There are so many “fool me once…” moments with the ongoing bailout of the financial industry. One that is particularly galling is that the fallen gods of Wall Street are still spending freely to lobby the government. Essentially, we have taxpayer money cycling from the our wallets, to the government, to a bank, and then to a lobbyist, who then works to get more money for the bank. Robert Reich, over at TPM Cafe, is very much correct when he writes:
Yet what’s happened to the Wall Street campaign contributions and to the lobbyists? They’re still going strong. We now know that many of the financial giants that have been bailed out by taxpayers continue to finance a platoon of Washington lobbyists, who are at this moment trying to influence TARP II and the next attempt to regulate Wall Street. In effect, your money and mine, and that of all other taxpayers, is paying these lobbyists to push Congress in a direction we have every reason to believe is not in our interests but in the continued interests of Wall Street. Citigroup, the recipient of $45 billion of taxpayer money so far, is still fielding “an army” of Washington lobbyists, according to the New York Times. Its lobbyists are working on a host of issues, including the bailout. In the fourth quarter of 2008, when it got its first infusion of bailout money, Citi spent $1.77million on lobbying fees. During the last three months of 2008, at least seven other firms receiving bailout funds (American Express, Capital One, Goldman Sachs, KeyCorp, Morgan Stanley, PNC and Bank of New York Mellon) lobbied the government about the bailout.
Would it not be a reasonable condition for receiving additional bailout funds — from TARP II — that a firm cease its lobbying activities and campaign contributions (as well as any contributions it makes indirectly through its executives) at least until it fully compensates taxpayers what we have provided it?
(Emphasis added.) That last question is the key here. Recently, Sens. Dianne Feinstein and Olympia Snowe reintroduced their bill to do just that: ban TARP recipients from using TARP funds for lobbying and influence. The bill is S. 133 and would ban the use of TARP funds for lobbying expenses and campaign contributions and require TARP recipients to disclose to the Treasury Department “how emergency economic assistance is being used, including an explanation of how such funds have been allocated to stabilize financial markets and increase the availability of credit to consumers and businesses”. The Treasury Department would then have to make these disclosures publicly available online.
This sounds like a good start for restraining certain types of lobbying spending around the bailout. In conjunction with this, real lobbying disclosure reform, requiring full disclosure and real time transparency, would go the full distance to help keep these abuses of influence down in the future.