Bailout Debate Spawns High-Stakes Lobbying Scramble
Wednesday, September 24, 2008
Executives and lobbyists for tiny community banks, giant hedge funds, auto-loan companies and finance industry chieftains were working the phones yesterday and marching up to Capitol Hill to make sure their interests would not be forgotten as the $700 billion bailout proposal for bad debts works its way through Congress.
Their tactics were typical: conference calls with regulators, personal visits to House and Senate offices, e-mails between coordinating groups and their members. But they were working with much higher dollar figures and in a much shorter time frame than usual.
"This is a hyper-drive-blitzkrieg, no-huddle situation," said Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, which represents the country's largest financial firms. "You've got a major, watershed bill that we're trying to move. There's no time for the usual sort of subtleties and coalition-building and hours of conference calls."
With a staff of just under a dozen people, the group has been trying to shape several aspects of the proposal. Among its chief goals is to prevent the legislation from limiting executive compensation at firms that participate in the bailout. The group is arguing that setting pay packages for corporate executives is "not the appropriate role for the federal government," Talbott said.
Cam Fine, president of the Independent Community Bankers Association, has been concerned whether small banks would be able to join their big Wall Street counterparts in unloading toxic mortgage-related assets onto the government.
Fine dispatched a team to press the case while he stayed glued to his television to watch lawmakers query Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke on their plans for addressing the worst credit crisis in generations.
"I was hanging on every word like it was a soap opera," Fine said. "Our entire office was."
They got excited when it sounded as though their work might pay off: Paulson in his testimony said that financial institutions both large and small would have access to the bailout program.
"That's very encouraging," Fine said.
At the same time, state banking organizations have been trying to persuade lawmakers to kill a provision that would allow bankruptcy judges to unilaterally restructure individual mortgages.
"That gives us great concern," said Mindy Lehman, vice president of government affairs for the Maryland Banking Association. "That will mean incredible risk and uncertainty in the housing market, and that's the last thing we need right now."
Auto lenders, meanwhile, are working to expand the eligibility criteria for assets and institutions allowed into the bailout program. The American Financial Services Association circulated a memo of talking points with the heading: "Motor Vehicle Financing Assets Must Be Included in the Definition of Troubled Assets."