lobbyists

Which Lobby Wrote the "JOBS" ("Jivers' Opportunity to Bilk Suckers") Act? Solving a "Bipartisan" Mystery

Richard Eskow — Tue, 20 Mar 2012 13:41:51 -0400

Whenever Washington politicians get together on something "bipartisan," there's a very good chance it's a lobbyist-driven initiative - one that will enrich the lobbyists'' patrons, generate campaign funds for pliant politicians, and stick it pretty much everyone else.

Want to know where a "bipartisan" bill comes from? Follow the money.

Scene of the Crime

The so-called "JOBS" Act is a good example: The acronym stands for "Jump Starting Business Startups," but a better name would be "Jivers' Opportunity to Bilk Suckers." The bill is a sham that declares open season on hapless investors while offering a money-making bonanza to a variety of wealthy political patrons. And it passed the House this month with an overwhelming majority.

Bills like this one don't just write themselves. Washington insiders know that many of them are drafted by industry lobbyists, then delivered to compliant legislators to be submitted and passed as "bipartisan" solutions.

But figuring out who's behind the "JOBS" Bill is a challenge. It's like one of those Agatha Christie mysteries that take place on a wealthy estate - which is appropriate, given the average personal wealth of a Washington politician - where everybody in the story is a suspect.

Motive

There has been a lot of reporting on the bill's contents, which are currently being debated on the Senate floor, so we'll stick to the highlights:

It would allow startup companies to advertise for private-citizen investors (sometimes called "crowdfunding"), which means that a lot of people could be suckered into unwise investments with their own savings;

it makes it easier for banks and bank holding companies to play in the investment world again, effectively undoing anything resembling the Volcker rule for these investments;

it would give a tax break to millions of "small businesses," which in its definition would include multimillionaire financial advisors, attorneys, plastic surgeons, and the like, none of whom would create additional jobs as a result;

it would allow companies to conceal key facts, such as the amount they pay their own executives;

and it would ease accounting and other regulatory requirements for so-called "emerging growth companies," giving them far greater license to bilk and deceive those "crowdfunders." (Crowdfunding is a good idea if done properly, but that's not the real goal of this bill.)

Oh, and those "emerging growth companies" could generate as much as a billion dollars per year and still be considered "startups." The economic data's clear on that point: Companies of this size don't generate jobs; smaller ones do.

Opportunity

It's a good thing your humble correspondent has worked on Wall Street. Otherwise it would be possible to believe that the one-billion-dollar limit, although it's ridiculously high, actually means something.

In real life, that sort of thing's easy to get around. When your massive corporation approaches the one-billion-dollar mark - even after your high-priced lawyers and accountants have used all their tricks to lower its reportable income - then all you have to do is split the company into two new ones. That way you get to continue evading all the accounting rules - and you can raise even more money from the suckers!

(An amendment's being offered that would moderate some of the bill's more egregious provisions, and is currently being debated, along with the House version of the bill, on the Senate floor.)

It's hard to figure out who's behind the bill when many wealthy and powerful interests stand to benefit from it. Goldman Sachs specializes in packaging IPOs of this kind - and in ruthlessly bilking its own so-called clients - so it's a prime suspect. But every other Wall Street bank does the same thing, and all of them have their own PACs and lobbyists.

Wealthy attorneys and financial advisors will also make a killing if this bill passes.

Prime Suspect

But my money's on the National Venture Capital Association, since it's been the loudest Beltway backer of this bill. They have the resources, the means, and the will to draft a bill of this kind. They've been ramping up their spending over the last decade, and they're on track to spend even more this year:

And look at their political contributions during the past few billing ... er, I mean, political fundraising cycles:

(above information via Open Secrets)

So far this year the VC Association has given 52 percent to Republicans, 48 percent to Democrats. In 2008 they gave 51 percent to Democrats and 49 percent to Republicans. (Democrats controlled the House that year.) And in 2010 they leaned more heavily Democratic, but still split fairly evenly.

"You're probably wondering why I've called you all here ..."

Still wonder where all this "bipartisanship" came from? As we were saying: Follow the money. The NVCA gives more money to the party that's in power, but greases all wheels in a "bipartisan" way to make sure it can claim victories like this week's House vote.

But we have no evidence that the NVCA actually drafted this bill. The truth is that the bill benefits so many different wealthy interest groups that it's hard to tell which one of them actually did the deed itself. It could've been the Goldman Sachs PAC. Or the JPMorgan Chase PAC. Or the Investment Company Institute PAC. Or the Securities Industry and Financial Markets Association PAC. Or lobbyists for a variety of other interest groups and corporations.

It really is like an Agatha Christie novel, when you think about it, the kind where you find out in the end that out that all of the suspects were guilty parties. And there's a word for deeds that are committed by more than one party:

Bipartisanship.

And The Door Revolves . . .

Zach Carter — Thu, 09 Dec 2010 14:24:32 -0500

Sen. Tim Johnson, D-S.C., is almost certain to be chairman of the Senate Banking Committee next year, once current chair Chris Dodd, D-Conn., is out of office. Johnson has never had a good reputation with consumer advocates, in large part because he's opposed nearly every piece of legislation designed to thwart predatory lending.

That perspective is not likely to change with his chairmanship. Johnson just hired a top bank lobbist named Dwight Fettig to be a "senior policy adviser." Fettig's clients included some of the chief scumbags that wrecked the economy, secured epic bailouts, and opposed financial reform: the American Bankers Association, JPMorgan Chase, the National Association of Mortgage Brokers and the Vanguard Group hedge fund. Prior to peddling influence on behalf of the too-big-to-fail gang, he was the top "government relations" man at Freddie Mac. During the housing bubble.

By hiring Fettig, Johnson is sending the clearest signal possible to Wall Street: I've got your back.

This isn't Fettig's first trip through the revolving door. Before entering the bank lobby, he worked as a Johnson aide in the House.

So the bad news is, Congress is totally corrupt. The good news? It already was.

UPDATE:

And hey! Obama's former Budget Director Peter Orszag just joined Citigroup! It's really pretty sick. The Republicans just spent an entire year promising to give Wall Street whatever they wanted on anything, but the public still thinks it's the Democrats alone who are in bed with Wall Street. This is why.

This also is not the Office of Management and Budget's first turn through the revolving door this year. The current director, Jack Lew, made $1 million running Citi's Alternative Investments unit into the ground.

The political optics here are just horrible. Obama is pushing a tax cut deal that provides huge benefits for the super-rich . . . as his former budget director take a job as Vice Chairman at Citigroup, thus joining the ranks of the super-rich.

Merry Christmas, Wall Street.

What Will Tea Party Members Do When Their Politicians Betray Them?

Dave Johnson — Tue, 26 Oct 2010 12:38:38 -0400

Tea Party members hate Wall Street bailouts, trade deals like NAFTA, job outsourcing, giant corporations buying laws, government spending, and elites telling the rest of us what to do. But there is no question that their candidates - many of them wealthy corporatists themselves - are funded by big corporations (even foreign oil companies) and Wall Street. So the question is, once in Congress will they vote with their base or their owners? And when they vote with the people who bought them, what will Tea Party members do about it?

Trade

Tea Party members want to be able to buy things that are "Made In America" in stores again. I have yet to meet a Tea Party supporter who doesn't absolutely hate NAFTA, WTO and other one-sided “free trade” agreements. They say these treaties "violate our sovereignty." But Tea Party candidates are funded by groups like the Chamber of Commerce and others who are the drivers of these "free trade" policies that close American factories and send jobs out of the country. This does not bode well for these candidates voting the way Tea Party members expect them to if they are elected.

Outsourcing

Tea Party members are astonished when they learn that the government gives companies tax breaks that encourage companies to send jobs away. But just a month ago a bill to do something about this was filibustered in the Senate by a unanimous Republican caucus. One thing about Tea Party candidates - they're also unanimously Republicans. Does anyone other than Tea Party members really think the Tea Part candidates are going to go against the now-unanimous Republican support for these outsourcing incentives if elected? Tea Party candidate Scott Brown didn't after he was elected.

Bailouts

If there is one thing that unites all Tea Party members, it is hatred of the Bush Bank Bailouts (except they think these passed under Obama.) But this is an area where their leaders will almost certainly stand with the banks, because that's where the money is -- their campaign money to be precise. The other day I wrote about In Oregon one Wall Street hedge fund manager is spending up to $1 million (pocket change) on a front group to elect a Tea Party candidate and unseat a Congressman who sponsored a couple of Wall Street reform bills.

Government Spending

Will Tea Party politicians vote to balance the budget? Really? Their members certainly expect them to. But like so many misinformed Americans, Tea Party members think the government spends most of its money on welfare and foreign aid. This is why Tea Party candidates refuse to specify just what spending they will cut to balance the budget. (Also see here, and here, and here, and here, and here, and here, and here, and here, etc.)

So when they get into office will they really cut spending -- where the spending really is? There are plenty of reasons to think they won't. The first and foremost reason is they are funded by people like the Chamber of Commerce who really, really want that spending to keep flowing. This is why Republicans increased government spending and deficits so much the last time they were in charge. In fact, there are reasons to think they'll incresase spending. For example, they hate health care reform, but if they really vote to repeal it they will increase the deficit, because the reform cuts the projected deficits by at least $138 billion.

But the bloated, huge, vast, overwhelming military budget might be worth a look. We spend more on military than every other country combined. (Total military-related spending actually pretty closely matched the deficit this year.) What do you think the odds are that the Tea Party politicians will cut the military budget?

Foreign Oil

Tea Party members understand that our addiction to foreign oil is harmful. We spend more than $300 billion a year on foreign oil -- much of it sent to the Middle East (MUSLIMS!) -- and need to find alternative sources of energy. But Koch Oil is the primary organizer, supporter, funder, and everything of the Tea Party, as well as much of the so-called "conservative movement." But Koch Oil is mostly about oil, not representative government. This is why they directly fund or set up front groups to support climate denial or oppose transit projects, alternative energy, even energy conservation. So don't expect Tea Party leaders to do anything -- anything -- that Koch Oil doesn't want them to do.

What Happens When Tea Party Members Are Betrayed?

It's pretty clear that the Tea Party members are being set up for a big disappointment. There is little chance that the politicians they are supporting are going to do what the members think they're going to do once in office. The members might supply the votes, but the big corporations behind so many of the things that the Tea Party members hate are the ones supplying the money and organization. These politicians, once in office, will understand that the big money can go after them just as well is it went for them this time, if they don't do what they're told by their big corporate funders. But on the other hand, there will be lucrative lobbying jobs waiting for them if they play along. They are going to disappoint the Tea Party members, no question. What will Tea Party members do then?

Financial Reform Activists Discuss 'Big Bank Takeover' Report

Isaiah J. Poole — Tue, 11 May 2010 16:43:59 -0400

As the Senate continues its debate on a financial reform bill, the Institute for America's Future Report, "Big Bank Takeover," looks at who's really behind the scenes attempting to control the debate. In this podcast, Bob Borosage, Co-Director, Campaign for America’s Future; Stephen Lerner, Director, Service Employees International Union’s Banking and Finance Campaign; Kevin Connor, Co-Director, Public Accountability Initiative, and George Goehl, Executive Director, National People’s Action, discuss the revolving door of government officials and lobbyists used by the financial sector to stymie reform and the "Showdown on K Street" planned to counter the financial sector's influence.

The Big Bank Lobby: Too Big to Bare?

Robert Borosage — Tue, 11 May 2010 14:34:12 -0400

Two-hundred and forty former legislators, bank committee staffers, and Treasury officials deployed to lobby. $600 million spent in lobbying, trade association activity and political contributions since March 2008. And that is just from the six biggest banks. The entire financial industry is spending an estimated $1.4 million a day, hiring 70 former members of Congress to make their case.

These figures, drawn from a new report released by the Campaign for America's Future (which I co-direct), would be shocking if they weren't so sad and predictable. As the Senate moves towards passing financial reform legislation, it is worth focusing on how the lobby works.

Bailed out by taxpayers, the big banks - Goldman Sachs, Bank of America, JPMorgan Chase, Citigroup, Morgan Stanley and Well Fargo - are emerging from the financial crisis larger and more concentrated than ever. Their very size offends market competition. Entities that are too big to fail cannot be disciplined by the market.

Worse, as former IMF economist Simon Johnson has emphasized, their size and wealth also undermine democratic accountability. As the report shows, they exercise immense political power which they use not only to fend off reforms that might curb their excesses, but to sculpt laws and regulations that consolidate their privilege and profits. So despite popular anger at the banks, the Senate last week voted down the Kaufman-Brown amendment that would have put a lid on the size of banks, forcing the break-up of the big six.

The report, written by Kevin Connor of the Public Accountability Initiative and LittleSis.org, highlights the corrupting revolving door that Washington insiders view as a sensible career path. The banks heavily rely on hiring retired legislators, former committee staffers and legislative aides. Although these are salad days for Democratic lobbyists, bipartisanship reigns. The banking lobby includes Dick Gephardt, former leader of the House Democrats; Trent Lott, former leader of the Senate Republicans; and former Republican House leader (and putative leader of one branch of the Tea Partiers) Dick Armey. Connor names names of the major players of over 240 former government insiders now on the banks' payroll.

Needless to say, former legislators and staffers are masters of the back rooms. They gain easy access to sitting legislators. They help draft legislation. They know how to slip in key amendments and loopholes in the dead of night. They know the players and the process.

More corrosively, the players—the sitting legislators and current staffers—know that after leaving Congress, they can comfortably make the family fortune by joining the lobbying profession. Not surprisingly, many seek to curry the favor of those who might later employ them. The revolving door doesn't just give special access to the bank lobby; it compromises sitting legislators and staffers looking out for their own futures.

PODCAST

Hear Bob Borosage, Co-Director, Campaign for America’s Future; Stephen Lerner, Director, Service Employees International Union’s Banking and Finance Campaign; Kevin Connor, Co-Director, Public Accountability Initiative, and George Goehl, Executive Director, National People’s Action, discuss the revolving door of government officials and lobbyists used by the financial sector to stymie reform and the "Showdown on K Street" planned to counter the financial sector's influence.

How this backroom influence works is illustrated in the most recent 'Financial Services Bulletin" of Concept Capital's Washington Research Group. (Concept Capital bills itself as a "total solutions provider" to hedge funds and other investors).

The bulletin (not available on the web) details amendments still to be considered to the financial reform bill and the timeline for moving to a vote. It highlights for its clients Senate Banking Chair Sen. Chrisopher Dodd's "manager's amendment" likely to be unveiled this week.

"This is by far the most important amendment as it represents all of the deals that he has cut to find 60 votes for the bill. This is the most likely spot for many of the small changes to the bill to find their way into law," (emphasis added) including such bank favorites as preempting state attorneys general enforcement powers.

The deals in the backrooms are getting cut as the debates on the floor drone on.

Ironically, The Washington Post recently reported on the distress of bank lobbyists faced with a financial reform bill that was being debated on the floor of the Senate in the light of day rather than in quiet of the banking committee. Speaking anonymously, they groused at a process that was out of control," "populist," "irrational." It is "time for grownups to step in," wrote JPMorgan analyst James Glassman. The Post reported that the lobbyists were pinning their hopes on the House-Senate conference process where "adults" could sit together and work things out.

Clearly, the only thing that limits the power of the banking lobby is the rage of American voters that the very banks that drove the economy over the cliff and were bailed out by taxpayers are now spending lavishly to block reforms needed to insure this doesn't happen again. That popular anger makes legislators reluctant to appear in the banks' pockets in public.

That is why National People's Action, SEIU, the AFLCIO and other groups are bringing citizens to a Showdown on K Street on May 17. Citizens from across the country will "visit" with lobbyists in their offices and haunts, exposing them to some of the human pain caused by their clients -- families that have lost their homes, the retired who lost their savings, workers who lost their jobs. And in doing so, they'll help educate Americans about the scope of this lobby.

That is why the Campaign for America's Future will join with dozens of groups to support House Financial Services Chair Barney Frank's call to televise the conference committee between the House and Senate on financial reform, assuming there is one. We can't control what happens in the cloakrooms. But as the banking insiders seek to weaken the legislation in conference, we can at least give Americans a chance to see exactly what side their legislators are on.

That is why legislators should be on notice that they will be held accountable this fall for how they voted on Wall Street reform. Steps will be taken to insure that voters are told the truth.

And that is why the current financial reform legislation should be seen as a first step, not an answer. We'll need a lot more revelations, scandals, prosecutions and investigations. We'll need action to tax financial speculation, curb credit card company fees and interest rates, wage another fight to limit the size of the big banks, and more.

The Washington Research Group predicts for investors that the Congress "will enact a moderate financial reform bill that ... will not destroy [read impact] the industry's business model." But changing the industry's business model and breaking up the banks that are too big to fail are vital to the new economy that we build out of the ruins of the old. This fight must go on.

Liveblogging Dugan's Appearance at the Financial Crisis Inquiry Commission

Zach Carter — Thu, 08 Apr 2010 12:53:37 -0400

Why did Angelides wait until 3:00 to hit Dugan on preemption? He really went for it, and it was great. Angelides to Dugan: "You tied the hands of the states and then you sat on your hands."

Dugan responded by saying 50 different sets of rules and disclosures would be required if states could enforce predatory lending laws against national banks. This is wrong. In practice, the banks just apply the regulations of the most stringent state across their entire business.

Dugan wasn't defending abstract principles of efficiency when he implemented preemption. He was actively defending specific subprime lenders, most notably First Franklin, against states who were trying to fight mass foreclosures. There is no excuse for that.

Aside from actually defending abusive practices by national banks, Angelides also noted that national banks supported 21 of the 25 largest subprime lenders with financing. That totally contradicted Dugan's prior claim that national banks provided "little" financing to subprime lenders.

Well done, but a little late.

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3:05

Angelides is doing well here.

Angelides: "Did the investment bank culture come to dominate the commercial bank culture?"

Dugan: "Yes."

This has enormous implications for Glass-Steagall. Dugan here is acknowledging that Citigroup was subjugating the practices of its commercial lending to suit the activities of its investment bank. And there's plenty of evidence for this-- Citi's subprime mortgages went up to its investment bank, which packaged them into securities and sold them off to investors for a big profit.

If the Glass-Steagall repeal hadn't allowed Citi to combine an investment bank and a commercial bank, it wouldn't have made so many subprime loans.

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