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Revolving Door, Bailout Edition

Why won't key lawmakers disclose contacts with ex-aides lobbying for Big Finance?

| Thu Apr. 9, 2009 10:06 AM PDT

In late March, as public outrage over bonuses paid to executives of bailed-out financial firms exploded, Citigroup CEO Vikram Pandit met with Senate majority leader Harry Reid. Accompanying the under-fire CEO to the meeting was Jimmy Ryan, one of the banking conglomerate's top in-house lobbyists. Ryan was a familiar face to Reid and his staff. Up until 2003, he was the Nevada senator's chief counsel, and since then he has remained close to Reid. The senator, according to Reid spokesman Jim Manley, merely discussed with Pandit the financial state of Citigroup and the economy in general. If Pandit and Ryan had hoped that Reid would take action to benefit their company, Manley maintained, this effort was unsuccessful.
 
Whether or not Ryan was able to win any sympathy (or anything else) from his old boss, the episode highlights one aspect of Washington bailout politics: Financial firms seeking big bucks and favorable terms from Congress and the White House are deploying Capitol Hill aides turned lobbyists to win favorable treatment from the congressional lawmakers who are managing various aspects of the financial recovery—overseeing or appropriating nearly $3 trillion in spending and lending. And some lawmakers—including Sen. Chris Dodd (D-Conn.), the chairman of the Senate banking committee—have declined to disclose whether they have had contact with former aides now lobbying for the financial sector.

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Corporations hiring departed congressional staffers as lobbyists is a ho-hum practice on K Street. But the stakes are particularly high when these Capitol Hill vets are sicced on programs and legislation that are crucial to the country's financial recovery and that involve massive amounts of government spending. In the past year, top bailout recipients, from Goldman Sachs to Bank of America to JPMorgan Chase, have dispatched more than 100 past congressional staffers and ex-government officials to shape the bailouts to their liking. This crew of well-connected lobbyists includes ex-employees of the congressional committees on banking, finance, and commerce; one-time aides to Democratic and Republican leaders; former Treasury officials; and a past aide to Rahm Emanuel, now the White House chief of staff.
 
At least one former lawmaker has also gotten in on the action. Goldman Sachs, which has more than 30 ex-government officials registered to lobby on its behalf, tapped one-time House Majority Leader Richard Gephardt (D-Mo.) to lobby his former colleagues in Congress on issues related to the Treasury Department's Troubled Assets Relief Program. Goldman, which paid Gephardt's firm $70,000 in the last quarter of 2008, received $10 billion in TARP funds. (As a counterparty to AIG's disastrous credit default swaps, Goldman pocketed an additional $12.9 billion in bailout money given to the insurance firm.) Other insiders lobbying for Goldman include former SEC commissioner Richard Roberts and Faryar Shirzad, once a top economic aide to President George W. Bush.
 
Ex-staffers for at least 10 members of the Senate finance committee—including the committee's chairman, Sen. Max Baucus (D-Mont.), and senior Republican member Sen. Charles Grassley (R-Iowa)—have lobbied lawmakers on behalf of big financial firms receiving billions of dollars of government assistance. And at least five members of the Senate banking committee have former aides lobbying Congress on financial matters. These include Dodd and ranking Republican Sen. Richard Shelby of Alabama.
 
Several leading lawmakers with ex-aides lobbying for bailed-out financial titans were not eager to discuss contacts between their offices or committees and those lobbyists. The offices of both Dodd and Shelby refused to respond to requests for information about any interactions with former staffers now on the payroll of financial firms. (Ditto for Dodd's banking committee.) A spokesperson for Baucus would not comment directly on whether the Senate finance committee chairman has been lobbied by his past aides. He only noted, "Over the past six months Sen. Baucus and his staff have been providing aggressive oversight of the TARP funds, and fought to protect American taxpayers." Baucus' office brushed aside Mother Jones' questions about two former chiefs of staff: David Castagnetti, a lobbyist for Credit Suisse (an AIG counterparty), and Jeff Forbes, who lobbies for Capitol One, which received $3.56 billion in TARP funds. The office of Sen. Jim Bunning, a Kentucky Republican who sits on both the Senate banking and finance committees, did not respond to a request for comment regarding any contacts between Bunning's staff and Jon Deuser, who lobbied for Bank of America and Bank of New York Mellon, recipients of $45 billion and $3 billion in TARP money, respectively. Until 2005, Deuser was Bunning's chief of staff.
 
A Grassley aide did acknowledge that the senator's office has been lobbied by John O'Neill and Chris Javens—ex-tax policy advisers to the Iowa Republican who now lobby for State Street Corp ($2 billion in TARP funds) and Goldman Sachs, respectively—but she maintained that these lobbying contacts concerned tax matters unrelated to economic recovery or stimulus efforts. A spokesman for Sen. Chuck Schumer (D-N.Y.), a member of both the banking and finance committees, insisted that Carmencita Whonder, once a top Schumer aide on economic matters and now a lobbyist with a number of clients in the financial industry, had not lobbied the New York senator or his staff for rescued financial firms. Manley, Reid's spokesman, says the senator's staff is "not aware" of any lobbying contacts with Kevin Kayes, a registered lobbyist for Bank of America through 2008, who was once the Nevada senator's chief counsel.
 
"What people are buying when they hire a lobbyist is access," says Bill Allison, a senior fellow at the Sunlight Foundation, "and if you hire somebody who used to sit across the room from a member of Congress or committee staff of a powerful committee, you're going to get better access."

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