Bankrolling charitable gifts
By Silla Brush and Kevin Bogardus
Financial firms and other companies receiving billions of dollars in federal bailout money spent hundreds of thousands of dollars to pay for meetings and charitable gifts on behalf of lawmakers.
In the last six months of 2008, as a financial crisis enveloped the country and lawmakers voted on a $700 billion financial rescue package, eight companies that would benefit from that package spent roughly $366,000 on events and charities connected to members of Congress, according to a review of congressional lobbying records.
Fannie Mae and Freddie Mac, the government-sponsored mortgage companies, spent more than $330,000 in the period, but since being taken over by their regulator in September have stopped donating money to politically affiliated charities.
At one event in December, several of the biggest financial firms in the country sponsored a reception on the trading floor of the New York Stock Exchange (NYSE) and dinner at the NYSE Club where Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, was the keynote speaker.
Bank of America contributed $35,000 for the Dec. 18 event, which was organized by the National Gay and Lesbian Chamber of Commerce, records show. Justin Nelson, the chamber’s president, said Citigroup contributed $17,500 and Goldman Sachs another $35,000, although records do not include those expenses. The three banks have received a combined $105 billion in bailout money from the Troubled Asset Relief Program (TARP). Bank of America and Citigroup have required repeated bailouts from the government.
“We are proud to have sponsored the event again this past December. Our sponsorship was a matter of public record and we complied fully with the requirements of the Lobbying Disclosure Act,” said a Goldman Sachs spokesman.
“The bank supports a number of causes important to our clients and customers,” said Shirley Norton, Bank of America spokeswoman.
Other firms involved in the event did not return messages asking for comment.
Nelson said Frank, the only lawmaker present at the event, “spoke about diversity and inclusion and the importance of having a workforce that mirrors the public and mirrors your values … it was sort of an inspirational speech.” He said that the dinner, which drew about 300 people, cost more than $100,000. Other sponsors included: Morgan Stanley, the Securities Industry and Financial Markets Association, and Wells Fargo, among others.
“Obviously, there is no influence there,” said Steve Adamske, Frank’s spokesman. Adamske added that Frank has pursued “tough executive compensation” rules for TARP. “We did TARP because we had to save the financial system,” he said.
Public Citizen’s Craig Holman said money for meeting and honorary expenses is “clearly an extension of lobbying activity” and allows companies to “hobnob and rub shoulders” with lawmakers.
“They get their name prominently displayed so the official knows who is footing the bill for this event,” he said. “They don’t chip in for free.”
Lawmakers have pressed for more disclosure on spending of TARP funds as reports of executives’ private jet planes and bonuses have become more and more frequent. In mid-January, Rep. Elijah Cummings (D-Md.) wrote to several government regulators, urging them to follow the lead of the Federal Deposit Insurance Corporation (FDIC) by requiring that institutions disclose their TARP expenditures.
“Institutions receiving federal aid cannot continue to operate with the attitude of business as usual, expecting the American taxpayers to subsidize their operations while refusing to provide even the most basic information on how they are utilizing federal assistance,” Cummings wrote.
Sens. Dianne Feinstein (D-Calif.) and Olympia Snowe (R-Maine) have gone further by introducing legislation that would restrict the banks’ political influence. If passed, their bill would ban TARP funds from being used for lobbying expenses.
Smaller banks outside of Wall Street have also been active on the charity front. Huntington Bancshares, headquartered in Columbus, Ohio, spent close to $40,000 on meeting and honorary expenses in the last six months of 2008.
Ten thousand dollars of that sum went to a daylong Oct. 20 senior management meeting, attended by 200 of the bank’s executives, according to a company spokeswoman. Sen. Sherrod Brown (D-Ohio) was a guest speaker, according to a Brown aide. Another $25,000 went to sponsorship of the West Virginia State Chamber of Commerce Annual Business Summit, held in August, where Rep. Shelley Moore Capito (R-W.Va.) and other officials spoke.
“We would have had the meeting whether Sen. Brown attended or not,” said Jeri Grier, a spokeswoman for Huntington.
Huntington has taken in nearly $1.4 billion from the Treasury’s TARP program so far.
General Motors Corp. and Chrysler LLC, which received a combined $14.4 billion by the end of December, spent $215,000 on meetings and honorary expenses in the last six months. GMAC LLC, the financing arm of GM, spent another $25,000.
“Political action committees are a legal and transparent way for our employees to pool their political voices together on issues that have a substantial effect on our company’s competitiveness,” said Greg Martin, spokesman for GM.
One of the biggest recipients of the donations were foundations and institutes associated with the Congressional Black Caucus (CBC), which received nearly $170,000.
Another group affiliated with Republican Hispanic lawmakers, the Congressional Hispanic Leadership Institute (CHLI), will see its annual gala in May 2009 partly sponsored by a TARP recipient. Popular Inc., a bank based in San Juan, Puerto Rico, has spent $7,500 on the dinner, according to records and CHLI’s executive director, Octavio Hinojosa. Popular has received $935 million in Treasury funds so far.
Fannie Mae and Freddie Mac were two of the largest contributors in the last six months, although they stopped giving money after Sept. 7, when they were taken over by the Federal Housing Finance Agency, their regulator. Fannie Mae contributed roughly $100,000 in the period. Freddie Mac contributed $230,000 in the period.
In addition to supporting CBC and Congressional Hispanic Caucus, the two mortgage firms spent money on institutes or events honoring or meeting with Sens. Dick Durbin (D-Ill.), Edward Kennedy (D-Mass.), Arlen Specter (R-Pa.) and Saxby Chambliss (R-Ga.) and Reps. Carolyn Kilpatrick (D-Mich.), James Clyburn (D-S.C.), Geoff Davis (R-Ky.), Ed Pastor (D-Ariz.), John Tanner (D-Tenn.) and John Boehner (R-Ohio) and then-Rep. Jim McCrery (R-La.).