Top 10 lobby firms take financial reform to the bank

Introduction

Just 10 Washington lobbying firms represented more than 130 key clients in the financial regulatory reform debate that is entering a crucial phase on Capitol Hill.

The Top 10

See the list of top firms lobbying on financial regulatory reform.

While some are household names and others are boutique firms, almost all employ representatives with close ties to Capitol Hill, according to an analysis of lobbying disclosure forms by the Center for Public Integrity.

The exact dollar amount the top 10 lobby firms made from the financial reform issue remains unclear because they are not required to itemize spending by issue. But the 10 firms collected more than $30 million in fees on lobbying for financial regulatory reforms and other issues, based on disclosure forms that contained key words and bill numbers related to financial reform legislation.

Among lobby firms that worked on financial reform, Clark Lytle & Geduldig, a small Washington firm with six partners, scooped up more clients than any other, the Center found. Clark Lytle & Geduldig represented 20 clients on financial reform and other concerns in 2009 and 2010, billing them a combined $1.2 million. Its client list included two giant associations: the Financial Services Roundtable and the U.S. Chamber of Commerce, which were major players influencing bills written by the House and Senate.

In addition to Clark Lytle & Geduldig, U.S. Chamber of Commerce hired three outside firms and deployed its own in-house lobbyists to Congress. The business association spent more than $148 million lobbying on financial reform and other issues during all of 2009 and the first quarter of 2010. The Financial Services Roundtable spent more than $9.5 million overall and supplemented its in-house staff with four outside lobby firms, according to disclosure documents.

Steve Clark, a partner at Clark Lytle & Geduldig, declined to comment on the firm’s success in attracting financial industry clients, but it likely has much to do with its ties to the Republican Party. Before hanging his shingle on K Street, Sam Geduldig, the firm’s main financial lobbyist, worked as political director for House Minority Leader John Boehner and as a senior adviser to Missouri Rep. Roy Blunt.

The Center ranked the lobbying firms based on the number of clients each firm represented in the financial reform debate, according to quarterly lobbying disclosure reports filed for all of 2009 and the first quarter of 2010.

While the number of lobbyists who worked on the financial reform issue can be extracted from quarterly Senate lobby disclosure documents, the amount spent on the issue is less clear. About 850 businesses and organizations spent at least $1.3 billion in all of 2009 and the first quarter of 2010 on lobbying teams to work on financial reform and other issues, the Center’s analysis found. Experts say it’s a safe bet that several hundred million dollars of that total was spent on lobbyists in the financial debate because of the potential impact of reform on U.S. banks, hedge funds, insurance companies, auto dealers and other players in the financial services industry.

Alfred Mottur, a managing partner of Brownstein Hyatt Farber Schreck LLP, which ranked second in the Center’s analysis, said financial reform brought a number of new clients to his firm. The firm represents hedge funds and Electronic Payments Coalition members, who fought restrictions on the swipe fees debit card companies charge businesses, a provision that was included in the Senate bill, but not in the House bill. That issue of interchange fee restrictions will remain in play as Senate and House negotiators meet throughout June to merge the two versions of the bill, and Mottur declined to comment on the firm’s lobbying strategy in the crucial weeks ahead.

Brownstein Hyatt’s finance team is led by Michael Levy, a former senior adviser to then-Treasury Secretary Robert Rubin during the Clinton administration and a former chief of staff to then-Sen. Lloyd Bentsen, D-Texas. Levy’s firm billed its clients for $3.42 million overall, according to disclosure documents.

Public anger over the financial industry’s role in the recession, along with the Securities and Exchange Commission’s indictment of Goldman Sachs Group, Inc., has put banking lobbyists on the defensive as Congress considered financial reform. “I think they are playing a role in shaping the contours of the legislation, but financial reform has a head of steam,” said Ken Gross, a lobby expert at Skadden, Arps. That head of steam boiled over in mid-May when an estimated 1,000 protesters from labor groups marched outside Washington lobby firms to protest Wall Street spending against financial reform.

But the financial industry won some battles during the process, including scuttling proposals to break up large banks and allowing community banks and credit unions to sidestep new consumer protection rules. And consumer advocates fear the final reform bill may be weaker than the Senate version, thanks in part to intense industry pressure. House Financial Services Committee Chairman Barney Frank, who will chair the committee reconciling both versions of the bill, wants some of the panel meetings to be televised on C-SPAN. He predicts Congress will send a final bill to the White House by the July 4 holiday.

Yet even if the conference committee meetings are televised, consumer advocates expect financial lobbyists to be twisting arms behind the scenes. Heather Booth, the executive director of Americans for Financial Reform, is concerned that the conference committee may remove a Senate bill requirement that banks spin off their swaps desks. The Obama administration and Frank do not support the requirement. Booth is also concerned about the increasing possibility that auto dealers will be carved out of the consumer financial protection agency.

In addition to Wall Street money flooding the Hill, Booth said the revolving door from Congress to financial firms makes some lawmakers reticent to regulate. “If you are on these committees,” Booth said, “you get political contributions, (and) you write rules or undermine the rules so there is little regulation so that you can get a job with a hedge fund or private equity fund when you leave the Senate.”

Financial reform has boosted K Street profits, but banking lobby efforts pale compared to the extended storm that surrounded the health reform debate in 2009 and early 2010. James Thurber, director of the Center for Congressional and Presidential Studies at American University, said unlike health reform, financial reform “was contained within Wall Street and the Beltway.” Financial firms focused on direct lobbying, he said, instead of spending millions on television advertisements to push their issues outside Washington.

“It’s been very heated if you have been on the committees, but it was not a brush fire that had people standing up in meetings,” Thurber said of the legislation. “Most people don’t know what is in it.”