On Sunday, Bloomberg News reported on an estimated $13 billion worth of income that banks gained by taking advantage of the Federal Reserve’s below-market interest rates, which were sometimes as low as 0.01 percent.

The six banks that benefited the most from this “subsidy” – Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, and Wells Fargo – reaped a combined $4.8 billion of estimated extra income from the below-market loans.

It’s worth pointing out that all six of these banks were major political players.

All six have also averaged at least $2.7 million in lobbying a year for the period 2008-2010. And all six have averaged at least $2 million in campaign contributions for the last two electoral cycles. Four of the six banks rank among the top 100 political contributor organizations for the last two cycles. Two of the six were in the top 100 political lobbying organizations for the period 2008-2010. (We focus on 2008-2010 because although the bulk of the lending took place in late 2008 and early 2009, continued lobbying by the banks may have contributed to keeping these deals undisclosed until now.)

While it’s difficult to infer causality from these numbers, it is fair to say that these companies were no strangers to Washington. And this probably didn’t hurt them when it came to negotiating bail-out deals with the Federal Reserve and keeping these deals undisclosed.

Merchants, retailers, and their trade associations have arrayed a team of former government officials turned lobbyists in one of 2011's biggest lobbying battles as banks and credit unions seek to overturn part of the Dodd-Frank financial reform bill. According to data compiled from the Senate Office of Public Records and the Center for Responsive Politics, merchants and retailers lobbying in support of debit interchange fees rules employed 124 lobbyists with previous government experience.

The Federal Reserve has proposed rules to set limits on the amount that banks can charge retailers every time a customer uses a debit card for a purchase, known as debit interchange fees. These fees, set by electronic networks, including VISA and MasterCard, provide big profits to banks and diminish returns for retailers, often leading to rising prices for consumers.

Retailers lobbied hard to get a limit on interchange fees included in the Dodd-Frank bill and succeeded when retail ally Sen. Dick Durbin, D-Ill., offered an amendment, which was adopted, to the bill requiring the Federal Reserve to write rules governing the fees. The Fed released their rule earlier this year. Much to the dismay of banks and electronic network operators the Fed rules capped interchange fees at 12 cents per swipe, or a more than 70 percent reduction in fees.

Banks and their allies--payment networks and credit unions--have swamped Capitol Hill with lobbyists and the retailers and merchants, including Wal-Mart, have done the same.

Major members of the Electronic Payments Coalition, the chief organizing vehicle for the banks opposed to the fee rules, have hired 118 former government officials to lobby and made at least $500,000 in political action committee (PAC) contributions to members of Congress.

Retailers and merchants have largely organized through the Merchant's Payments Coalition. Organizations listed as members of the Merchant's Payments Coalition, all of whom are trade associations, accounted for half of the 124 revolving door lobbyists hired by retailers and merchants. The other half come from supporting companies including Wal-Mart, Home Depot, 7-11, and Best Buy.

Below you'll find a table listing all the revolving door lobbyists affiliated with the retailers and merchants. These are all lobbyists who were specifically listed as lobbying on debit interchange fee rules on their lobbying disclosure forms for 2010 or 2011. Revolving door lobbyists affiliated with the Electronic Payments Coalition can be found here.

A coalition of banks, credit unions, and electronic payment networks have hired a vast team of lobbyists that includes 118 former government officials as they aim to derail the implementation of rules governing the price charged to retail businesses by banks and credit unions every time a customer uses a debit card to pay.

The Electronic Payments Coalition is opposed to a new rule proposed by the Federal Reserve that would cap debit interchange fees, the cost per debit card swipe charged to retailers, at 12 cents per swipe. This would amount to a 70 percent reduction in the fee, a boon for retailers and cut in profits for banks.

The lobbying operation consists of some of the biggest names in Washington and keeps growing. Already this year coalition members have registered with five new lobbying firms to lobby on the interchange rules. FIRST Group, Hollier & Associates, and Cornerstone Government Relations are all registered as lobbying for Visa, Covington & Burling is registered with Wells Fargo, and SNR Denton is registered with the Independent Community Bankers Association.

A Sunlight Foundation report from earlier this week showed that the political action committees of coalition members have contributed $500,000 to lawmakers over the first two months of this year.

Below is a chart of all revolving door lobbyists for Electronic Payments Coalition members that were listed as registered to lobby on debit interchange fee rules in either 2010 or 2011:

The Federal Reserve released a series of key data sets today as required under the Dodd-Frank financial reform law. The data sets show all of the emergency lending programs that the Fed undertook beginning in 2007 as financial firms found themselves awash in toxic assets and unable to borrow or lend money.

All of these data sets are available for download on the Federal Reserve site in both Excel and .csv formats.

Ryan Sibley explained some of what we may find in a blog post yesterday:

If it’s fulfilled as the Dodd-Frank bill requires, we’ll know which banks had to use the secondary credit window, also known as the discount window, which was reserved for banks in poorer health. Information about TALF loans will show us which banks took advantage of federally guaranteed loans as an incentive to buy “toxic assets” and which banks were able to get rid of their bad assets as a result of the program. We’ll also find out which banks the Fed was nice enough to buy so many risky mortgage-backed securities from.

Some of these data sets are likely to hold more interesting revelations than others. Like the cables released by Wikileaks, there are bound to be a number of revelations that are more detailed confirmations of what we already know.

We'll have more on the other data sets in the coming days.

Tomorrow, the Federal Reserve is supposed to release information regarding a suite of programs created to increase lending during height of the financial crisis.  Scheduled for release are the amounts, dates, types of loans and loan terms for every entity that took advantage of the emergency lending programs set up by the Fed. Included in that list will be the Term Asset-Backed Securities Loan Facility (TALF), the mortgage backed securities program, Maiden Lane and other programs that provided loans or assistance to financial institutions between December 1, 2007 and July 21, 2010 – the date the Dodd-Frank Wall Street Reform and Consumer Protection Act was put into law.

This information is of interest for a few reasons. If it’s fulfilled as the Dodd-Frank bill requires, we’ll know which banks had to use the secondary credit window, also known as the discount window, which was reserved for banks in poorer health. Information about TALF loans will show us which banks took advantage of federally guaranteed loans as an incentive to buy “toxic assets” and which banks were able to get rid of their bad assets as a result of the program. We’ll also find out which banks the Fed was nice enough to buy so many risky mortgage-backed securities from.

The graphic below shows when spikes in purchases occurred. It visualizes the Fed's growth over time as it took on more and more risk to help the economy.

[caption id="attachment_18716" align="aligncenter" width="580" caption="http://subsidyscope.org/bailout/federal-reserve/"][/caption]

It seems as though the requirement inserted into the Dodd-Frank bill will satisfy the Freedom of Information act request filed by Bloomberg back in 2008. Bloomberg and many other news outlets and government watchdogs, including the Sunlight Foundation, wanted to know details about the collateral being pledged to the Fed in exchange for loans to help banks remain liquid. That FOIA was denied claiming the information was confidential commercial information and therefore did not have to be released.

The Fed claimed that releasing the information could have the effect of stigmatizing the struggling banks, thus hurting them even more. The data that is supposed to be released now, however, will be as much as two years old in some cases. Therefore the current state of banks that might have once been in trouble will still be unknown.

To learn more about the Fed's steps to help the economy and how it strayed from its primary job of setting the interest rate, read here.

Here is the text from the Dodd-Frank bill as enacted:

"PUBLICATION OF BOARD ACTIONS.—Notwithstanding any other provision of law, the Board of Governors shall publish on its website, not later than December 1, 2010, with respect to all loans and other financial assistance provided during the period beginning on December 1, 2007 and ending on the date of enactment of this Act under the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Term Asset-Backed Securities Loan Facility, the Primary Dealer Credit Facility, the Commercial Paper Funding Facility, the Term Securities Lending Facility, the Term Auction Facility, Maiden Lane, Maiden Lane II, Maiden Lane III, the agency Mortgage-Backed Securities program, foreign currency liquidity swap lines, and any other program created as a result of section 13(3) of the Federal Reserve Act (as so designated by this title)— (1) the identity of each business, individual, entity, or foreign central bank to which the Board of Governors or a Federal reserve bank has provided such assistance; (2) the type of financial assistance provided to that business, individual, entity, or foreign central bank; (3) the value or amount of that financial assistance; (4) the date on which the financial assistance was provided; (5) the specific terms of any repayment expected, including the repayment time period, interest charges, collateral, limitations on executive compensation or dividends, and other material terms; and (6) the specific rationale for each such facility or program."

Here's an interesting development in the world of secret holds: the Nobel Prize committee just awarded Peter Diamond the Nobel Prize in Economics. Earlier this year Diamond was appointed to the Federal Reserve Board by President Obama. His nomination has since been returned to the President due to a secret hold placed by unnamed Republicans.

This functionally means that Diamond's nomination was rejected due to the intransigence of unknown elected representatives. He was approved by the overseeing committee, but his nomination was refused time to come to the floor as Republicans offered objections based on the stated objection of someone within their caucus.

(Tyler Cowen has a good run-down on Diamond's work here.)

Casting aside the merits of the nomination, it does not seem fair to either the nominee, the President or the people who elect senators to have decisions made in this opaque and clouded manner. The nominee deserves a fair and open hearing. The President, historically, has largely been given leeway in his appointments. And the people of this nation deserve to have an open and honest debate over legislation and nominations that does not involve secret senators blocking action for unknown reasons. That simply breeds mistrust and confusion.

The Sunlight Foundation has repeatedly called on the elimination of the secret hold from the Senate rules. The bipartisan Grassley-Wyden legislation is the best vehicle to end this abusive practice and is supported by nearly 70 senators. Yet the Senate refuses a vote on the legislation and continues to allow bills and nominations to be the scuttled based on the secret objections of unnamed senators. Is this any way to govern?

David Waldman has offered another solution to the whole secret hold mess. Declare that there are no secret holds by proclaiming the objecting senator, whether they say they are objecting on behalf of someone else or not, as the holding senator. Thus, whomever comes to the floor to object is the senator who is responsible for said objection and the blocking of the legislative process. This is also a novel approach that deserves to be looked at.

The House Financial Services Committee is holding a hearing on the Fed Transparency bill. The legislation started as a pet project of Federal Reserve gadfly, Rep. Ron Paul, but since the Fed's massive intrusion into the market and expansion of responsibilities has attracted so many cosponsors to force a hearing and likely a vote in Congress. If ever there was a doubt that Congress responded to public concerns, this should show that they clearly do. Watch here. (And especially watch for Rep. Alan Grayson's dollar sign tie. I also suggest The New Republic profile of Grayson.)