On March 16, the House Financial Services Subcommittee on Capital Markets & Government Sponsored Enterprises held a hearing to discuss five pieces of legislation proposed by committee freshmen to increase investment and roll back aspects of the Dodd-Frank financial reform law enacted in 2010. This effort was part of the “identify and remedy” slow-motion assault on the financial reform law proposed by Financial Services Committee Chairman Spencer Bachus, R-Ala.
While Republicans have begun identifying Dodd-Frank provisions to repeal, the financial sector has identified committee freshmen as prime recipients for campaign contributions.
A review of first quarter campaign finance filings by Sunlight shows that seven of the ten freshmen Republicans appointed to the House Financial Services Committee have received 40 percent or more of their political action committee (PAC) contributions from the finance, insurance, and real estate sector. Five of these members—Robert Hurt, R-Va., Steve Stivers, R-Ohio, Sean Duffy R-Wis., Francisco Canseco, R-Texas, and Bill Huizenga, R-Mich.—received over 50 percent of their total PAC contributions from the sector their committee oversees.
The sector contributed a total of $592,578 to the ten Republican freshmen on the committee. More than half of that total has come since the Subcommittee hearing in mid-March.
The Financial Services Committee has long been known as a “cash committee,” a hotbed of fundraising for favored freshmen facing expensive sophomore elections. That’s because no sector gives more money to congressional elections than finance.
Since 1998, the finance, insurance, and real estate sector has given nearly $2 billion to federal candidates for office, more than $700 million more than the second biggest contributing sector.
The top financial sector contributors to committee freshmen were New York Life Insurance ($51,000), Pricewaterhouse Coopers ($31,500), the Independent Community Bankers Association ($31,000), the Investment Company Institute ($29,000), and the Mortgage Bankers Association ($25,000).
The freshmen with a disproportionate share of their campaign funds from the sector they are meant to oversee are just following the fundraising strategy employed by Chairman Bachus. No congressman is more reliant on finance sector contributions than Bachus, who has pulled in 84 percent of his PAC contributions from the finance sector and 70 percent of his total contributions during the first three months of 2011.
Under the new Republican majority, the committee has turned into the central force opposing new rules and regulations being written by federal agencies as a part of the Dodd-Frank implementation process. The committee freshmen have been put front-and-center as sponsors of legislation to repeal sections of the financial reform bill.
Rep. Nan Hayworth, R-N.Y., is sponsoring a bill to repeal a Dodd-Frank provision on CEO pay disclosure. A provision requiring certain private equity firm advisers to register with the SEC is the target of a bill by Rep. Robert Hurt, R-Va. Rep. Steve Stivers, R-Ohio, is looking to repeal a controversial provision making credit ratings agencies liable for the ratings they assign. Oversight of the Consumer Financial Protection Bureau’s decisions would increase under a bill pushed by Rep. Sean Duffy, R-Wis. Staten Island Rep. Michael Grimm, R-N.Y., introduced a bill to expand exemptions for commodity traders under the derivatives regulation currently being implemented by the Commodity Futures Trading Commission (CFTC).
Committee freshmen have also signed on as cosponsors to a couple of bills to reign in the Consumer Financial Protection Bureau, a noted target for banks and business groups created by Dodd-Frank. Eight committee freshmen signed on to a bill introduced by Chairman Bachus that would alter the structure of the Consumer Financial Protection Bureau (CFPB) by replacing the appointed director with a five-member commission.
Some of the big finance organizations contributing to committee freshmen are also backing bills that they’ve sponsored and cosponsored.
The Independent Community Bankers Association backs the Bachus bill to reign in the CFPB. In testimony before the committee a representative of the community bank trade group stated, “would help ensure that the actions of the CFPB are measured, non-partisan and result in balanced, high quality rules and effective consumer protection.” The ICBA PAC contributed $31,000 to committee freshmen in the first quarter.
The bill is also supported by the American Bankers Association, which gave $14,000 to committee freshmen. A representative for the Bankers Association also testified before the committee to explain their support for this measure, “The resulting practically boundless grant of agency discretion is exacerbated by giving the head of the Bureau sole authority to make decisions that could fundamentally alter the financial choices available to customers.”
Meanwhile, the American Benefits Council, a trade group for some of the biggest corporations in America, has been lobbying for Rep. Hayworth’s bill to repeal a CEO pay disclosure provision. Many members of the Benefits Council are contributors to the committee freshmen including Bank of America, Citigroup, Deloitte, Ernst & Young, the Investment Company Institute, JPMorgan Chase, New York Life Insurance, Pricewaterhouse Coopers, and Wells Fargo.
Another bill, cosponsored by freshmen Reps. Francisco Canseco, R-Texas, and James Renacci, R-Ohio, is at the center of one of the biggest lobbying battles of 2011. The Consumer Payments System Protection Act would delay the implementation of a Federal Reserve rule that would limit the amount that banks can charge retailers for every swipe of a debit card. These fees, known as interchange fees, account for billions in business for banks. The bill is supported by contributors to committee freshmen including the ICBA, the ABA, the Credit Union National Association, JPMorgan Chase, Bank of America, Citigroup, MasterCard, and Visa.