Top Bailout Recipients Spent $71 Million On Lobbying In Year Since Bailout
With Reporting By Julian Hattem
Twenty-five top recipients of government bailout funds spent more than $71 million on lobbying in the year since they were rescued, an extensive review of federal lobbying records by the Huffington Post reveals.
A year after taxpayers forked over $700 billion to help rescue the biggest names in banking, insurance and the automotive industry, those same institutions are using portions of the cash to influence legislation with a direct impact on taxpayers.
In all, during the last quarter of 2008 and the first three quarters of 2009, those 25 institutions spent $71,199,000 on lobbying. The list includes General Motors ($11.95 million), Citigroup ($8.915 million), Bank of America ($6.427 million), J.P. Morgan Chase ($7.735 million), Goldman Sachs ($4.38 million) and AIG ($3.47 million). Some of these companies have paid federal money back. Not all of the top bailout recipients, meanwhile, spent money on lobbying.
The amount that was spent, however, is nearly identical to the lobbying expenditures these same companies made during the year preceding the federal bailout. According to the Center for Responsive Politics, bailout recipients paid approximately $76.7 million for the services of lobbyists in 2008. All of which has sparked angry pushback from good government groups and lawmakers on the Hill, who ask whether the expenditures are appropriate after these institutions took the nation's economy to the brink of collapse.
"It creates a bizarre feedback loop where taxpayer money is being used by beneficiaries of the bailout to, in some cases, thwart taxpayer protections and even to score more taxpayer money, things that taxpayers themselves will likely find quite distasteful," said Sheila Krumholz, executive director of the Center for Responsive Politics. "The question is where does it end?"
Much of the lobbying money spent by bailout recipients has been devoted to influencing legislation that has direct impact on taxpayers. Among the eight recipients who spent more than $3 million lobbying since the bailout, the most common specific items of interests included the Credit Card Holders' Bill of Rights Act, the Credit Card Fair Fee Act of 2009, Credit CARD Act of 2009, the Helping Families Save Their Homes Act, and the Mortgage Reform and Anti-Predatory Lending Act.
Specifically, bailed-out institution have fought efforts to give bankruptcy judges the power to renegotiate mortgages. They have worked against legislation that would lower the fees merchants are charged when their customers use credit cards. They have also worked against legislation that would put more restrictions on how they spend taxpayer funds.
"The biggest problem is that they are lobbying for more bailouts," said Rep. Brad Sherman (D-Cali). "In particular they want to make sure that future bailouts do not involve votes in Congress because Wall Street is convinced that Congress is not a reliable bailout partner. They want all bailout decisions made by the executive branch because all elements of the executive were very pro-bailout throughout the process."
Officials representing bailout recipients insist that their lobbying expenditures are neither untoward nor exceptional. They stress that the Capital Purchase Program portion of the TARP -- the program in which many of the failing banks are participating -- was "forced" on those institutions by the federal government, meaning that the banks shouldn't be held to a different standard of good-governance.
"[The banks] were brought to Washington and told they were going to take this money," said Peter Garucci, a spokesman for the American Bankers Association. "It was billed, and is still regarded by Treasury, as an investment program in healthy banks as a means to spur greater lending."
Asked if spending $71 million on lobbying was a form of "greater lending," Garucci replied: "No. I wouldn't make that contention."
But Garucci, and other officials at various bailed out institutions, insist that it would be overly restrictive and perhaps unconstitutional to apply restrictions that limited or simply barred institutions relying on taxpayer money from lobbying.
"We are faced with new proposals and new ideas almost every day," said Garucci. "It is very well understood that fundamental reform of the entire financial system is under consideration. And from our perspective, we work with members from both sides of the aisle to discuss how that is going to progress."
Still, for others, it is difficult to justify institutions spending any money -- let alone $71 million -- just one year after needing a historic lifeline from the American public. That bailed-out companies could spend so much simply on influencing legislation, they argue, is reflective of how stacked the political deck truly is in favor of the financial sector. As the Service Employees International Union reported, all Wall Street institutions -- banks and insurance companies, TARP recipients and non-TARP recipients -- have spent $321 million on lobbying in the first nine months since the bailout.
"It's obscene that banks are using tax payer money to lobby against reforms that would protect consumers and the country from banks crashing the economy again," said Stephen Lerner, director of the private equity project at SEIU. "They have plenty of money for lobbying and bonuses while they cut off lending to small business and are again raising credit card interest rates."