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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 1:06 PM EDT

A revolving-door case study is Alexander Sternhell. In 2008, fresh from his stint as the deputy staff director of Dodd's banking committee, he became a lobbyist for the Cypress Group. A 14-year Capitol Hill veteran, Sternhell boasts on his Cypress bio that he "played a key role in drafting and negotiating nearly every major piece of financial services legislation in the past decade." At Cypress, he works with J. Patrick Cave, a former deputy assistant treasury secretary, to influence the same types of bills. Their recent clients include bailout recipients US Bank and Citigroup, firms that have received $6.6 billion and $45 billion in TARP funds, respectively. Sternhell and Cave are also registered lobbyists for the International Swaps and Derivatives Association, an industry group that has championed the types of transactions that have upended the economy.
Sternhell, who declined to comment for this story, is not the only Senate banking committee alum on the bailout beat. His former colleague, Sheryl Cohen—Dodd's longtime chief of staff and the campaign manager of his 2008 presidential bid—joined the lobbying ranks last spring, and bagged as clients a handful of financial firms including Sovereign Bank, a bailout recipient. There's also Kristina Kennedy, who lobbies for Citigroup and other finance industry clients. Kennedy worked as a senior aide to former Sen. Paul Sarbanes of Maryland during his years as the committee's chairman and ranking member.
Citigroup, which spent nearly $8 million on lobbying in 2008, has been especially active in retaining former congressional staffers and other government insiders. The company has hired more than a half-dozen firms, amassing a small lobbying army of more than 40 former veterans of the legislative and executive branches. Among them is Robert Getzoff, who until 2007 served as senior counsel to then-Rep. Rahm Emanuel. He is currently a vice president for federal government affairs at Citigroup. "To the best of our knowledge there has not been direct contact between Getzoff and Rahm in several months," an Emanuel aide said.
Robert Cogorno, a Citigroup lobbyist who works for Elmendorf Strategies, is a former Gephardt aide and one-time floor director for Steny Hoyer (D-Md.), the No. 2 House Democrat. (Cogorno also lobbies for Goldman Sachs, as does his boss, Steven Elmendorf, Gephardt's former chief of staff.) A Hoyer spokeswoman said Cogorno has not lobbied the House majority leader on banking matters. Also on Citigroup's lobbying team is DC attorney Robert Barnett, the chairman of the Federal Deposit Insurance Corporation (FDIC) during the late 1970s. New to the company's lobbying roster is DC Navigators, which, in January, registered to lobby for Citigroup on TARP issues. At this lobbying outfit, Cesar Conda, former Vice President Dick Cheney's one-time domestic policy chief, is one of the lobbyists on the Citigroup account. Cheney's daughter, Mary, is a principal at the firm.
Previously, DC Navigators was one of AIG's go-to firms—until the insurance company halted its lobbying efforts last fall under congressional pressure. AIG, which has received $182 billion from the government, including $40 billion in TARP funds, spent more than $9 million on lobbying in 2008. At DC Navigators, GOP lobbyists Ronald Christie and Chris Cox, both former aides to George W. Bush, tended to AIG's interests. And AIG also signed up Hazen Marshall, a 17-year Hill veteran who had been the staff director for the Senate budget committee's Republican majority. In 2005, Marshall helped start the Nickles Group, a lobby shop set up by former Sen. Don Nickles, an Oklahoma Republican. (Nickles, once the chairman of the Senate budget committee and a member of the finance committee, is not registered to lobby for financial firms, but one of his clients is embattled automaker GM, which has received more than $13 billion in government rescue funds.) AIG also retained Moses Mercado, once a deputy chief of staff for Richard Gephardt and a former Democratic Party official. Last year, Mercado was an unpaid adviser to the Obama campaign.
Under current lobbying rules, lobbyists are only required to disclose if they lobby the House, the Senate, or the executive branch, and they must describe in general terms which bills or issue areas they lobbied on. They don't have to identify the legislators or aides they contacted, or what they discussed with lawmakers. The Honest Leadership and Open Government Act of 2007, passed shortly after the Democrats regained control of Congress, strengthens some limitations on aides-turned-lobbyists, but former congressional staffers still need only wait a year before returning to the Hill to lobby their former bosses and colleagues.
On taking office, President Barack Obama, who had championed government accountability and transparency as a candidate, signed an executive order imposing tough ethics standards on his administration. If an Obama appointee leaves government and becomes a lobbyist, he or she will be banned from lobbying executive branch officials for the duration of the administration. Similarly, in late March, the president announced stringent lobbying rules related to the $787 billion stimulus package. The restrictions, which outraged K Street, direct executive branch agencies to disclose lobbying contacts related to projects funded by the stimulus legislation. The order also forces lobbyists to communicate in writing if they are seeking to influence any specific stimulus-related project, and these communications must be made public.
But Obama's tough new rules apply only to the executive branch and hold no power over Congress. This week, the Sunlight Foundation proposed an online lobbying disclosure system that would require congressional lobbyists to divulge far more detailed information about their contacts on Capitol Hill; they would have to reveal whom they met and what they discussed. Congressional action would be required for a system like this to become a reality. And the lobbying crowd in Washington is hardly likely to embrace such reform. In the meantime, though, there is certainly nothing that prevents lawmakers from voluntarily disclosing their interactions with lobbyists, including those with whom they share history. With many Americans already suspicious about behind-the-scenes dealmaking involving Wall Street, this could help to ease the trepidations of Main Street.

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