MSNBC: How Wall St. execs bankrolled GOP victory

Written by admin on January 5th, 2011

Courtesy of MSNBC, the story of how one Congressman’s election was completely bankrolled by a single Wall Street firm.

Rep. Garrett will now oversee regulatory decisions directly affecting this and similar firms.

MSNBC

Many substantial donations from the hedge fund executives escaped public notice either because they were made late in the campaign (and therefore weren’t reported until after the election) or were funneled through third-party groups, obscure “joint fundraising committees” and newly created political nonprofits that are not required to disclose donors.

The net effect has been to give the hedge funds important new allies at a time they are fending off regulations mandated by the Dodd-Frank financial reform bill and an aggressive Justice Department investigation into insider trading.

A prime example is Rep. Scott Garrett, a little known Republican from northern New Jersey who this week is slated to become the new chairman of the House Financial Services subcommittee on capital markets, a key panel that has direct oversight of the industry. A staunch foe of the regulation of Wall Street, Garrett has threatened to cut funding for the Securities and Exchange Commission and roll back some provisions of Dodd-Frank.

As it became increasingly clear late last summer that Republicans were likely to capture the House, the partners at Elliott Management Corp., a $17 billion Wall Street hedge fund that specializes in distressed foreign debt, mobilized to boost Garrett’s political fortunes. One of the firm’s senior officers threw a fundraiser for Garrett. The firm’s executives and one of their spouses wrote checks totaling $195,800 to two of the congressman’s political fundraising committees, campaign records show.

Of that amount, $45,000 was donated by nine Elliott executives to the congressman’s leadership political action committee Supporting Conservatives of Today and Tomorrow. As  first reported by the The Record newspaper, another $150,800 was donated to a newly created entity called the Scott Garrett Victory Committee, which was registered by a GOP fundraiser using a post office box in Athens, Ga.

As a so-called joint fundraising committee that shared its proceeds with the National Republican Congressional Campaign Committee, it was permitted under campaign finance rules to accept donations in excess of the standard $2,400 limit on contributions to individual candidates.

Elliott executives — one of whom wrote a check for $35,000 — ended up providing about 96 percent of all the funds raised by the Garrett committee, according to the review of campaign records by CPI and NBC.

“This is particularly appalling,” said Ellen Miller, executive director of the Sunlight Foundation, a nonprofit group that promotes transparency in campaign finance. “No one in America will believe that Representative Garrett can provide impartial oversight of the hedge fund industry after taking these huge amounts of money from one (hedge fund) company.”

 

Washington Post: Lawmakers seek cash during key votes

Written by admin on December 26th, 2010

The Washington Post exposes how Congress actively fund raises during the voting process.

Washington Post

Numerous times this year, members of Congress have held fundraisers and collected big checks while they are taking critical steps to write new laws, despite warnings that such actions could create ethics problems. The campaign donations often came from contributors with major stakes riding on the lawmakers’ actions.

For three weeks in June, for instance, the members of a joint House and Senate committee worked to draft final rules for regulating the financial industry in the wake of its 2008 meltdown. During that time, the 35 members of the drafting committee collected $440,000 in donations from that same industry, which was then lobbying heavily for looser rules.

Earlier this month, the chairman of the Senate committee overseeing tax policy, Sen. Max Baucus (D-Mont.), gave himself a birthday-party fundraiser – on the same day that the chamber took its first vote on an $858 billion tax package that would provide breaks to wealthy citizens and business interests.

Members of Congress contacted for this article declined to answer questions about ethics rules and the possible appearance of impropriety. Instead, they stressed that their votes can’t be bought.

The issue of the timing of donations came up this summer when reports surfaced that eight members were under investigation by the independent Office of Congressional Ethics. They had solicited hundreds of thousands of dollars in donations from financial firms just before a critical House vote last December on new regulations for Wall Street. The ethics office was looking at whether they should have avoided those donations because of the potential for or appearance of impropriety.

But just as the public learned of the ethics office’s probe in June, a conference committee of House members and senators met to draft a compromise bill on landmark Wall Street reform. The measure would force firms to follow new rules for previously secret and risky transactions that were blamed for the 2008 market meltdown. Over the course of three weeks in June, the 35 conference committee members collected $440,000 in donations from the financial industry. Sen. Charles E. Schumer (D-N.Y.), a member of the Senate banking committee and a powerful conferee, collected the most that month – about $90,000 from financial interests.

 

Bloomberg:Why Businesses Can’t Stand Free Markets

Written by admin on December 25th, 2010

Nice Bloomberg piece on how businesses use lobbying to restrain competition.

Bloomberg

This practice has been around for as long as there have been businesses and governments. The great economist Milton Friedman cited the example of the Interstate Commerce Commission in his 1990 book “Free to Choose.”

Farm Power

In the late 1800s farming interests demanded that government rein in the railroads amid the perception that they misused their power to influence local politics and set freight rates too high. The railroads responded by working with Congress to form the ICC, a regulatory agency populated with industry insiders. It fixed prices and limited new railroads from entering the business.

At the urgings of the railroads, the ICC brought the trucking industry — a source of competition — under its jurisdiction in the 20th century. It limited the number of trucking licenses, thereby constraining entry into the industry as shipping volumes ballooned and helping to prop up prices that would have fallen in a free market.

These and similar practices are rampant today, and not just among railroads or funeral directors. Each year, private corporations in America receive about $100 billion in subsidies from the federal government, gaining an advantage over those that don’t receive such handouts.

Double Prices

Take the Fanjul family, which controls Florida Crystals Inc. and Domino Sugar, owns more than 400,000 acres of sugar cane farms and produces one-third of Florida’s sugar. Yet, the federal government protects them against competitors by imposing U.S. import quotas that maintain sugar prices at artificially high levels. U.S. consumers and businesses have had to pay twice the world price of sugar on average since 1982, according to economist Mark Perry.

Why? The fact that the sugar industry spends millions in lobbying might be one reason.

The U.S. sugar lobby contributes millions of dollars to political campaigns to maintain federal support for the subsidies, according to the Center for Responsive Politics. The Fanjul family alone spent $715,000 on lobbying in 2008 and has spent an estimated $2.6 million on political campaigns from 1979 to 2006.

 

Bloomberg: For-Profit Colleges Double Spending, Hire Ex-Congressmen to Beat Aid Rules

Written by admin on December 23rd, 2010

Bloomberg reports on the revolving door from Congress to the lobbying business for the for profit college business, a business that derives the vast majority of it’s fees from US Government grants and loans.

Bloomberg

For-profit colleges more than doubled spending on lobbying and hired six former members of the U.S. Congress this year to fight regulations that threaten the industry.

Ten education companies and their trade association spent $3.8 million on lobbying in the first nine months of 2010, up from $1.5 million in the comparable period last year, according to reports filed with Congress.

For-profit colleges are resisting a U.S. Department of Education proposal to restrict funding and objecting to a law that limits their revenue from government sources. The proposed restriction, called “gainful employment,” would tie eligibility for federal student-aid programs to graduates’ incomes and loan repayment rates.

Pittsburgh-based Education Management hired former U.S. Representatives Tom Loeffler, a Texas Republican, and William Gray, a Pennsylvania Democrat.

Career Education Corp…… hired former Connecticut Democratic Representative Toby Moffett.


Washington Post Co., owner of the Kaplan education business,……..hired former California Democratic Representative Vic Fazio.

Campaign Contributions

For-profit colleges have also contributed to political campaigns. Two for-profit colleges were among the 14 biggest donors to the re-election effort of John Boehner, an Ohio Republican who now will be the speaker of the House, according to the Center for Responsive Politics, a Washington-based research group. Employees of Corinthian Colleges Inc., based in Santa Ana, California, and Apollo Group Inc., owner of the University of Phoenix, gave $18,250 and $14,000 respectively, according to the center.

Representative John Kline, the Minnesota Republican who will take over leadership of the House Education and Labor Committee next month, received $56,500 from educators and their families, his fourth-biggest source of campaign contributions during his re-election campaign, according to the center.

The biggest spender on lobbying among publicly traded colleges in the first nine months was Corinthian Colleges, which hired Richard Gephardt, a Missouri Democrat and the former House majority leader.


Capella Education Co…… hired former Minnesota Republican Representative Vin Weber, now managing partner of Clark & Weinstock, a lobbying firm in Washington.


Education companies are permitted by law to get as much as 90 percent of their revenue from federal student aid, and some are close to the limit. The companies want to change the law or extend an exemption on some revenue that currently expires in 2011.

Apollo Group, based in Phoenix, and Corinthian Colleges have each said that close to 90 percent of their revenue comes from government grants and loans, and that they’re in danger of violating the rule next year. Apollo, the biggest U.S. education company, spent $340,000 on lobbying in the first nine months of 2010, down from $440,000 a year earlier.

 

Politico: Liquid gold: Donations questioned

Written by admin on December 21st, 2010

Politico points out the critical timing of campaign contributions and critical votes in the beverage industry.

Politico

In all, at least 32 House members were given wholesaler contributions within a month of signing on to the legislation — including at least 10 lawmakers who were given contributions within a day of co-sponsoring the bill, according to a POLITICO analysis of data from the Center for Responsive Politics and public records.

The wholesalers said the contributions had nothing to do with the co-sponsorships. Lawmakers, too, said the timing is purely coincidental — with some asserting they had no idea the wholesalers had donated to them about the time of their co-sponsorships.

Rep. Glenn Thompson (R-Pa.) said the fact that he received a $2,500 check from the National Beer Wholesalers Association on May 5 — a week before he co-sponsored the legislation — was “just happenstance.”

“The beer and wine wholesalers have been regular and consistent contributors to my campaign, about every six months from what I can see, and obviously not tied to any one event,” said Thompson, who raised at least $10,000 from the beer wholesalers this election season.

Democratic Rep. Gerry Connolly of Virginia sponsored the bill on May 18. The next day, he reported receiving $2,500 from the beer wholesalers. Connolly received at least $8,500 from beer and wine wholesalers’ lobbies this cycle. A Connolly spokesman would not comment.

The beer wholesalers also became the top contributor to House Judiciary Committee Chairman John Conyers of Michigan, whose panel held a hearing on the legislation. Conyers received at least $66,700 from beer wholesalers this cycle. His office would not respond to requests for comment.

But the beer distributors didn’t stop at campaign contributions. Eleven days after the bill was introduced on April 15, the group’s top lobbyist took the unusual step of e-mailing every House member to let them know that his membership would consider co-sponsorship of the bill a “key vote” — a move usually reserved only for votes on bills, not sponsorships.

 

Washington Post: No one’s neutral about net neutrality

Written by admin on December 21st, 2010

The Washington Post discusses the lobbying efforts being directed towards the FCC’s Net Neutrality rules, just approved today.

Washington Post

“Those that didn’t have the money to pay for a lobbyist in Washington weren’t unrepresented but they certainly weren’t represented to the same extent the major [telecommunications] carriers were,” said Joel Kelsey, policy adviser to the open-Internet group Free Press.

The Alpine Group‘s link to one commissioner was likely attractive to the clients that made it the most often hired net neutrality lobbying shop in town. Though the 17-member group does not specialize in telecommunications or cable industry issues, its lobbyists include a former legislative assistant to the House committee that oversees telecommunications regulation and a law school grad who once interned for FCC Commissioner Michael J. Copps. The American Cable Association, the Business Software Alliance, the Recording Industry Association of America and Warner Music Group all signed on with the firm.

Solo lobbyist Mitch F. Rose and the Fritts Group boutique firm weren’t far behind. Rose, previously a vice president of government relations at the Walt Disney Co. and consultant to the National Cable and Telecommunications Association, was tapped by the industry group and companies such as Comcast and Time Warner Cable. Fritts Group founder Eddie Fritts spent 23 years as the chief executive of the National Association of Broadcasters, making his firm an ideal choice for DirecTV, the Motion Picture Association of America, News Corp. and others.

The work of these firms and others was crucial to Genachowski’s recent indication that his proposal will ultimately include a usage-based pricing provision that grants Internet service providers “meaningful flexibility” to manage their networks — a victory for ISPs. AT&T, Comcast, Verizon and Time Warner Cable have collectively employed more than 60 firms for net neutrality-related work, including shops such as Capitol Solutions, Crossroads Strategies, Ogilvy Government Relations and Quinn, Gillespie & Associates.

Even if the commission approves the proposal, influencers expect the work to continue. Congressional representatives critical of the FCC’s push to crown itself Internet regulator, including incoming House Commerce and Energy Committee Chairman Rep. Fred Upton (R-Mich.), have already warned that the next step is a bevy of hearings and inquiries that will keep K Street busy

 

The Weekly Standard: The Boy from Yazoo City

Written by admin on December 20th, 2010

In a wide ranging interview in The Weekly Standard, Republican Haley Barbour make the case for why a successful lobbyist makes for a good politician.

The Weekly Standard

“When I first ran for governor,” Barbour told me, “my opponent attacked me as a Washington lobbyist. So we did some research. It showed that people thought I’d be a better governor because I’d been a lobbyist. Before Katrina, 37 percent of the state budget of Mississippi came from the federal government: Medicaid, highway funds, aid to education. People knew I understood the federal government. People knew I had a lot of friends in the federal government. And they knew it might come in handy.”

Hurricane Katrina made landfall on the morning of August 29, 2005. It is by some measures the greatest natural disaster in American history. It was surely the governor’s finest hour. After 20 months in office Barbour was already popular with voters and—a neater trick—successful with a strongly Democratic and hostile legislature.

“People will tell you there are a lot of handicaps,” he said. “I’m governor of a very poor state. They’ll say that’s a handicap. People will tell you it’s a handicap to be from the South. I had an office in Washington for 19 years, working as a lobbyist. I have an accent. People will tell you those are handicaps.”

He leaned back and folded his hands across his chest, looking to me like a man who’s made up his mind.

“But I don’t think so.”

 

Foreign financial corporations’ US lobbying

Written by admin on December 19th, 2010

Here are a few selected third quarter lobbying expenditures by foreign financial corporations who have operations in the United States.

Deutsche Bank Securities Inc. spent $540,000 lobbying the government during the third quarter on financial regulatory reform and foreign tax issues, a decrease of about 41 percent from the second quarter.

The German bank, which has operations in the United States, spent $920,000 to lobby the government during the second quarter. In the third quarter of 2009, it spent $300,000.

In this year’s third quarter, Credit Suisse Securities, which includes the bank’s U.S. operations, lobbied the Department of Treasury, both houses of Congress and the Federal Reserve System, Commodity Futures Trading Commission, Securities & Exchange Commission and National Economic Council.

The bank lobbied on issues including foreign tax compliance issues, derivatives trading changes, futures trading limits, SEC standards for broker-dealers, and Wall Street reform issues.

HSBC spent slightly more on lobbying the government in the third quarter than it did the previous quarter.

The British bank spent $540,000 in the quarter that ended Sept. 30. In the second quarter it had spent $510,000, which was about half of the $1 million spent in the first three months of the year, when banks were pushing hard to prevent financial reform measures from becoming too onerous.

Barclays PLC spent $1.09 million during the third quarter to lobby the U.S. government on financial regulatory reform and tax code issues, according to a Congressional lobbying disclosure filing.

The money spent during the third quarter was 14 percent more than the $930,000 spent in the second quarter and 62 percent more than the $410,000 spent in the third quarter of 2009.

The British bank lobbied both houses of Congress, the Treasury Department, the Executive Office of the President, Securities and Exchange Commission, and the Commodity Futures Trading Commission

 

New York Times Dealbook: Citigroup’s Top Lobbyist Steps Down

Written by admin on December 18th, 2010

The New York Times Dealbook reports on Citigroups top lobbyist, Nicholas Calio moving on to the Air Transport Association.

Mr Calio was a participant in the documentary.

New York Times

After seven tumultuous years as head of Citigroup’s government affairs group, Nicholas Calio is stepping down to become the chief lobbyist for the airline industry.

Mr. Calio, who was a White House legislative adviser to both Bush presidencies, shaped Citigroup’s political strategy as the bank came under harsh scrutiny from lawmakers for all that was wrong with Wall Street.

During his tenure, Mr. Calio helped shepherd three Citigroup chief executives through the corridors of Washington and build its political office from scratch.

At his peak, Mr. Calio managed a staff of nearly nine federal lobbyists and several staff members overseeing state and international political affairs. He also briefly oversaw Citigroup’s communications team for Charles O. Prince III, Citigroup’s embattled chairman and chief executive.

 

USA Today: GOP health care lobbyist to run House committee

Written by admin on December 14th, 2010

USA Today reports on another lobbyist returning through Washington’s revolving door to run a House committee.

USA Today

Rep. Fred Upton, R-Mich., incoming chairman of the House Energy and Commerce Committee, announced today that he has hired Gary Andres, who is leaving a vice chairman’s post at Dutko Worldwide for the Capitol Hill job.

According to Dutko’s website, health care and financial services are part of Andres’ policy portfolio. The House commerce committee is one of the key panels that played a role in shaping the health care law, and Upton has vowed that it will also be a player in dismantling the legislation when the GOP takes control next month.

Upton called Andres “a leading voice in Republican policy, always seeking solutions to advance our principles to limt the size and scope of government.”

In the same statement from Upton’s office, Andres said he was looking forward to his new job. “Republicans must deliver on our pledge to the American people by cutting spending, repealing Obamacare and helping create new jobs,” he said.

In 2007, Andres was named one of Washington’s top lobbyists by The Hill, a newspaper that covers Congress. He is a former deputy assistant for legislative affairs to President George H.W. Bush and was an adviser on the younger Bush’s presidential transition team. In 2008, Andres published Lobbying Reconsidered, a book about advocacy.

Upton is not alone in turning to K Street to help out the new Republican majority. The Washington Post reported last week lobbyists have been hired on the staffs of some newly elected Republicans, including Sen.-elect Ron Johnson of Wisconsin, who railed about special interests and lobbyists during the campaign.