New Horde of Financial Lobbyists Ex-Regulators - What A Surprise !!!

Aug. 3, 2010 - PRLog -- By David Caploe PhD, Chief Political Economist, EconomyWatch.com

We said it when we came back from a two-month stint in the States last fall:

Obama’s biggest problem is relying too much on self-interested middlemen to do what the Federal government should be doing.

And we said it again when the so-called health “care” revision package was passed:

all the major players were definitely well taken care of: Big Pharma / health insurance giants / AMA-affiliated doctors / hospitals / big HMOs.

As for the people, well, who knows – a question that is still far from being adequately addressed, let alone definitively answered.

Then we said it while the so-called / self-styled / alleged financial “reform” was being considered:

whatever else it may be, this is a jobs bill for lobbyists and financially-oriented lawyers.

And we repeated it when this behemoth of a financial “revision” – it’s hard to call it a reform with any degree of seriousness – finally passed Congress:

this gives regulators a LOT of power, and Big Business has shown itself especially adept at manipulating the regulatory process,

as the AIG bailout scandal so clearly revealed.

So are we in any way surprised to find out that nearly 150 lobbyists registered since last year used to work in the executive branch at financial agencies,

from lawyers for the Securities and Exchange Commission to Federal Reserve bankers ???

Gee, not really.

Nor are we surprised that dozens of former lawyers for the government, who are not registered as lobbyists,

are now scouring the financial regulations on behalf of corporate clients.

Sadly, we’re not even shocked – just more than a bit disgusted.

And not just at the participants in this totally predictable / completely unnecessary / and painful to watch – charade of “democracy.”

We’re also not too overwhelmed with the extent to which the mainstream media – with, as always, some notable exceptions –

is basically IGNORING this total farce that continues to be played out between Wall Street and K Street.

Actually, farce isn’t the right word, because it implies something at least a tad humorous.

What’s going on here is more like an absolute scandal –

about which, as usual, no one seems to be making much of a fuss.

But since it’s been going on since at least Black September 2008, if not before,

maybe WE shouldn’t be surprised no one seems to either know nor care this Kabuki-like “theater” is being so brazenly enacted.

“The headhunters are out in force” to recruit former government regulators as lawyers and lobbyists,

said Lawrence Kaplan, who was a senior lawyer at the government’s Office of Thrift Supervision

and now works on banking regulation at the Washington law firm Paul Hastings.

“I get calls practically every day,” he said.

“You want people who know what they’re doing, and the government background builds your bona fides.

It’s a credential that you flaunt.”

How modest – and so revealing.

Lobbying and law firms here have always turned to former regulators to navigate the bureaucracies of Washington.

But the financial regulations passed by Congress and signed into law by President Obama

have left most of the real decision-making to the S.E.C. –

whose insistence on NOT being held publicly accountable we just documented last week –

and other agencies, making these agencies more powerful than ever.

On a scale that analysts say they have never seen,

government regulatory agencies will spend the coming years enacting rules

on everything from the definition of a “systemically important” mega-bank to limits on debit card fees.

Federal agencies will decide the details of at least 243 financial rules and conduct 67 studies,

according to an assessment by the Davis Polk law firm.

The S.E.C. alone is responsible for developing 95 rules on topics like

the trading of derivatives, standards for credit rating agencies and disclosure of executive bonuses.

The Commodity Futures Trading Commission must develop 61 rules,

the Federal Reserve has 54,

and two agencies just created by Congress —

the Consumer Financial Protection Bureau and the Financial Stability
Oversight Council —

have 80 rules between them.

Credit card companies will look to maintain higher fees on debit cards.

Derivatives investors will seek to define themselves as “end users”

of a particular product who should be exempted from some restrictions.

Niche industries like payday lenders and check-cashing services will push for less burdensome federal regulation.

And in many, if not most, cases, these industries will rely on former regulators to make their cases to the federal agencies.

Many directives in the Congressional legislation are written so broadly that the agencies have wide discretion in drafting rules.

“It’s 2,300 pages that affect every facet of the financial services industry,”

said Justin Daly, a former counsel at the S.E.C.

“If you look at a lot of the important provisions,

Congress delegates authority to the agencies to make the really tough determinations.

There’s no question that this bill empowers regulators in a way that we’ve never seen before.”

Mr. Daly will now be working those issues from the other side — as a lobbyist.

He left the S.E.C. in February, and joined the lobbying firm of Ogilvy Government Relations.

Although Mr. Daly was a senior lawyer at the S.E.C.,

he was not senior enough to fall under a one-year “cooling off” period that bans lobbying by former employees.

Last week, Ogilvy, fourth among lobbying shops last year with $21.7 million in revenue,

brought in another former government regulator to work with Mr. Daly —

De’Ana Dow, a lawyer at the Commodity Futures Trading Commission for 22 years until 2002.

In announcing Ms. Dow’s hiring, Ogilvy stressed the government résumés that she and Mr. Daly brought to the job

and said the pair had “the experience and expertise to provide tremendous value to our clients as the regulatory agencies implement the legislation.”

According to the analysis done by the Center for Responsive Politics,

nearly 500 officials have gone through the “revolving door” between government financial agencies and the private sector.

Of that group, 148 former regulatory officials were registered to lobby the government last year or this year,

representing virtually every regulatory agency ...

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