Former Senator Evan Bayh is joining Apollo Global Management as a senior adviser with a role in public policy. Bayh joins a number of government officials who have moved on to jobs on Wall Street including former Office of Management and Budget director Peter Orszag, who recently joined Citigroup.

Apollo Global is a private equity firm with tens of billions in assets. The firm owns a stake in a number of major businesses including Harrah's Entertainment, AMC Entertainment, and Linen n Things. Apollo has also invested in the debt of major banks including purchasing, along with The Blackstone Group and TRG Capital, $12.5 billion in secured loans from Citigroup.

It is unknown whether Bayh, who will likely remain in Washington in his Apollo Global role, will register as a lobbyist. His job, a public policy adviser, is little different than a lobbying job. The former senator will likely provide strategic advice on policy decisions including leveraging his contacts in Congress and in the financial regulatory agencies that he oversaw in his role on the Senate Banking Committee, which including a chairmanship of the Subcommittee on Trade and Finance.

The finance, insurance, and real estate sector was by far the biggest contributing sector to former Sen. Bayh's campaigns. According to the Center for Responsive Politics, the sector gave $4,338,047 to Bayh's campaigns since 1998.

The biggest donor to his campaign came from the finance sector as well. Since 1998, Bayh received $161,850 from employees and political committees affiliated with Goldman Sachs.

The New York Times suggests that the allure of Wall Street salaries may have helped bring Bayh to Apollo Global, "For a lifelong public servant like Mr. Bayh, a private-equity shop holds great appeal. U.S. senators earn a salary of $174,000 per year. Private-equity deal makers are among the most highly compensated executives on Wall Street."

While this may be the case, Bayh is by no means poor. In his most recent financial disclosure to Congress Bayh reported a net worth ranging between $1,299,022 to $3,039,000.

In the post below I noted that the selection of William Daley as chief of staff to the President (now official) would be a terrible idea not only for the message it sends to the public, the banks are more important than you, but that Daley's role would be to stovepipe information to the President, all the while with an eye towards his future employment.

Felix Salmon points out that a similar problem is unfolding in the appointment of a new chairman of the National Economic Council. With the selection of Gene Sperling, a Goldman Sachs executive who makes an ungodly sum writing a column for Bloomberg, the Wall Street to Washington pipeline is not just alive, but fully institutionalized.

Salmon wrote a few days ago:

The problem, of course, is that Wall Street became so big and so pervasive over the course of the boom that it’s hard to find people to run the NEC who haven’t been paid large sums by banks at some point. And even if they are relatively pure on that front, there’s every reason to expect that they’ll pull an Orszag and start taking millions of Wall Street dollars the minute they leave. Obama can try to distance himself from Wall Street, but it isn’t easy.

The examples of the Wall Street to Washington expressway can be seen all across town. The amount of influence that the finance sector has in Washington is crushing and provides for the circumstances that help feed this constant revolving door.

Last month I wrote about this influence and showed that the finance sector is far and away the biggest influencer in Washington. The sector spent over $6 billion on lobbying and campaign contributions over the past 12 years--about a billion more than any other sector. According to the Center for Responsive Politics, they employed 1,390 former government employees as lobbyists in 2010. That doesn't even count those who aren't registered lobbyists.

The problem with this trend isn't that lawmakers are being bribed under the table, but rather that connections and contacts create closed communities of thought. Lawmakers talk to lobbyists because lobbyists have information. That information is invariably skewed to fit their client's interest, even if it isn't factually inaccurate. This creates a situation where lawmakers are influenced by this professionalized community, disregarding other streams of information.

Senators selected to work to combine the House and Senate financial regulation bills in a conference committee are some of the top recipients of campaign contributions from the finance, insurance and real estate sector (FIRE). In total, these twelve senators have received over $57 million from the FIRE sector over the course of their careers, according to data obtained from Center for Responsive Politics.

Senator	Career FIRE Contributions
Schumer, Charles E (D-NY)	$16,708,236.00
Dodd, Chris (D-CT)	$14,067,712.00
Shelby, Richard C (R-AL)	$5,635,030.00
Chambliss, Saxby (R-GA)	$3,507,960.00
Corker, Bob (R-TN)	$3,188,550.00
Johnson, Tim (D-SD)	$3,150,865.00
Reed, Jack (D-RI)	$2,918,732.00
Lincoln, Blanche (D-AR)	$2,612,159.00
Harkin, Tom (D-IA)	$2,534,445.00
Crapo, Mike (R-ID)	$1,809,715.00
Gregg, Judd (R-NH)	$1,070,249.00
Leahy, Patrick (D-VT)	$637,282.00

New York's Charles Schumer, D-N.Y., is the leading recipient among the Senate conferees with $16.7 million in contributions over his career. Schumer has long been an ally of the New York-based financial industry, but has been remarkably quiet as Congress has focused on reforming Wall Street. Schumer remains in support of the bill despite hometown pressure from industry friends, campaign contributors and Mayor Michael Bloomberg.

His support for the financial reform bill goes against a long history of supporting deregulatory actions for Wall Street. In the late 1990s and 2000 Schumer enthusiastically supported measures that ended the Glass-Steagall separation between commercial and investment banks and the enforced deregulation of derivatives trading.

The new rules for derivatives trading included in the Senate bill remain a serious sticking point in the coming conference committee. Senate Banking Committee chairman Chris Dodd, D-Conn., has already attempted once to eliminate a provision in the bill, penned by conference committee member Sen. Blanche Lincoln, D-Ark., ($2.61 million), requiring banks to spin off their derivatives trading portofolios. Dodd is the second largest recipient of FIRE campaiagn contributions on the conference committee with $14 million for his career.

Dodd is also connected to Wall Street with seven of his former staffers currently lobbying for financial organizations. Organizations represented by Dodd's former staffers include Goldman Sachs, Genworth Financial, MBIA, National Association of Mortgage Brokers and New York Bankers Association.

One former Dodd staffer turned financial industry lobbyist runs a financial lobbying firm with the former senior advisor to Dodd's Republican counterpart on the Banking Committee, Sen. Richard Shelby, R-Ala., the third highest recipient of contributions from the FIRE sector on the conference committee ($5.63 million).

Andrew Lowenthal and Lendell Porterfield run a bipartisan lobby shop providing clients with instant access to the Senate Banking Committee and, with both of their former bosses on the financial reform conference committee, the final chance to change the sweeping regulatory bill.

Recently joining Lowenthal and Porterfield as a partner in their firm is Dwight Fettig, a former Legislative Director to Sen. Tim Johnson, D-S.D., the sixth highest recipient of FIRE contributions appointed to the conference committee ($3.15 million). Johnson stands to become the next chairman of the Banking Committee after Dodd retires this year. The credit card industry, largely based in his state, has always counted on the support of the senior South Dakota senator.

Johnson, a career recipient of $391,400 in campaign contributions from the credit card industry, was one of ten Democrats to vote against an amendment to the financial reform bill capping “swipe fees” for debit card transactions. “Swipe fees” are charges to merchants for purchases made by customers using debit cards and often drive up retail prices for consumers. Credit card companies and banks are still lobbying hard to remove this provision from the bill. Johnson, however, is only one of four conference committees members to vote against the amendment making it unlikely the provision will be removed.

The conference committee will have to decide which portions of the House and Senate bills will be placed into a final version to be voted on and signed by the President. The House and Senate must pass bills with identical language. To do so, conference committees including members from both chambers meet to craft a compromise between the House and the Senate. The House has yet to name conferees.

The remaining members on the conference committee include Democrats Jack Reed, D-R.I., ($2.92 million), Tom Harkin, D-Iowa, ($2.53 million) and Patrick Leahy, D-Vt., ($637,282) and Republicans Saxby Chambliss, R-Ga., ($3.51 million), Bob Corker, R-Tenn., ($3.19 million), Mike Crapo, R-Wyo. ($1.81 million) and Judd Gregg, R-N.H., ($1.07 million).

Multiple stories point to a huge lobbying effort on the part of the financial industry as the Senate debates reform to the financial sector. Banks, hedges funds, derivatives clearinghouses, investment firms and all the major industry trade groups are all on the ground lobbying to try and change, alter and weaken the coming reforms. And that's pretty much where our knowledge of the efforts to influence our elected representatives ceases. Lobbying disclosures do nothing to provide the public with information regarding who lobbyists meet with and what exactly their lobbying relates to.

This brings up a serious point when we consider the reason for a transparency or disclosure policy. Who benefits from the cursory information released in current lobbying disclosures? What disclosures would better benefit the public? Does the issue that the transparency policy seeks to address require a tougher response?

The Senate is currently debating financial reform, one part of which is the requirement that all derivatives be traded in the open. This is an application of transparency and disclosure to a particular problem: opacity in the derivatives trading market led to a lack of knowledge across the financial world as to the level of risk that many firms were taking on. Another argument, equally as valid, would be that the actual product of over-the-counter derivatives and specific types, i.e. credit default swaps, were so risky that they were one of the direct causes of the economic crisis. You're likely to support a different response depending on what your narrative of problem is. If these products are viewed as so dangerous as to have been a direct cause of the crisis a considerable option would be to ban them. If the problem is simply under the radar trading and a lack of knowledge among traders, banks and regulators then transparency would seem more appropriate.

One could view lobbying the same way. Did financial sector lobbying lead to a deregulation of the industry, particularly around derivatives? And then wasn't that lobbying part of the root cause of the current economic crisis? If that is the narrative then stricter regulations on lobbying might be in order. Whenever I read the comment threads of stories or posts about lobbying they are riddled with ordinary people stating that lobbying should be banned. Same thing goes when I talk about politics at the bar. The only issue is that, unlike with credit default swaps or any other dangerous product, lobbying cannot be banned.

The First Amendment provides for the right to petition the federal government. Of course, companies, individuals or organizations with a lot of money can hire a bunch of people to do it for them. Short of a constitutional amendment altering the First Amendment or an amendment ending corporate personhood (I doubt this would matter in terms of lobbying), there is no way to ban lobbying.

Transparency in the lobbying profession, along with regulations governing types of practices (which are often applied to targets of lobbying and not the lobbyists themselves), is likely the sole means to assuage the public's fears about the profession. Current disclosure policy provides for the following: names of lobbyists, client name, issues lobbying on, amount spent/amount contracted, government entity contacted, some revolving door disclosure and voluntary listing of bill numbers, names and policies. This is all very cursory information that does little to inform the public of how outside interests are attempting to influence government policy.

The one significant change in disclosure that goes to the root of the public fears of lobbying would be immediate disclosure of lobbyist contact with lawmakers, government officials and government offices. When people complain about banks lobbying Congress or health insurers lobbying Congress they are feeling powerless because they have no idea what the level of influence is and where the influence is directed. There an informational valley here that creates extreme distrust and fear.

Representative democracy suffers when people don't trust their elected representatives when they are in Washington. The best way to alleviate this dilemma is to increase the information flow out of Washington. To paraphrase John Adams, knowledge diffused through the people can provide opportunity to prevent abuses of the system of representative democracy.

Last week, Ezra Klein wrote a post on how members of both parties are still running around raising money from Wall Street for their campaigns. This despite the obvious loathing that the public has for everything finance-related. Klein wrote:

Both parties, in fact, know the risks and are choosing to take the hit rather than forgo the cash. This isn't because they love being attacked or even think that the toxicity of Wall Street is overstated. It's because, to use a metaphor that's in vogue right now, our system of campaign finance turns politicians into vampire squids wrapped around the wallets of the rich, relentlessly jamming their blood funnels into anything that smells like money.

And for the past twenty years there's been no better smell of money than the one eminating from Wall Street. As my colleague Larry Makinson pointed out back in 2008, "the finance, insurance and real estate (FIRE) industries that collectively are at the center of the current crisis are the single largest sector–by far–of all the major economic and interest groupings that give campaign contributions to federal politicians."

If you needed any confirmation of this, see the graphic that was put together for Larry's nearly two year old post:

Lawmakers can't avoid raising money from the finance sector. It's where the majority of campaign contributions come from.

Amazingly, despite the fundraising and the lobbying and the sheer volume of contributions, the financial sector is not getting what they want. In fact, they may be facing much more severe reforms after the bill goes through the amendment process.

The Washington Post offers this sometimes hilarious article loaded with anonymous statements from angst-ridden finance sector lobbyists unhappy that their puppet strings have been severed.

Lawmakers from both parties have been eager to excoriate Wall Street. But industry lobbyists warn that populist proposals to shrink, break up or otherwise shackle some of the giants of the financial world could do more harm than good to the economy. These advocates say that stiff regulation could stifle the flow of credit, undermine American competitiveness in global markets and cost jobs. Among the terms that lobbyists used to describe elements of the legislation: "Draconian." "Crazy." "Insanely unproductive." They had expected the most vexing provisions in the bill sponsored by Sen. Christopher J. Dodd (D-Conn.), chairman of the banking committee, to be scratched by now, or at least scaled back. These lobbyists had hoped that Dodd and Sen. Richard C. Shelby of Alabama, the committee's ranking Republican, would have privately hammered out a bipartisan deal months ago. It didn't happen. Then Dodd and Sen. Bob Corker (R-Tenn.) gave it a whirl. No dice.

Of course, the lobbyists don't like the open process that an actual Senate floor debate provides. Instead, they pine for the behind the scenes deal-making that Americans know and really don't love:

Looking past the Senate debate, industry lobbyists say they hope Frank and the Obama administration can help remove some of the most objectionable provisions that survive the Senate. "They've got to get this thing off the [Senate] floor and into a reasonable, behind the scenes" discussion, said one lobbyist. "Let's have a few wise fathers sit around the table in some quiet room" and work out the details.

Yes, "'a reasonable, behind the scenes' discussion." The American people loved that when it happened during the health care debate. This time they'll enjoy it even more.

[caption id="attachment_14073" align="aligncenter" width="580" caption="Derivatives trading as featured in the 1983 movie "Trading Places.""][/caption]

The final piece of the financial regulatory reform puzzle is about to come into place as Sen. Blanche Lincoln released language last Friday that would impose rules on the unregulated world of over-the-counter derivatives trading. Lincoln's bill, the Wall Street Transparency and Accountability Act, is more far reaching than proposals from both the Obama administration and the House of Representatives. This comes as somewhat of a surprise from the moderate and previously bank-friendly senator who has benefited from finance industry contributions in her post as chair of the Senate Agriculture Committee.

The Agriculture Committee occupies a unique place in the oversight of the nation's financial markets. With legislative jurisdiction over the Commodity Futures Trading Commission (CFTC)--historically futures trading began as a trading mechanism for farmers--the committee maintains jurisdiction over futures and derivatives trading. This unique arrangement provides committee members the ability to pull campaign contributions from the most prolific giver of contributions, the financial sector.

What are derivatives?

Examples from the financial meltdown

How did some derivatives escape regulation?

In 2009, Lincoln raised $693,500 from the finance, insurance and real estate sector, according to data obtained from the Center for Responsive Politics. Those with a specific stake in derivatives reform did not begin contributing to her campaign until she ascended to the chairmanship of the committee after the death of Sen. Edward Kennedy caused a a shuffling of committee seats. Since ascending to the Agriculture Committee chair Lincoln raised $256,900 from the finance, insurance and real estate sector. She also raised over $44,000 from financial companies with a major stake in derivatives reform--almost twice as much as she raised in the previous eight months from similar companies.

In total these major derivatives players contributed approximately $70,000 to Lincoln's reelection campaign. These companies include fifteen members of the International Swaps and Derivatives Association (ISDA), an international trade association that writes the rules for derivatives trading that remains unregulated. Some of these contributors include  JPMorgan Chase, Goldman Sachs, Bank of America, Credit Suisse, Deutsche Bank and UBS.

Despite all of the money and lobbying power—Credit Suisse employs Lincoln's former chief of staff as a lobbyist—expended to deflect new regulations, Lincoln has unveiled unexpectedly tough regulations. (Click here to see Lincoln's reforms.) While these tougher rules will set up a fight in the Senate, they will assuredly create a massive industry showdown if they pass the Senate and move to conference with the House to reconcile the two bills.

Finance influence in the House

Unlike Lincoln's bill, which goes against the wishes of her financial sector fundraisers, the House bill is a reflection of the finance sector's enduring influence in Washington. Throughout the process, the derivatives section of the House bill was consistently amended in favor to the finance industry as efforts to toughen the bill were defeated.

The Obama administration has argued that the majority of over-the-counter derivatives be traded out in the open on exchanges or cleared through clearinghouses. The banks and others have argued for broad exemptions for which over-the-counter derivatives would be required to be traded in the open. The House bill, however, wound up riddled with exemptions.

The bill began under the control of Rep. Barney Frank, the chairman of the House Financial Services Committee. The Financial Services Committee is a cherished post for congressmen to raise money and for staffers to gain knowledge for a future lobbying job. Since 2000, nearly half of the 126 committee staff who left the committee became lobbyists, according to a report by The Huffington Post. The committee is also the chief conduit for financial sector campaign contributions with the 71 committee members, or 16% of the 435 member body of Congress, accounting for 33% of all financial sector campaign contributions to members of the House in 2009.

In October 2009, Bloomberg reported on the crucial role that members of the New Democrat caucus played in helping add exemptions and loosening regulations on over-the-counter derivatives. Many of these members, along with their ideological counterparts, the Blue Dog Democrats, received inordinate amounts of campaign contributions from the financial sector.

Financial Services Committee member Gregory Meeks pulled in over 50% of his 2009 campaign contributions from the financial sector. Rep. Melissa Bean, another committee New Dem, raked in over 47% of her contributions from the financial sector, as did Rep. Dennis Moore. Committee members Jime Himes and David Scott pulled in over 30% of their campaign haul from finance companies and Rep. Charlie Wilson and Ron Klein pulled in over 25% of their total contributions from finance.

A major point of contention is what kinds of exemptions should exist for the over-the-counter derivatives that will be pushed onto exchanges and into clearinghouses. Both the Financial Services Committee and the House Agriculture Committee carved out large exemptions for “end-users”--a wide-swath of companies that may include mutual funds, insurance companies, hedge funds and private-equity capital. The exemptions also aid the top five banks in the United States—Citi, JPMorgan Chase, Bank of America, Morgan Stanley and Goldman Sachs—which hold approximately 95% of the over-the-counter derivatives exposure among the top 25 banks, according to the Comptroller of the Currency.

CFTC Chairman Gary Gensler, speaking on behalf of the Obama administration, declared the exemptions in the House bill unacceptable, adding, “we should ensure that every transaction between Wall Street banks and their financial customers, such as hedge funds, insurance companies or leasing companies, be subject to a clearing requirement.”

The loosening of the derivatives language continued when the bill hit the floor. An amendment widening the “end-user” exemption offered by Rep. Scott Murphy, a recipient of $525,015 in campaign contributions from the financial sector in 2009, passed by a wide margin with 131 Democrats in support—87 of them were New Dems or Blue Dogs. The House also voted down three amendments that would have placed tougher regulations on derivatives trading. The regulations that would have been imposed by these three defeated amendments mirror regulations proposed by Sen. Lincoln in her derivatives reform bill.

A lot of industry players came away from the House debate moderately contented. The coming showdown between the House and Senate over derivatives will reignite their engines and push them to pressure their allies in the House. One industry, specifically one company, will emerge from this debate with a windfall in profits, no matter which version of the bill passes.

Clearing and exchange trading requirements

Intercontinental Exchange, Inc. (ICE) operates derivatives exchanges and owns the biggest over-the-counter derivatives clearinghouses in the country. (See here for an explanation of exchanges and clearinghouses.) Both the House bill and Lincoln's bill would increase the number and type of derivatives that would be required to be cleared by a clearinghouse like the one ICE operates. The House bill has a series of exemptions and loopholes governing clearing and reporting, while the Lincoln proposal contains a strict requirement for clearing. Either way, this will pump up ICE's bottom line. It also would be a boon for the big banks as well.

In 2008, ICE purchased The Clearing Corporation, an over-the-counter derivatives clearinghouse from its owners. The owners included a who's who of major banks including JPMorgan Chase, Goldman Sachs, Bank of America, Citi and Morgan Stanley. ICE turned The Clearing Corporation into ICE Trust, which in March of 2009 became the first clearinghouse approved by the Securities and Exchange Commission (SEC) to begin clearing over-the-counter derivatives. If over-the-counter derivatives have to go onto an exchange, there is little option outside of ICE Trust.

When ICE purchased The Clearing Corporation they entered into a detailed profit sharing agreement with their partners, the big banks. The banks and ICE have a 50-50 profit sharing agreement for all profits that come from trades that are cleared by ICE Trust. As previously mentioned, these big banks account for over 90% of the over-the-counter derivatives market. A requirement, especially with a series of exemptions that the banks can take advantage of themselves, would increase profits for both ICE and the big banks. In the nine months that ICE Trust was open for business it processed $3.1 billion in trades and received $30 million in fees.

In testimony before Sen. Lincoln's committee in December, ICE general counsel Johnathan Short stated ICE's support for an increase in transparency in the market, but also voiced opposition to a requirement that all over-the-counter derivatives trades be cleared or be made over an exchange, much in line with the position of the big banks.

The big banks have an incentive to create as many exemptions in the clearing and exchange trading requirement as possible.This may seem counter-intuitive as ICE would benefit handsomely if all trades had to be processed by their clearinghouse for a fee. But it would not benefit the big banks who are partners with ICE in ICE Trust. The big banks have an incentive to create as many exemptions in the clearing and exchange trading requirement as possible. Previously, if an airline or a manufacturer wanted to purchase a derivatives contract they had to do it through a big bank, as the big banks had good credit ratings and were seen as a safe place to make these trades. This allowed the big banks to charge both the user and the trader fees for making the contract. If all derivatives contracts are required to be traded on exchanges or cleared then the users and traders could simply make contracts with each other rather than relying on a bank as a go-between. With a wide-range of exemptions to clearing and exchange trading, derivatives contracts could still be made within the big banks and then contracts made by big banks could cleared through a clearinghouse like ICE Trust.

Over the past three years, ICE increased its lobbying operation in Washington. Last year, ICE spent nearly $700,000 to lobby Congress and the executive branch. In their pursuit of lobbying talent, ICE poached a top member of the House Financial Services Committee staff, Peter Roberson. ICE picked well. Roberson had a hand in crafting the House bill's derivatives language, including its many exemptions. Roberson's job switch infuriated his former boss Barney Frank, who subsequently banned committee staff from talking to Roberson while he remains chairman of the committee.

ICE's campaign contributions increased as well. Sen. Lincoln was the recipient of $12,300 in campaign contributions from ICE's employees and political action committee. The only member of Congress to receive more in 2009 is Banking Committee Chairman Chris Dodd, who is no longer running for reelection.

An Alternative Minimum Tax (AMT) patch, a mental health parity bill, a package of tax break extensions, and tax breaks and relief for victims of natural disasters, specifically Hurricane Ike. These don't sound like they have any relation to the relief of an financial crisis, but, as of today, they will all play a major role. The new massive bailout package — sorry, "rescue" package — introduced in the Senate includes all of these measures. The inclusion of these measures could help push the underlying Emergency Economic Stabilization Act through Congress or torpedo it by injecting inter-chamber politics into an already tense political situation.

At the heart of the tacked-on legislation is a combination of an AMT patch and tax break extensions for corporations and renewable energy investments. Senate Democrats, most prominently Sen. Max Baucus, believe that the inclusion of these measures will help draw the support of House Republicans who previously voted down Monday's bailout bill. However, this measure is already drawing the ire of House Democrats, including Blue Dogs and Majority Leader Steny Hoyer.

The AMT/tax break extension package was previously passed by the Senate, but House leaders, pushed by Hoyer and the Blue Dogs, intended on shelving the proposal due to its failure to abide by pay-as-you-go rules (providing offsetting cuts to go with revenue reductions). The inclusion of the package in the bailout bill will revive the animus between the two Democratic factions. Hoyer has already stated that the inclusion of the "tax extenders" is "controversial" and was included only because "they thought that’s the only way they could get it passed.” Of course, the Blue Dogs, being prominent supporters of the bailout bill, may find themselves in a situation where this compromise is the best they can get.

Seeing as how every vote counts at this point — the bailout only needs 12 votes to pass in the House — the inclusion of the mental health parity legislation previously passed by the House could help sway one or two votes. The chief Republican cosponsor of the bill, Rep. Jim Ramstad, voted against the bailout bill on Monday. Also, one the bill's seven cosponsors, Rep. Pete Stark, also voted against the bailout. The inclusion of the defining bill of Ramstad's career, as he retires this year, could be enough to sway this one vote into the "yes" column.

In classic congressional fashion, the Senate has decided to use a crisis piece of legislation as a way to push through a massive package of other priorities forcing an inter-chamber factional battle to come to a head. The inclusion of this controversial legislation could also serve as a remedy to the current failure in the House.

Poison pill or appeasing antidote? We'll wait and see.

Congress took a real step today toward legislative transparency, proactively posting the proposed bailout legislation in public, online, in advance of floorconsideration.

To give citizens a chance to fully digest and comment on the proposed legislation, we've posted the text of the legislation to PublicMarkup.org for public review.

On Friday Ellen blogged a request for legislative transparency, calling on Congress to release the bailout draft as early as possible:

The Sunlight Foundation is calling on Congress to publish the proposed bailout legislation as soon as possible, to give constituents and lawmakers themselves as much time as possible to examine the specifics of the proposal before it’s voted on.  We will post the draft legislation to PublicMarkup.org as soon as possible, to give citizens a chance to weigh in on the proposal’s specifics. Any lack of transparency in consideration of this legislation would be especially ironic since lawmakers have blamed the current crisis on financial malfeasance that was hidden from public view. Before the bailout proposal is considered by lawmakers, it must undergo an even more important test: evaluation and assessment by the public.

Today, Congress responded, and Speaker Pelosi and the House Financial Services Committee posted the bill they've designated as the final version.

From remarks Speaker Pelosi delivered at a press conference today:

Before I yield to Senator Reid, I just want to tell everyone that I am now informed that at this moment, you can find the plan on financialservices.house.gov, and then if not there, on speaker.gov. It's there for all Americans to see, for our Members to read so they can make the important decision they have to make tomorrow in the House. I also want to say that later when this bill passes and is implemented, all of the transactions related to this legislation will be on the Internet within 48 hours and that represents change. That transparency, that oversight, will be very important to the health of our economy.

In the midst of rare political urgency, as congressional leaders are pushed well beyond their comfort zones, facing the Bush Administration, unclear political consequences, a skeptical public, and posturing from the presidential candidates, Pelosi chose to assert the role of an empowered public.

Ellen identified two shortfalls in transparency; one real, helping cause the finance situation, and one potential, as Congress responds with legislation.  Speaker Pelosi's statement addresses both.

First, on finance data, Pelosi says "all of the transactions related to this legislation will be on the Internet within 48 hours..."  While I don't know finance well enough to speak to the details of publishing such data, I can say that this is the same sort of transaction tracking transparency that has made FedSpending.org (and USASpending.gov ) immensely successful -- the same transparency that the individual US states are experimenting with (as Grover Norquist recently noted on The Next Right ).

On the second point, Speaker Pelosi points the public to the two sites where the legislation had just been posted.  Now, putting legislation online is nothing new.  THOMAS has been around since the mid 1990s.  Referencing online access to legislation in the midst of intense negotiations, whipping, and public pressure, however, is.

The expectations here, of course, are much higher than with most legislation.  The dollar amounts are enormous, the legislative process has slipped into urgency-mode, and rank-and-file lawmakers are scrambling to establish a position.

Regardless of the incentives facing congressional leadership, and regardless of the substance of the bill, this episode shows one thing very clearly: the bar for public disclosure has been raised.

Ellen, in her post, also points out the distinction between public dialog and "compromises and deal making — the real stuff of urgent policy-making."  If public dialog is going to remain separated, to some degree, from "the real stuff of urgent policy-making," as it is sure to in a legislature controlled by centralized party leaders, then the role of the informed public needs to be clearly staked out, asserted, and defended.

Even if many Americans dislike this legislation, and even if much of the legislation was created in informal pre-legislative meetings, public scrutiny and input has been welcomed into that process.

The legislative process, just like finance regulation, depends on public scrutiny for stability and legitimacy.  It's good to see Congress recognize both.

As news spreads that a consensus Wall Street bailout plan is being finalized, and leaders negotiate between proposals submitted from the Treasury Department, Senator Dodd, Representative Barney Frank, and others, two separate conversations are taking place. One is public, as the nation struggles to evaluate the urgency of the economic situation, and to understand the best course of action.  The other, however, is not public, as the compromises and deal making -- the real stuff of urgent policy-making -- are held in the dark.

The Sunlight Foundation is calling on Congress to publish the proposed bailout legislation as soon as possible, to give constituents and lawmakers themselves as much time as possible to examine the specifics of the proposal before it's voted on.  We will post the draft legislation to PublicMarkup.org as soon as possible, to give citizens a chance to weigh in on the proposal's specifics.

Congress faces urgent pressure from the Administration and from constituents to act. Regardless of the course of action Congress ultimately chooses, this is a decision that must be made in full public view. If citizens don't have a chance to evaluate the legislation, how can Congress possibly represent their constituents' needs?

The need for sunlight is especially required for urgent or emergency legislation. All too often, Congress praises transparency as a democratic value, but violates it in practice. Any lack of transparency in consideration of this legislation would be especially ironic since lawmakers have blamed the current crisis on financial malfeasance that was hidden from public view.

We have called the relevant congressional committees and have asked for copies of the new consensus legislation.  As soon we get it, we'll be posting the text of the legislation online at PublicMarkup.org.

Now more than ever,  Congress must represent the needs of all Americans, and to give everyone - citizens and lawmakers alike -- a chance to participate actively in the legislative process.

Before the bailout proposal is considered by lawmakers, it must undergo an even more important test: evaluation and assessment by the public.