Wall Street Draws Ex-Lawmakers

Wall Street has dramatically expanded its influence on Capitol Hill over the last year, using a lobbying army that includes nearly 1,500 former federal employees and 73 former members of Congress who have been deployed during debate on financial reform legislation.

Citigroup, Visa, the American Bankers Association, Prudential Financial and Goldman Sachs have drawn some of the top experts from Capitol Hill — with each organization registering nearly 50 people who formerly worked in the government, according to a joint report released today by the Center for Responsive Politics and Public Citizen. 

Of the 73 lawmakers-turned-lobbyists touting Wall Street’s interests, 17 served on congressional banking committees during their time in office, including former House Financial Services Committee Chairman Michael Oxley (R-Ohio), who helped co-author the Sarbanes-Oxley Act.

Other former powerhouses doing Wall Street’s bidding include former Speaker of the House Dennis Hastert (R-Ill.), former Senate Majority Leaders Bob Dole (R-Kan.) and Trent Lott (R-Miss.) and former House Majority Leaders Dick Armey (R-Texas) and Dick Gephardt (D-Mo.). One former member, Rep. Vin Weber (R-Minn.) has a whopping 13 financial sector clients.

To be sure, many of these members have been lobbying for financial clients since well before the financial legislation was introduced last year. But their influence has only grown in wake of the financial crisis.

“Wall Street hires former members of Congress and their staff for a reason,” said Public Citizen Congress Watch Division Director David Arkush. “These people are influential because they have personal relationships with current members and staff. It’s hard to say no to your friends.”

Besides members of Congress, Wall Street bankers have also snapped up some of the brightest former staffers from financial committees.

At least 66 registered financial lobbyists previously worked as staffers on either a House or Senate banking committee, and an additional 82 worked for members of congress who sat on one of the banking committees. Another 42 served at some point in the Treasury Department with at least seven serving in some form in the Office of the Comptroller of the Currency.

Among the high profile staffers-turned-lobbyists are Andrew Lowenthal, the former minority staff director of the Senate Subcommittee on Securities, who once served as a key staffer for Sen. Chris Dodd.
Nate Gatten, the former top banking aide to Sen. Bob Bennett (R-Utah), later jumped to become a lobbyist for Fannie Mae, and Joi Sheffield served as the Democratic staff director of a Senate Banking subcommittee, now a lobbyist for financial regulators.

Even more intriguing, dozens of current banking lobbyists have previously worked for members of Congress who are still serving on the Senate or House Banking Committees — a key relationship connection.

Members linked to multiple staffers-turned-lobbyists include Senate Banking Committee Chairman Chris Dodd (D-Conn.), as well as Sens. Mike Crapo (R-Idaho), Richard Shelby (R-Ala.), Chuck Schumer (D-N.Y.) and Kay Bailey Hutchison (R-Texas).

“Companies pay a premium for lobbyists who’ve spun through the revolving door because it can be a small price to pay relative to the huge payoff if they can shape legislation,” said Center for Responsive Politics Executive Director Sheila Krumholz. “Without a doubt, the goal is to weaken the legislation.”

Under ethics rules instituted when Democrats took control of Congress, there is a yearlong cooling-off period for senior staffers turned lobbyists.

But some lawmakers, including House Financial Services Committee Chairman Barney Frank (D-Mass.) have moved to stop the revolving door altogether.

Earlier this spring, Frank permanently banned his committee staff from speaking with Peter Roberson, an aide who left the committee to join K Street, lobbying on the derivatives legislation he had just helped create. The law bans Roberson from having contact for a year, but Frank extended the ban under his chairmanship.

"I am therefore instructing the staff of the Financial Services Committee to have no contact whatsoever with Mr. Roberson on any matters involving financial regulation for as long as I am in charge of that committee staff," said Frank at the time.

The report used lobbying disclosure information filed with the Secretary of the Senate and other data. While all of the lobbyists cited in the report were registered in 2009, some may have been hired before the financial debate began to grow.

For instance, the American Banking Association has had a hiring freeze for more than a year, and some of its lobbyists, including James Sivon of Barnett, Sivon and Natter, have been lobbying for ABA since 2000, lobbying records show. Sivon previously worked as a minority staff director for the House Banking Committee.

“Some of the data in this report is a little misleading,” said one industry representative. “We haven’t hired dozens of lobbyists since regulatory reform began.”

Experts also say the numbers do not prove that banking sector will have undue influence as Capitol Hill moves forward on financial reform.

“These are technical people in a technical field. It’s a small universe of people who can actually understand this,” said Scott Talbot, Financial Services Roundtable senior vice president for government affairs. “I think this is much ado about nothing, in the sense that this is something that happens in every industry. It’s not just specific to financial services.”

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