When Paul Volcker announced this week that he was starting a new organization–the Volcker Alliance–whose goal is to “restore public trust in the government”–at Sunlight we knew all too well the frustration that inspires him.
We’ve been tracking the “Volcker rule,” the provision at the heart of the 2010 Dodd-Frank financial law meant to prohibit taxpayer-backed banks from entering risky trades for their own profit. The rule has been through several iterations, drawn more than 17,000 comments, and has yet to be finalized. “[A]pparently dead in the water,” is how Bart Chilton, a commissioner with the Commodity Futures Trading Corporation (CFTC) described it this week to Yahoo’s Daily Ticker.
Last year Sunlight reported that in the weeks before JP Morgan announced a $2 billion hedging loss–the sort of trade that the Volcker rule is meant to address–the company’s CEO, Jamie Dimon, met with then-Treasury Secretary Timothy Geithner to discuss this very provision. Dimon was not a fan of the rule. Indeed, Treasury Department meeting logs show that a whole parade of banking CEOs made their way to the agency to discuss the Volcker rule with top officials.
It is precisely this kind of story of how Washington really works that makes restoring public trust in government a daunting–but necessary–task. In the wake of the 2008 financial crisis, millions of Americans lost their jobs and their homes. Yet as we approach the third anniversary of the passage of the Dodd-Frank financial reform law, federal agencies have missed nearly two-thirds of the rule writing deadlines written into the law. Quoting Chilton again, “Lobbying, litigation and lawmakers who have tried to defund and defang Dodd-Frank have all brought rule-writing to a crawl. Regulators themselves have become overly concerned about finalizing rules. Over-analysis paralysis, fears of litigation risks, and the lack of people-power have all contributed to the slowdown.”
Meanwhile, the level of transparency surrounding Dodd-Frank lobbying is severely wanting. After the law was passed, the major financial agencies charged with implementing the law volunteered to disclose on their websites meetings with outside parties concerning implementation. However this noble pledge was hampered by the fact that all of the agencies chose to post their records in varying formats over different time periods and in formats that are not easily translated to a database for analysis. Sunlight Labs built a Dodd-Frank meetings log tracker to follow all of these postings, but because of the poor quality of the records fueling it, the tracker does not provide the comprehensive view of all of these meetings that we had hoped. What analysis we’ve been able to conduct on these meeting logs shows that they are heavily dominated by financial industry representatives and lobbyists. The very story mentioned above, about Dimon’s meeting with Geithner concerning the Volcker rule, was only possible because we were watchdogging the Treasury Department. That particular month the department was late on its self imposed deadline for posting meetings, and made them public only after we inquired where they were.
The Volcker Alliance website is still bare bones and does not describe in depth what the new organization will do beyond sponsoring “research on government performance, making actionable recommendations for policy and implementation, and provide a forum for discussion of new ideas and tools to strengthen policy execution at all levels of the government.” Headed by Shelley Metzenbaum, a veteran of the Office of Management and Budget, the board consists of luminaries from both left and right, from Donna Shalala, former Health and Human Services secretary under President Bill Clinton, to Norman Ornstein of the American Enterprise Institute.
At Sunlight, we are supportive of any effort to strengthen the responsiveness of government as part of our mission to increase government transparency. And given our own frustration with poor data and data reporting hampering accountability on the implementation of the Dodd-Frank law, we would hope that the Volcker Alliance would support our efforts on the transparency front. One key way to lead in this direction: by example. As a charity under 501(c)3 of the tax code, the Alliance is not required to disclose its donors to the public, and so far it has not. When contacted by Sunlight to ask who the donors are, a spokesperson for the organization issued a statement saying “the information will be provided in due course.” When asked for clarification, the the spokesperson said, “the organization is still deciding on how and when it would release donor information because the group is still in its nascent phase.” This should not be a difficult question. To help reinforce the message about the importance of transparency — a key element in enhancing the public trust Volcker said he wants to foster — we urge the Volcker Alliance to disclose its donors on its website, just as we do. Transparency should be part of the culture of this organization from the start.
Keenan Steiner contributed reporting to this post.