With the passing of Sen. Ted Kennedy, the gavel he wielded as chair of the Senate Health, Labor, Education & Pensions Committee must pass as well. The senator next in line to chair the committee is an old Kennedy friend, Sen. Chris Dodd. Sen. Dodd, however, currently chairs the Senate Banking Committee and would have to relinquish that gavel if he were to replace Kennedy and shepherd through the health care reform bill championed by his departed friend. A switch in committees may be just what the Connecticut senator needs right now. As negative feelings have increased about bank bailouts, Sen. Dodd has come under withering criticism for his close ties, and large campaign contributions from, the financial sector. Unfortunately, he may be replaced by another senator with similar conflicts. Sen. Tim Johnson of South Dakota is next in line to replace Sen. Dodd and has similarly close ties to the financial sector.

According to Open Secrets from 2003-2008, Sen. Johnson has pulled in $1,407,958 from the finance, insurance and real estate sector. While this pales in comparison to Sen. Dodd's $9,097,107 over the same period of time, it accounts for 20% of the South Dakota senator's campaign haul. Sen. Johnson's finance contributions are aided by the importance of South Dakota to the finance and credit industries. These companies only need to abide by the regulations of the state within which they are incorporated and South Dakota has some of loosest regulations for bank holding and credit card companies. This has led to a large number of credit and banks companies locating in the small plains state, providing for tens of thousands of jobs.

The support Sen. Johnson receives from the industry, and their importance to his state, is reflected in the senator's recent voting record. Donny Shaw at Open Congress (Friend of Sunlight) looked at Sen. Johnson's recent votes and showed that he stands out among Democrats in his support for the credit card industry. The senator was the only Democrat to oppose a recent law, sponsored by Sen. Dodd, to "restrict unfair credit card rate increases, penalties and fees, and bans deceptive and predatory practices." He was also one of a handful of Democrats to oppose a series of amendments meant to impose tougher regulations on credit card companies.

Sen. Johnson isn't just connected to the finance sector through his campaign contributions and his votes, but also by his former staffers turned lobbyists. Two of Sen. Johnson's former staffers currently work for firms representing financial clients or companies in the financial world. In 2005, Naomi Camper left her position as staff director for Sen. Johnson on the Senate Financial Institutions Subcommittee to become co-head of Federal Government Relations at JPMorgan Chase, one the biggest banks in the United States. Dwight Fettig, a former staff director of Sen. Johnson, became a partner in the almost exclusively finance-related lobbying shop, Porterfield, Lowenthal & Fettig. Clients at Fettig's firm include the American Bankers Association, the Coalition of Private Investment Companies, NASDAQ and the National Association of Mortgage Brokers.

These connections and contributions should be of concern to anyone who is already alarmed by the relationship that Sen. Dodd has with the financial sector. As the government continues to determine it's role in the financial sector, through bailouts and Federal Reserve lending, it may be better to reserve committee chairs for those without the conflicts that Sen. Johnson may bring with him.

In the back-and-forth regarding who inserted the retroactive bonus immunity provision into the stimulus bill, we were repeatedly treated to on-air dodgeball acrobatics as both Sen. Chris Dodd and Treasury Secretary refused to name the Treasury staffers who could have pressed for this provision. While Geithner has owned up to his role and his support for the bonus immunity provision--on the grounds that a legal challenge could invalidate the entire stimulus bill--it would be worth our time to take a look at one member of Geithner's staff: his chief of staff. Mark Patterson is a former lobbyist for Goldman Sachs who has lobbied for pretty much every position that the administration is now openly opposing.

David Corn, in Mother Jones, dives into this revolving door drama:

On Wednesday afternoon, as President Barack Obama was leaving the White House for a town hall meeting in California, he spoke for 15 minutes to reporters about the AIG controversy. Responding to the rising rage over the $165 million or so in bonuses paid to executives at the bailed-out insurance firm, Obama noted that he was quickly developing policies to prevent future AIG-like catastrophes. And he slammed Wall Street's culture of "excess greed, excess compensation, excess risk taking." To demonstrate that he's committed to battling such greed, the president cited his work in the Senate to rein in executive compensation. Noting that he and Rep. Barney Frank (D-Mass.) had each introduced legislation on this front in 2007, Obama declared that "there were some people who attacked us, saying government has no business doing that."

One of Obama's opponents at that time was Mark Patterson, a lobbyist then for Goldman Sachs, the investment banking firm, which opposed the Frank-Obama initiative. Yet Patterson is now chief of staff to Treasury Secretary Timothy Geithner, the embattled point man in the Obama administration's endeavor to undo the notorious AIG bonuses. That is, a Washington influence-peddler who worked against Obama's effort to limit excessive corporate pay is now a key member of the Obama administration team that is supposed to contain excessive compensation in the AIG case and in general.

Corn notes at the end of his post that, according to Treasury spokesmen, Patterson has recused himself from discussion regarding Goldman Sachs and issues he was previously paid to lobby. This still creates a serious conflict for Geithner, as Treasury is being partly managed by a former Goldman lobbyist. Geithner is also placed in a tough position considering that his chief of staff is limited in the areas in which he can work (supposedly).

For those who ask, didn't Obama plan on not allowing the influence of lobbyists into his administration, here's a handy chart showing the 30 individuals in his administration who were registered as lobbyists at some point during the past five years. Now not all of these persons are objectionable for their lobbying (lobbying on public interest issues is rather different than private interest), but it clearly flies in the face of a lot of remarks we heard during the campaign trail. National Journal's Julie Kosterlitz has a good article on this today as well.

Looking at the Dodd-Geithner-AIG-Stimulus secret provision quadrangle, the real problem may be who the decision makers listen to. If their top advisors are former Goldman Sachs lobbyists previously hired to lobby against tame executive compensation bills, then we can begin to assume where their positions come from.

Congress is like the Beltway. Sometimes it's impassible gridlock; so slow that nothing seems to move at all. Other times it moves so fast you barely knew you were on it. Right now, we're going the too-fast-to-pay-attention speed.

With outrage boiling over about millions of dollars worth of retroactive bonuses awarded to AIG executives, the House voted today 328 to 93 to get most of the cash back by taxing the recipients for 90 percent of what they received. (Here's the text of the bill.) Maybe this is a good way around the argument that the government must pay the bonuses because they're obligated contractually.

But why such a rush? The bill, introduced by Rep. Charlie Rangel (D-NY), yesterday, was available less than a day before lawmakers voted on it. Shouldn't Congress--and the public--get more time to read the bill?  After all, it was because Congress was in a hurry before that it got itself into such a mess in the first place.

Unfortunately, just like the Beltway, it keeps going round-and-round-and-round. To end this cycle, go to ReadTheBill.org and sign the Read the Bill petition calling for all bills to be placed online for 72 hours prior to consideration.

Last night Sen. Chris Dodd admitted on CNN that he was responsible, under administration pressure, for language in the final version of the American Recovery and Reinvestment Act that explicitly permitted the types of retroactive bonuses that A.I.G. is under fire for doling out. The tale of this obscure amendment shows how important it is that Congress provide time for the public to Read the Bill—remember, the 1,000+ page stimulus bill was available to the public for only 13 hours before Congress began debating it, most of that time during the wee hours of the night. If the legislation had been available longer, perhaps this provision would have shriveled in the sunlight.

On February 4, 2009, the Senate approved, by voice vote, an amendment proposed by Sen. Dodd to restrict executive compensation for firms receiving TARP funds. Dodd's amendment wasn't the most far reaching executive compensation amendment offered during debate, but it did seek to restrict excessive compensation retroactively--the issue raised by the A.I.G. bonuses-- something fiercely opposed by the officials at the Treasury Department and in the Obama Administration. President Obama had earlier released his own set of executive compensation restrictions which did not include retroactivity or the "clawback" provisions in Dodd's amendment.

One week later and the bill was in conference committee with leaders of the House and Senate, in talks with Obama administration officials, hashing out details for the final bill draft. The administration, including top economic officials Tim Geithner and Larry Summers, remained opposed to the executive compensations restrictions and sought to alter, or eliminate, them. When the final conference report was released on February 13, Dodd's amendment was altered significantly, including the insertion of a provision provided retroactive protection to all bonuses agreed to prior to February 11, 2009. Contemporary news accounts state that the administration was lobbying against the provision and that they won numerous concessions. The controversial provision was in direct contradiction to Dodd's original amendment and ultimately provided the justification for approving the ballyhooed A.I.G. bonuses.

On March 17, Dodd refused to acknowledge any part in inserting the retroactive bonus immunity provision. One day later, while dodging questions about who asked him to change the amendment, he admitted that, under pressure, he agreed to changes to the amendment. The text is as follows:

BLITZER: What I hear you saying is that, you personally, you did this in order -- at the request of officials at the Treasury Department, Timothy Geithner, among others.

DODD: Well, I didn't say who it was. But just say this, I wouldn't have modified my own amendment at my own insistence. I mean, I spent a long time to having people try to be -- change it. And obviously they came. And the alternative was losing the amendment. And I didn't think we should do that at all.

BLITZER: Who asked you at the Treasury Department to do it?

DODD: Well, they were people, obviously, coming and negotiating with the staffs back and forth. And I don't know their names specifically, it was at a staff level, people were talking about it.

BLITZER: So it -- but it wasn't just your members of your own staff at the Senate Banking Committee who did this, you personally knew about it at the time, is that right?

DODD: No, I didn't know the exact details. I knew they were coming with modifications to it, and whether or not we'd accept some.

Later on March 18, the Politico reported that a White House official acknowledged that, "Treasury told Congressional aides that trying to place limits on contracts already signed would create legal problems and could lead to lawsuits against the government."

There are so many things wrong with this situation it is hard to even start. First, Dodd apparently is saying that he didn't even know what the changes were to his amendment. Could there be any better case for requiring more time for lawmakers to read the bill? If he did know what the changes were, or even still if he didn't, it is the legislative branch's responsibility to write the laws. Responsibility falls on Congress for agreeing to the insertion of the retroactive bonus immunity even though the administration was leaning on them, and they should own up. Second, the closed conference committee system is a fraud and a threat to decent legislation. Technically, conference committee reports are supposed to be made publicly available for 48 hours before consideration, but that rule is rarely enforced. In 2006, the Democratic Party ran on making conference committees transparent and requiring 24 hours of public availability before consideration for all reports. That doesn't appear to be happening, and we're seeing the results.

To further show that conference committees cause undue, secret distortion to bills, we can take another example that is not the Dodd amendment, as it wasn't the only amendment changed in the conference committee. Another executive compensation amendment, sponsored by Sen. Ron Wyden and Sen. Olympia Snowe, was completely stripped from the bill in conference committee. The Wyden-Snowe amendment went further than Dodd's amendment in requiring "bailout recipients to cap their bonuses at $100,000. Any amount paid above that would have been taxed at 35 percent." Upon seeing the conference report, Wyden saw that his amendment, which was previously agreed to by the whole Senate, was stripped from the bill. No one consulted him, as they consulted Dodd. The fate of the Wyden-Snowe amendment also shows that the administration was the one seeking to protect executive compensation. Wyden told the Huffington Post, "I pulled out all the stops ... If the White House economic team had made it clear that this was important, this provision would never have been removed. I don't believe the president has been well-served on the bonus issue by his economic team."

As Wyden says, "This lack of transparency -- and the lack of accountability that results -- is one of the most significant threats to our democracy." The first thing we can do is make sure that all lawmakers, staff, and citizens have at least 72 hours to read and review all versions of legislation. To stop these loopholes and last minute deletions, we need to mandate more sunlight. To help make that happen, join the Read the Bill campaign.

Recent news stories have shown that the U.S. is increasingly in the business of providing loans and bailout money to foreign banks. A.I.G. recently revealed a list of the counterparties to their bailout, which included many foreign banks. The Federal Reserve has also loaned billions of dollars to the central banks of many foreign nations including the European Central Bank, the Bank of Japan, and Banco Central do Brasil.

The loans to foreign central banks do raise a political issue: who is chosen for participation in the program and what efforts are they exerting to obtain the loans? When the participating countries file their next Foreign Agents Registration Act (FARA) disclosures--lobbyist disclosures for foreign nations--we should be able to see if they have been lobbying for Federal Reserve bank loans.

Unlike lobbyist disclosures under the Lobbying Disclosure Act, FARA disclosures require a much greater amount of detail. This allows us to have a greater view of what foreign nations are lobbying for during the economic crisis. Conversely, we have less information about what American banks are lobbying for or against, which is a real disappointment considering their lobbying, along with other financial services and mortgage groups, helped create the economic mess we find ourselves in now. Perhaps we should demand better disclosure from our lobbyists.

As the bailouts mount serious questions remain about the future formation of the economy and the government. These questions revolve not just around policies, but around principles. One of those principles that everyone--senators, congressmen, newspapers, the President--has stated support for is transparency. But, the battle for real transparency in the current cleanup of the market mess is woefully wanting.

Bloomberg reports today that the Federal Reserve has rejected their Freedom of Information Act (FOIA) request for information relating to the nearly $2 trillion in Fed loans to banks and securities firms. The Fed states that their refusal to fulfill the FOIA request is due to an "exemption under trade secrets." Also, the source of a lot of the lending is the Federal Reserve Bank of New York, the former perch of Treasury Secretary Geithner, which is not subject to FOIA law.

Congress was able to extract some transparency from the Fed in the past, as Bloomberg recounts:

On Feb. 23, the Fed disclosed a breakdown by broad categories for $1.81 trillion of collateral pledged by banks and bond dealers as of Dec. 17 after Congress demanded more transparency from the central bank.

The largest portions of collateral being held by the Fed at that time were $456 billion in commercial loans, $203 billion in consumer loans and $159 billion in residential mortgages, according to the central bank’s Web site. It didn’t identify any loans or provide their credit ratings and said it will update the figures about every two months.

The Fed, however, is still remaining intransigent in their opposition to transparency in their lending. Aside from the refusal to disclose lending to these firms, the Fed is also refusing to provide details about the bailout of A.I.G., particularly the counterparties to the bailout. Meanwhile, the details of new transparency requirements for TARP and TALF recipients are still rather vague.

It is really important to stand firm in the insistence on transparency at the outset of this recreation of our economic and governmental spheres. All information that can be made public about the lengths taxpayer money is being used to finance the stabilization of private firms must be made available. Similarly, all efforts by private firms to influence the public sphere must be made available. The financial crisis was abetted by an institutional crisis in government caused by excessive political influence--lobbying, PAC money, campaign contributions. These influencing actions need to be made transparent just as much as the money pouring from the public coffers into private companies. That means real time transparency! When a lobbyist meets with a lawmaker or a regulator, it must be reported within 24 hours. When a CEO makes a campaign contribution, it must be reported within 24 hours.

When Louis Brandeis called for "Sunlight as the best disinfectant" (first published in 1913) he was discussing the new financial instruments of the early 20th century. His famous line was resurrected again after those financial instuments failed leading to the Great Depression. This crisis requires a more thorough implementation of Brandeis' ideal of transparency in our government and our markets. Without that we are asking to repeat the mistakes leading up to our current situation.

Following calls from their fellow senators, Banking Committee Chair Chris Dodd and Ranking Member Richard Shelby slammed the Federal Reserve for refusing to release the names of the counterparties to the A.I.G. bailout. The counterparties are the ones who are actually receiving the majority of the bailout money.

During a committee hearing this morning on A.I.G.'s problems, Dodd stated clearly that "it is not clear who we are rescuing." The counterparties were not "innocent victims" and the public "has a right to know" who is receiving the bailout funds sent through A.I.G.

When questioned, Federal Reserve Vice Chairman Donald Kohn refused to release the names of the counterparties because it could "make companies less likely to do business with anyone receiving government funds, risking further turmoil at AIG and in financial markets more broadly."

Dodd and Shelby both laid into Kohn, telling him his statement was "not adequate" and "very disturbing." Shelby further stated, "People want to know what you’ve done with this money."

You can watch the full committee hearing here.

UPDATE: Should also point out this moment from Sen. Jim Bunning:

“You are telling us,” he said sternly to Mr. Kohn, “that the counterparties that got par for their bonds or for whatever — the American taxpayer shouldn’t know who they are? And then you may come back to us and ask for more money for more banks and more corporations? You will get the biggest ‘no’ you ever got.”

He added that he would do everything in his power to “stop you from wasting the taxpayers’ money on a lost cause.”

A.I.G. counterparty transparency is quickly becoming a bipartisan populist issue. Who will drop a bill to force the disclosure?

I think that Fed chairman Ben Bernanke spoke for all Americans when he testified yesterday that the one thing that has angered him the most during our current economic crisis is the ongoing bailout of A.I.G. So far, A.I.G. has received approximately $186 billion from the U.S. government in a bailout to protect the insurance giant's huge losses. But, as Josh Marshall noted over the weekend, the bailout of A.I.G. isn’t really a bailout of A.I.G., but a bailout of the counterparties that had insurance policies to back up their mortgage-backed securities (now known as toxic assets).

Despite the knowledge that the bailout of A.I.G. is, in fact, a bailout of counterparties, A.I.G. and the Federal Reserve refuse to disclose the identities of the counterparties. In a Senate Budget Committee hearing yesterday, Sen. Ron Wyden berated Fed Chairman Ben Bernanke about the failure to release the names of the counterparties, the actual bailout recipients. Bernanke stated that “under normal conditions” the counterparties would “have a presumption of privacy”. As the New York Times' Joe Nocera put it two days ago,

“Gobs of tax money is going to bail out unnamed companies — and yet we aren’t allowed to know who they are, and are supposed to take it all on faith. You know those awful cases you read about every once in a while where a child dies in a troubled home — and then the state health department won’t divulge any information out of “privacy concerns”? This strikes me as the financial equivalent of those cases. As excuses go, it sure is convenient.”

It truly does not make sense that the taxpayers need to be left in the dark about whom we are bailing out. Representative government requires that our representatives and us little people know what we are spending our money on, particularly if that money is meant to prop up the bad decisions of private enterprise.

In conjunction with this transparency problem comes word that A.I.G. is paying two Washington spin machines, Hill & Knowlton and Burston Marsteller, to do positive PR for the belly-up company.

A.I.G. probably needs a spin army after the way they operated outside of regulations and oversight, essentially running a scam insurance business that could collapse numerous foreign banks. I'm just curious as to how a company that is nearly wholly owned by the U.S. government can pay for expensive PR firms.

From October 1, 2008 through the end of the year, eighteen companies that had received, or would receive, bailout funds spent money lobbying the government. As the bailout is set to move onto round two, there have been concerns that recipients of funds are improperly lobbying the government after receiving the funds. In the past week there has been an effort by Treasury Secretary Timothy Geithner to restrict lobbying of his department by bailout recipients and a bill introduced by Sens. Dianne Feinstein and Olympia Snowe to ban the use of bailout funds for political influence. Some good government groups are objecting to bailout recipient Bank of America's involvement in organizing opposition to the Employee Free Choice Act.

In total, the eighteen bailout recipients that continued to spend money on lobbying spent $14,810,259 over the three month period of October to December. Of course, many of these companies were lobbying on a variety of issues and did not necessarily spend the full amount listed on their disclosure to lobby on the bailout. All but two of the bailout contracts received by these companies came during the period of which this lobbying spending is the subject. Lobbying on the bailout was determined by whether the lobbyist disclosure forms listed one of the following in the Issue Area provided on the form: H.R. 1424, Emergency Economic Stabilization Act, TARP, and Troubled Asset Relief Program. One bailout recipient that continued to list lobbying expenses, American Internation Group (AIG), has publicly stated that they are no longer lobbying government. The report AIG filed indicates that the expenses were for:

In response to requests and to correct misinformation, AIG provided information about AIG to federal officials in connection with government efforts to address instability and liquidity in the financial markets and congressional oversight of federal programs including the Troubled Asset Relief Program.

Topping the list is the General Motors Corporation with lobbying expenses totalling $3,550,000. The financial arm of the General Motors family, GMAC, a bailout recipient, also spent $,1540,000 on lobbying expenses. Both of these bailout recipients obtained funds at the end of the lobbying disclosure quarter, after Congress rejected a bill granting non-TARP funds for them, suggesting that the majority of the lobbying was done in pursuit of the funds themselves. Four more companies also obtained their bailout funds in the waning days of the year (the end of the disclosure quarter) or in the new year. Those companies are American Express, Chrysler, CIT Group, and PNC Financial Services Group.

Below is the full table of bailout recipients, their lobbying expenses for the 4th quarter, and the first date upon which they were issued bailout funds.

Oct.-Dec. 2008 Lobbying by Bailout Recipients

Bailout Recipient	Lobbying Expenses (Oct.-Dec. 2008)	First receipt of bailout funds
American Express Company	$1,080,000	1/9/09
American International Group	$1,080,000	10/28/08
Bank of America	$880,000	10/28/08
Chrysler LLC	$1,356,589	1/2/09
CIT Group, Inc.	$80,000	12/31/08
Citigroup	$1,480,000	10/28/08
General Motors Corporation	$3,550,000	12/29/08
GMAC LLC	$1,540,000	12/29/08
Goldman Sachs & Co.	$720,000	10/28/08
Huntington Bancshares, Inc.	$43,670	11/14/08
J.P. Morgan Chase Bank	$1,100,000	10/28/08
Morgan Stanley	$610,000	10/28/08
PNC Financial Services Group	$10,000	12/31/08
State Street Corporation	$210,000	10/28/08
The Bank of New York Mellon	$330,000	10/28/08
U.S. Bancorp	$160,000	11/14/08
Wells Fargo & Co.	$580,000	10/28/08

I just received a one line statement from Tara Andringa, press officer for Sen. Carl Levin, on the will he or won't he question of whether the senator will release copies of contracts that companies participating in the Troubled Asset Relief Program signed:

Senator Levin intends to release the documents, consistent with Senate rules, after reviewing them for proprietary information.

Levin had to fight to get the documents from Treasury; it's good news that he intends to release them to the public. He deserves credit for announcing this. One wrinkle worth noting -- Footnoted, a blog devoted to reading company disclosures to the Securities and Exchange Commission, says that these contracts (the same ones Levin got from Treasury) are already filed on EDGAR (the online SEC disclosure site) -- they look at one filing here. I pretty quickly managed to find a TARP contract with American International Group here and one with Citigroup here. I also found an agreement between AIG and something called Maiden Lane II LLC for which the Federal Reserve Bank of New York served as controlling party. The New York Fed so far has rebuffed attempts to pry loose information on its own, non-TARP bailout activities (it would appear that this might be one of them).

I think it's fair to operate under the assumption that Levin will get more information than that disclosed to the public, but I'm not positive about that.

Thanks much to Michelle Leder, editor and founder of Footnoted, for pointing us to the SEC.