The Revolving Door Spins in CEO Pay Protector

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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.

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  • It’s too bad Geithner was not allowed to speak up at the onset of the AIG bonus “crisis” He spoke up today and explained that he was aware of the bonuses, sought legal counsel and due to the nature of the bonuses it would be illegal to not honor the contracts. That would have taken guts and would have alleviated some of the angst over the bonus deals.
    I think the general population and Congress assumed that the only type of bonuses are “performance” bonuses. If ignorance were bliss we should have a lot more blissful people than we do.