their decisions and votes are based on lobbying efforts and campaign contributions from groups that have stakes in legislation.

"Give me a break," said Hatch, who's a member of the Senate Finance Committee. "There are honest lobbyists who do a good job. They'll sit down and ask if you would consider their position, and they'll tell you the other side. And if somebody lies to me, I don't deal with them again."


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