Financial Lobbyists: Anti-Progress
The House of Representatives Thursday may have been successful in their quest to impose a stiff tax on the giant bonuses given to employees of firms taking federal bailout money, but that doesn’t mean the fight is over. Lobbyists for the financial services industry are in “hyperdrive” in their attempts to block lawmakers from limiting pay packages for the executives at these failing banks. [Roll Call]
By Christy Harvey, Mic Check Radio
March 20, 2009
Know Five Things
1. Old Legislation Lobbyists Killed
During the debate over the economic recovery package, an amendment to limit executive bonuses passed the Senate. The amendment, introduced by Sens. Olympia Snowe (R., WA) and Ron Wyden (D., OR) said “that those companies receiving TARP or bailout funds face a choice when it comes to the bonuses given to its employees: either cap those payments at $100,000, pay a 35 percent excise tax on anything above that level, or repurchase TARP shares in the amount that exceeded $100,000.” The amendment was then removed during conference. According to Sen. Wyden, “we got it through the United States Senate and then like, with so many issues, all the lobbyists came out in droves and somehow magically, the amendment disappeared.” (The Joint Committee on Taxation estimated that the Snowe-Wyden Amendment would have raised as much as $3.2 billion.) [Think Progress]
2. New Legislation Lobbyists Want To Kill
In November, Liddy sent a letter to New York Attorney General Andrew Cuomo saying, “AIG is mindful that it must act prudently and, as such, must impose curbs on executive compensation. … To meet these objectives, AIG’s top seven executives (Leadership Group) will receive no annual bonuses for 2008. In addition, the top roughly 60 executives (Senior Partners) including the seven most senior AIG executives, will forgo any salary increase through 2009 and their 2008 and 2009 bonuses will be restricted. [Roll Call]
3. Banks Invest In Lobbyists
THREE: Banks Invest In Lobbyists. According to the Center for Responsive Politics, “The companies that have been awarded taxpayers’ money from Congress’s bailout bill spent $77 million on lobbying and $37 million on federal campaign contributions.” Amount the companies received: $700 billion. The return on their lobbying/contribution investment: 258,449 percent. (Lobbyists also have a personal angle in killing this legislation: “Lobbyists who work for federally bailed-out banks also have a vested interest in seeing the legislation stopped. Most senior lobbyists at banks such as Citigroup, JPMorgan Chase and Bank of America, earned well over the $50,000 bonus threshold in the Senate legislation.”) [Open Secrets] [Roll Call]
4. A Group At Center Of Defeat Efforts
The lobbyists working for the financial industry are organized into a group known as the Financial Services Roundtable, which represents 100 of the largest financial institutions in the country. Financial Services Roundtable was heavily involved in lobbying against both the Wyden-Snowe amendment and the Baucus-Grassley legislation. The chief goal of the group, from the Washington Post: “Among its chief goals is to prevent the legislation from limiting executive compensation at firms that participate in the bailout.” [NY Times] [Washington Post]
5. Banks Aren’t Paying Taxes Anyway
Rep. John Lewis (D., GA), chairman of the House subcommittee overseeing the Troubled Asset Relief Program (TARP) funds, reported Thursday that thirteen of the firms receiving billions of dollars of federal bailout money “owe a total of more than $220 million in unpaid federal taxes.” Lewis said these unpaid taxes were discovered in a review of the top 23 firms receiving the most money; Lewis asked, “If we looked at all 470 recipients, how much would they owe?” (Note: Lewis did not disclose the names of the 13 tax-dodging firms.)[AP]
Read Additional Resources
“TARP Recipients Paid Out $114 Million for Politicking Last Year,” Center for Responsive Politics, 02-02-09. [Open Secrets]
- Excerpt: “...The finance, insurance and real estate sector, including all companies and trade groups (not just those that qualified for TARP funds), spent $453.5 million on lobbying in 2008, an 8.7 percent increase from the year before. In the last quarter of ‘08, the sector spent $106.9 million on its influence-peddling efforts. The securities and investment industry spent $20.5 million in the 4th Quarter, insurance companies spent $36.7 million and real estate companies spent $16.5 million…”
“Lobbyists Launch Effort to Soften Tax on Bonuses,” Anna Palmer, Roll Call, 03-19-09. [Roll Call]
- Excerpt: “...Financial services lobbyists have moved into hyperdrive, engaging in a behind-the-scenes counterattack after lawmakers trained their eyes on all bonuses paid out by struggling banks….”
“Outraged Americans Want AIG Bonus Money Recovered,” Gallup Poll, 03/18/09. [Gallup]
- Excerpt: “...Three in four Americans (76%) want the government to take actions to block or recover the bonuses insurance giant AIG paid its executives after receiving federal bailout funds…”
“House approves 90 percent AIG tax,” Patrick O’Connor & Victoria McGrane, Politico, 03-19-09 . [Politico]
- Excerpt: “...That could have dire consequences for the overall stability of the financial system, lobbyists warn, as banks rush to give back their TARP money and others decline to participate in government programs, fearful that Congress will hit them next…”
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