By Carol D. Leonnig and T.W. Farnam
Washington Post Staff Writers
Sunday, December 26, 2010; 12:00 AM
Numerous times this year, members of Congress have held fundraisers and collected big checks while they are taking critical steps to write new laws, despite warnings that such actions could create ethics problems. The campaign donations often came from contributors with major stakes riding on the lawmakers' actions.
For three weeks in June, for instance, the members of a joint House and Senate committee worked to draft final rules for regulating the financial industry in the wake of its 2008 meltdown. During that time, the 35 members of the drafting committee collected $440,000 in donations from that same industry, which was then lobbying heavily for looser rules.
Earlier this month, the chairman of the Senate committee overseeing tax policy, Sen. Max Baucus (D-Mont.), gave himself a birthday-party fundraiser - on the same day that the chamber took its first vote on an $858 billion tax package that would provide breaks to wealthy citizens and business interests.
Members of Congress contacted for this article declined to answer questions about ethics rules and the possible appearance of impropriety. Instead, they stressed that their votes can't be bought.
"Money has no influence on how Senator Baucus makes his decisions," Baucus spokeswoman Kate Downen said. "The only factor that determines Senator Baucus's votes is whether a policy is right for Montana and right for our country."
But ethics watchdogs complain that, in a race for money to help them win reelection, lawmakers routinely ignore congressional ethics rules that urge them to avoid fundraising around the same time that they are making key lawmaking decisions. The rules say that such sensitive timing could give the appearance that donors are improperly influencing decisions.
The Washington Post found that the pattern of crunch-time fundraising has continued this year, even after a congressional investigative office warned this summer that it could violate ethics rules. The Post analysis - using data from two nonprofit organizations, the Center for Responsive Politics and the Sunlight Foundation - scrutinized lawmakers involved in pushing key legislation and donations made to them by interested parties.
"Citizens generally feel this kind of thing falls between the bookends of 'icky' and 'bribery,' " said David Levinthal, a spokesman for the Center for Responsive Politics, which charts campaign donations and special interest influence. "It makes people wonder: Is the donor making the donation because they are trying to get a particular legislative action? Or is the member soliciting the donation because they feel they have a whole bunch of special interests over a barrel at that moment and can profit from that?"
Members of Congress say that donations close to key votes are often coincidental. Some argue that because legislative action and fundraising happen all the time on Capitol Hill, it is impossible to know when the two are connected.
Ethics watchdogs say that instead of protesting their innocence, members should write clearer rules, disclose all fundraisers or both, in order to address public concern that monied donors are able to buy access at critical stages in lawmaking.
"What this reveals is just how much this is general operating procedure on Capitol Hill, raising money around key legislative decisions," said Nancy Watzman, who oversees analysis of political fundraisers for the Sunlight Foundation, which advocates for government transparency. "This hits right to the core of how lawmakers get and keep their jobs. And they complain when you show the public how it works."A test case
The issue of the timing of donations came up this summer when reports surfaced that eight members were under investigation by the independent Office of Congressional Ethics. They had solicited hundreds of thousands of dollars in donations from financial firms just before a critical House vote last December on new regulations for Wall Street. The ethics office was looking at whether they should have avoided those donations because of the potential for or appearance of impropriety.
Three cases, involving Reps. John Campbell (R-Calif.), Tom Price (R-Ga.) and Joseph Crowley (D-N.Y.), were referred to the House ethics committee, which last week asked for more time to investigate. All three have said that they complied with House ethics rules.
But just as the public learned of the ethics office's probe in June, a conference committee of House members and senators met to draft a compromise bill on landmark Wall Street reform. The measure would force firms to follow new rules for previously secret and risky transactions that were blamed for the 2008 market meltdown. Over the course of three weeks in June, the 35 conference committee members collected $440,000 in donations from the financial industry. Sen. Charles E. Schumer (D-N.Y.), a member of the Senate banking committee and a powerful conferee, collected the most that month - about $90,000 from financial interests.
Executives of accounting giant Ernst & Young contributed the lion's share of that amount for Schumer: $49,000 in all of June, including $2,000 from chief executive James Turley. Ernst & Young works for some of the biggest firms on Wall Street. This week, New York state sued the company, accusing it of using a paperwork shuffle to help Lehman Brothers hide billions of dollars in debt before that firm's 2008 collapse.
Schumer's staff declined to discuss the ethics rules' advice on forgoing some donations, but said the timing is not relevant.
"During this period, Senator Schumer was actively fighting for some of the proposals most opposed by the banking industry, including a strong consumer watchdog agency and greater oversight on derivatives," spokesman Brian Fallon said.
Conference members also were busy on the party circuit that month. There were 54 fundraisers held to benefit the reelection campaigns of committee members, or featuring one of those members as a VIP guest.
Rep. Barney Frank (D-Mass.) was mentioned as the VIP guest for a Florida lawmaker's fundraiser 48 hours before the committee officially began work. The party host was DLA Piper, a law firm registered to lobby on the bill for several financial clients, including Discover Financial Services, Experian and Charles Schwab. Frank's committee office did not respond to a request for comment, but Frank has previously said that he follows all ethics rules carefully.Business generosity
In September, the Senate voted on what it considered one of the year's most important pieces of legislation, the Small Business Job Creation Act. The bill, which later became law, created a $30 billion loan fund for community banks and gave them incentives to lend the money to small businesses. Hundreds of lobbyists were registered to lobby on this legislation, in part because it meant more business for banks.
Senators collected $469,000 from the financial industry the day before, the day of and the day after that key Sept. 16 vote, a Post review of donations shows. The biggest recipient was Senate Majority Leader Harry M. Reid (D-Nev.), who shepherded the legislation and faced a tight reelection race.
Reid spokesman Zac Petkanas said the timing was not of Reid's making. The vote was supposed to come months earlier but was delayed by Republican obstruction, Petkanas said.
"Senator Reid's sole consideration on any piece of legislation is always how it will benefit Nevada's families and small businesses," Petkanas said. "He will not apologize for working for months to pass the Small Business Job Creation Act, which is now helping Nevada small businesses during these difficult economic times by opening up otherwise unavailable lines of credit to help them grow, strengthen our economy and put people back to work."Birthday surprise
Early this month, when Baucus held his birthday fundraiser, Democrats that same day sent to the floor a $858 billion tax cut package. The bill, which has since become law, extends tax cuts passed during George W. Bush's presidency, but also provides huge breaks for wealthy Americans and niche business interests. The invitation to Baucus's event solicited money from lobbyists and executives with major stakes in the package.
Baucus's office said that the bill that passed was not his and that his fundraiser - which included an event for donors of at least $5,000, held at a location that was not made public - was scheduled months before the legislation went to the floor.
Research editor Alice Crites and staff writer Paul Kane contributed to this report.