In Hot Pursuit Of a Bailout
Saturday, February 7, 2009
The e-mail arrived at the Office of Thrift Supervision just after 5 p.m. from an aide to New Mexico Sen. Jeff Bingaman.
"Earlier today, Sen. Bingaman met with Treasury Secretary nominee, Timothy Geithner," the staffer wrote. "The Senator raised concerns regarding New Mexico based Thornburgh Mortgage and their efforts to access TARP funding and convert to a savings and loan holding company."
Thornburg had been fighting off bankruptcy, and its best chance at a piece of the $700 billion federal bailout known by its initials as TARP could hinge on transforming itself into a regulated thrift and persuading the OTS to recommend it as a candidate for rescue. Bingaman's aide wanted to schedule a call between her boss and OTS Director John M. Reich.
That short Dec. 9 e-mail offers a glimpse of the flurry of activity involving lawmakers and federal regulators as firms have pursued hundreds of billions of dollars from the Troubled Assets Relief Program and waited for details of how the Obama administration will disperse even more. With so much money at stake and so much uncertainty about who will get it, beleaguered companies fearful of being left behind are scurrying from Capitol Hill to K Street, trying to find a way to the front of the line.
In response to the e-mail from Bingaman's staff, an agency employee replied: "We would be happy to talk to Senator Bingaman regarding publicly available information," but, "be advised that this meeting will not influence any decisions pertaining to any pending applications."
A spokeswoman for Bingaman, a Democrat, yesterday confirmed the content of the e-mail from his office but said the senator had never intended to lobby the agency about TARP, only about Thornburg's status as a savings and loan.
The efforts of lawmakers to secure funding for financial firms are not illegal. But the bailout program has become a sensitive subject in Washington and across the country. The Treasury Department has vowed strict new rules against lobbying its officials for TARP funds. And an angry public has displayed little sympathy for banks that have turned to the government for rescue after contributing to the financial crisis.
"The whole TARP issue is politically charged," said Ray Gustini, a partner at Nixon Peabody, a firm with more than a dozen clients seeking bailout funds. "It's become a touchy subject. People are reevaluating the pitches they are making."
But the pitches are still coming.
Companies seeking bailout money have hired lobbyists and enlisted the help of trade associations. They have lobbied friends inside the government to help their cause. They have increasingly leaned on lawmakers to go to bat for them.
In some cases, lawmakers have obliged.
Michigan Sens. Carl M. Levin and Debbie Stabenow, both Democrats, recently contacted federal regulators regarding Flagstar Bancorp, the state's largest financial institution. The bank posted a $200 million fourth-quarter loss in 2008 and was seeking relief under part of the bailout initiative known as the Capital Purchase Program.