The Cash Committee: How Wall Street Wins On The Hill

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Huffington Post

The Cash Committee: How Wall Street Wins On The Hill

by
Ryan Grim and Arthur Delaney

The question was simple: Should the lending practices of auto dealers be regulated?

It was already October and the 42 Democrats and 29 Republicans on
the House Committee on Financial Services had spent the better part of
the year hashing out the details of a new federal agency dedicated to
protecting consumers from dangerous and deceptive financial products.

Auto dealers seemed like an obvious target for the new agency;
nearly every time someone buys a car, the dealer also sells them an
auto loan, complete with promises like zero per cent interest and a
pile of cash back. Americans hold some $850 billion in car debt and
dealers are responsible for marketing roughly four-fifths of that
amount. They pocket lucrative commissions with little oversight, and
the committee seemed poised to change that.

Enter Rep. John Campbell (R-Calif.), a former Saab dealer from Orange County, who according to his latest financial disclosure statement
still collects rent from some of his former auto dealer colleagues.
Campbell downplayed the importance of his industry partners and
proposed an amendment to the bill exempting dealers from the new
agency's purview. On October 22, it came up for a vote.

As usual, the members filed into the high-ceilinged first-floor
hearing room in the Rayburn House Office Building. Committee Chairman
Barney Frank oversaw the vote atop four tiered rows of seats, a full
story above the witnesses and the audience. The longest-serving
Democratic members of the panel -- informally known as the banking
committee -- sat to the right or just below the chairman; it can take
years, if not decades, for a freshman representative to ascend up the
risers.

The clerk called the roll, starting from the top. Senior Democrats
roundly rejected Campbell's amendment. It appeared as if the Democrats
would beat back the effort and apply the same standard to car dealers
that was applied to everyone else.

Then came the bottom two rows, the place where reform goes to die.
Despite the disapproval of the powerful chairman and nearly every
consumer group in the country, the Campbell amendment passed by a 47-21
margin.

THE FRONTLINES

In the fall of 2008, Democrats took the White House and expanded
their Congressional majorities as America struggled through a financial
collapse wrought by years of deregulation. The public was furious. It
seemed as if the banks and institutions that dragged the economy to the
brink of disaster -- and were subsequently rescued by taxpayer funds --
would finally be forced to change their ways.

But it's not happening. Financial regulation's long slog through
Congress has left it riddled with loopholes, carved out at the request
of the same industries that caused the mess in the first place. An
outraged American public is proving no match for the mix of corporate
money and influence that has been marshaled on behalf of the financial
sector.

The banking committee is the second-largest in Congress -- the
Transportation and Infrastructure Committee has three more members --
and is known as a "money committee" because joining it makes
fundraising, especially from donors with financial interests litigated
by the panel, significantly easier.

The Democratic leadership chose to embrace this concept, setting up
the committee as an ATM for vulnerable rookies. Eleven freshman
representatives from conservative-leaning districts, designated as
"frontline" members, have been given precious spots on the committee.
They have individually raised an average of $1.09 million for their
2010 campaigns, according to the Center for Responsive Politics; by
contrast, the average House member has raised less than half of that
amount.

Raising that much money, even with a golden seat on the committee,
takes an awful lot of time. The Democratic Congressional Campaign
Committee (DCCC) pushes members to do as much "call time" with
potential donors as is physically possible from the moment they win
election -- which doesn't leave much time for legislating.

"It creates a culture where people don't have to show up," says
freshman Rep. Jackie Speier (D-Calif.) about the combination of the
committee's size and the ever-pressing fundraising concerns. Speier, a
freshman on the committee, says she began to think she was stupid for
showing up to every single hearing when she first arrived on the Hill.
"I don't know if it's just an unspoken rule around here -- because I'm
still very new -- but it appears you don't have to show up for the
hearing. You just show up to vote... I think for really thoughtful
discussion and review to take place, you have to be an active
participant. You can't just be the vehicle to whom one of the special
interests throws an amendment with a statement attached and feel that
you're doing the people's work."

Because the frontline members face the possible end of their careers
in November and may be beholden to the whims of powerful donors, the
Democrats' 13-seat advantage on the committee is weaker than it
appears. If seven members break with the party on a vote, the GOP wins.
Rep. Luis Gutierrez (D-Ill.) refers to them as "the unreliable bottom
row." (The second row is little better, populated by the Democrats from
red-leaning areas who first took office after the 2006 election.)

In short, by setting up the committee as a place for shaky Democrats
from red districts to pad their campaign coffers, leadership made a
choice to prioritize fundraising over the passage of strong
legislation. "It makes it difficult to corral consensus," says Rep.
Stephen Lynch (D-Mass.), a subcommittee chairman, of the unwieldy
panel.

And just as the lure of money leads inexperienced new members to
join the committee, it prompts experienced staffers to bolt for larger
paydays in the private sector. "You have this phenomenon where if you
have a staffer who's very experienced on a certain issue and is dealing
with the financial sector for any number of months or years, all of a
sudden they become a real acquisition target for Wall Street," says
Lynch.

According to a HuffPost analysis of the 243 people who've worked on
the committee -- including clerical and technology staff -- since 2000,
almost half of the 126 people who have left registered as lobbyists,
mostly for the financial services industry.

And recruiting experienced Capitol Hill hands to work on K Street
pays off in material ways. For example, it didn't hurt the auto
dealers' chances of winning an exemption that a third of the industry
trade group's two dozen lobbyists are former Hill staffers.

Commercial banks, according to the Center for Responsive Politics,
spent nearly $50 million lobbying in 2008 and dropped another $37
million in the first three quarters of 2009. They employed 417
federally-registered lobbyists.

And the revolving door turns in both directions. Sixteen of the
committee's 86 current staffers -- including a good chunk of the senior
staff -- worked as lobbyists before coming to the committee. (And it's
not just Republicans; 12 of the 16 are Democrats.)

"The door doesn't just revolve once," says Rep. Brad Miller
(D-N.C.). "They tend to go out and come back and go out again. It
really does create a set of financial incentives, whether conscious or
not."

Though Lynch laments the phenomenon of staffers fleeing to K Street,
he's got nothing against the individuals who leave: "I don't begrudge
any of these young people with huge student loans and some Wall Street
firm wants to compensate them."

Frank laments staff compensation: "We underpay public officials.
Particularly the staff. [Lawmakers] get a certain degree of
non-monetary compensation -- psychic. You know, I get mentioned on
'Gossip Girl.'"

Staffers get a good look at how the other half lives; they rub elbows with lobbyists both at work (in meetings or even on extravagant field trips)
and off the clock, during ritualistic happy hours. Those who attend
know the unspoken rule: don't talk too much shop but bring plenty of
business cards. The friendly social scene helps explain why there's not
much condemnation from staffers for colleagues who leave for higher pay.

"Everyone comes here to stand up for something they believe in, and
at some point they go downtown to make money, and at some point someone
they worked for draws them back [to the Hill]," said a former staffer
who works as a lobbyist. "It's the running joke: a staffer gets
married, you better go downtown! Spots open and one of the committee
staffers has a kid. They'll be moving downtown. Money is number one."

"OUT-GRASSROOTED"

As the House leadership set up committees for the 111th Congress in
early 2009, Frank pushed to shrink the size of his own panel in order
to better meet the historic challenges presented by the financial
collapse and bailout, say several members of the committee including
Reps. Watt, Miller and Lynch. Instead, it got bigger. "He was obviously
outvoted," quips Lynch. "Either that or he missed the meeting."

Frank doesn't conceal his distress at the size of his panel. "I had
no part in setting up the committee. That was all the Speaker," Frank
says when asked about the front-row frontliners. Then, without
prompting, he adds: "It's also very large, which is a problem. We're
the second-largest committee, but the transportation committee does not
have ideological issues."

The size and makeup of the committee have been a challenge even for
Frank, a chairman not lacking in confidence or energy. "It's been very
hard work. The committee used to be a very good little committee,
because it had the urban constituency. But it's become a somewhat more
desirable committee for people," he says. "There are a large number of
people who have marginal seats, and it obviously makes me have to work
harder and is a constraint on what we can do. We start out with what I
want to do, but what's relevant is what I can get a majority for."

The sheer size of the committee can sentence reform to death by a
thousand cuts. Each member of the majority, no matter where he or she
falls on the political spectrum, has political interests back home. If
those interests are affected by the bill, they've got someone on the
panel to carry their concerns about "unintended consequences" to the
chairman.

Franks denies that the big banks control his committee members; he
actually claims that the big banks' backing of legislation these days
is so toxic that he doesn't want their public support. "Goldman [Sachs]
has no influence down here. Bank of America doesn't. Bank of America
was ready to support the consumer policeman," Frank says in an
interview in his office, referring to the CFPA. That support, he says,
was politely declined.

There is some truth to Frank's point; groups like the auto dealers
don't bring with them to Capitol Hill the public-relations baggage of
Wall Street or Goldman Sachs. "The local auto dealers are very popular
in their districts," Frank says. The more an interest group can make an
issue district-specific and the more it can relate on an everyday
level, Frank argues, the better it will do. "That's why the realtors
always beat the bankers. The bankers sit and they go [Frank makes a
dour face, leans back in his chair and tightly folds his arms, miming
an aloof posture]. The realtors are out there joining the Kiwanis and
sponsoring little league."

The same is true with John Deere, dairy farmers and other
back-slapping boys from back home. But the big banks have figured this
out, too -- and now they use precisely such groups to poke holes in the
reform effort. Over the last year, they've drafted an army of
credible little guys to walk the halls of Congress and push the
interests of brokers, swaps traders and Wall Street bankers. And
they've shown that they don't need big loopholes to slip trillions of
dollars through.

In fact, says Frank, they're so toxic he claims he doesn't want
their public support. "Goldman [Sachs] has no influence down here. Bank
of America doesn't. Bank of America was ready to support the consumer
policeman," Frank says. That support, he says, was politely declined.

"What's happening now is the pro-regulation forces are being
out-grassroots-ed by the antis," Frank says. One member, he says,
represented tons of title insurance companies. Another came from the
headquarters of credit unions. A third's district is home to
LexisNexis; another to Equifax. Each of those entities received special
treatment because their representative sits on the committee -- and the
more members on the committee, the more special treatment is needed. "I
have not had a problem because of campaign contributions. The problem
is democracy: it's people responding to people in their districts:
community bankers, realtors, auto dealers, as I said, end users,
insurance agents," says Frank.

A video of the vote on Campbell's amendment shows how the auto
dealers won their victory. It's both serious and comical. After the
senior committee members enter their no votes, the bottom two rows
begin weighing in with yes after yes after yes -- followed by unanimous
ayes from the GOP side.

Then, once it becomes clear that auto dealers are getting their way,
those senior Democrats -- not wanting to get on the bad side of a
powerful industry for a losing cause -- actually start switching their
votes from no to yes.

As confusion spreads and more votes are changed, Frank tweaks his
colleagues with a subtle dig. "Can I ask this? Would members please
vote loudly, especially if you plan to vote differently than the clerk
anticipates?" The chamber echoes with laughter.

Pretending that there is some mistake, several members ask the clerk
how they were recorded before asking to switch their votes. After Rep.
Dennis Moore (D-Kan.), a senior New Dem and a subcommittee chairman,
employs this technique, Frank puts a stop to it. "I would also say, at
the same time, if you know how you're recorded, don't ask the clerk.
Just change your vote," he says. This time, there is no laughter.

Later on, when the bill was on the House floor, Frank and Rep. Mel
Watt (D-Va.), a subcommittee chairman, tried to narrow the exemption
but failed. The lopsided committee vote had sapped the strength of the
opposition.

The scene of the unfolding vote demonstrates a few things at once:
First, notice the size of the committee and the time it takes for
everyone to vote. Then, watch the bottom two rows up-end the
legislation. And see how difficult the committee is to control, even
for as forceful a personality as chairman Frank:

It's in this environment that Frank is tasked with passing what he
considers financial reform as historic as "what Theodore Roosevelt and
Woodrow Wilson did to control trusts, and what FDR did to control the
stock market" -- a regulatory bulwark that stood firmly until it was
disassembled in the '80s and '90s.

NOBODY COULD HAVE FORETOLD

The general makeup of the committee dates back to January 2007, when
Democrats reclaimed control of Congress. It was a different world than
the one today -- before the global financial crisis of 2008.

"No one knew when this committee was appointed that the U.S.
economy, the world economy would walk to the precipice, and therefore
put the eyes of the world on that committee. Nobody could have foretold
[that]," says Rep. Emanuel Cleaver (D-Mo.).

As for the conservative sophomores on the committee: "No, you can't
[kick them off]. I mean, you could, [but] it's not going to look good
and probably going to hurt them," Cleaver says. "I mean, who wants to
go home and explain why they were taken off the most active committee
with the most significant legislation maybe in the last hundred years?
That's not something I'd want to go home and explain."

Can the younger members go home and explain the legislation to begin
with? Check out almost any committee hearing on C-SPAN 2, and those
bottom two rows are typically empty, another example of the no-show
culture that so surprised Jackie Speier. Just as over-involvement can
slowly weaken legislation, under-involvement in the broader crafting of
legislation results in members who don't understand what it is they're
tackling -- though they might be able to repeat talking points from
lobbyists. Over the summer, a senior Democrat on the committee, Maxine
Waters of California, complained about committee members' closeness to
bank lobbyists after freshman Blue Dog Suzanne Kosmas (Fla.) skipped a hearing on the financial crisis to attend a fundraiser with lobbyists from the financial industry.

"I understand they have almost hired a lobbyist for each one of us,"
Waters said, speaking after Speier in an almost completely empty
hearing room. "I never expected that given the subprime meltdown and
the number of foreclosures that we have that we would get that kind of
opposition. How soon we forget. And I'm more concerned that there are
members of Congress who are beginning to take on the arguments of the
financial services industry about why a consumer financial agency is
not necessary."

Then Waters chastised Kosmas for skipping out: "Even yesterday when
we were engaged with consumer advocates, one member got up and left and
went to a fundraiser with the banking community, in the middle of all
that. Well, all I have to say is, I'm hopeful that our advocates will
be stronger than ever and we will fight against this opposition."

The panel still muscled through some pretty tough legislation,
argues Cleaver. "We've been able to get all the priorities of the
administration through the committee in spite of some glaring
handicaps, such as a large number of freshmen whose seats may not be
safe. " he says. "And if you look at the votes plural, you will see
that on some rather key votes they actually vote against the
administration's position."

The legislation's failure to tightly regulate the derivatives
market, however, is a crippling weakness. And the frontliners take
credit for that.

Democratic Rep. Jim Himes, a frontliner and a New Dem, knocked out
moderate Republican Chris Shays in Connecticut in 2008. A former
banker, Himes is already an influential member on the committee. "The list of [New Dem] principles
for financial regulatory reform, I was intimately involved in that,
because I co-chair the New Dem Financial Services task force with
Melissa Bean," Himes says. Bean (D-Ill.), along with retiring Rep.
Dennis Moore (D-Kan.), is a New Dem ringleader on the committee.

Bank lobbyists looking for the seven votes needed to up-end
legislation know where to start. Bean and 15 other New Dems have
effective veto power on the committee and are sympathetic to their
interests. According to its mission statement, the coalition, which was
founded in the boom year 1997, is "committed to enacting policies that
encourage economic growth, maintain U.S. competitiveness, meet the new
challenges posed by globalization in the 21st century, and strengthen
our standing in the world." Wall Street lobbyists usually warn that
banking regulations will harm U.S. competitiveness and slow economic
growth.

Six of the committee's New Dems are frontline freshmen. The panel is
also home to seven Blue Dogs, another faction of business-friendly
Democrats, three of whom are also New Dems. Two of the Blue Dogs are
frontliners, including Rep. Walt Minnick, a freshman Democrat from
Idaho who worked to beat back the pro-consumer finance authority in
committee and pushed an amendment on the House floor that would have
gutted it. Both efforts failed, but Minnick was nonetheless singled out
for praise by the American Bankers Association in a post-vote memo.

Some of the Blue Dogs and New Dems describe their experience working
as bankers as an advantage. "I worked in the industry for many years,
and so it's been very exciting for me to probably play a more engaged
role than a new member ordinarily would," says Hines. "Scott Murphy and
I and two or three others really drove the creation of the derivatives
bill. Nobody understands it, but it's one of the more important aspects
of the regulatory reform. And looking at it as a former businessperson,
I think we've really struck a good compromise. I don't think the bill
is in any way heavy-handed."

Murphy (D-N.Y.) is a former venture capitalist who won a special
election to replace Kirsten Gillibrand when she went to the Senate. A
Blue Dog, Murphy isn't on the committee, but on the House floor he
punched a gaping hole in the derivatives portion of the bill -- which
was already riddled with gaps -- exempting all sorts of swaps-trading
from regulation and effectively undermining the legislation. Trillions
of dollars of derivatives, which Warren Buffet has called "financial
weapons of mass destruction," are traded in "dark pools" that nearly
brought down the global financial system in 2008. Thanks to the
frontliners, many of these pools remain unregulated in the House reform
bill.

Brad Miller has had his share of battles with the bottom two rows.
Many of "the Blues and News," as he calls them, are hamstrung by a
"dependence on contributions from the industry. That traditionally has
been one of the reasons to get on the committee. It was seen as a money
committee."

BIPARTISANSHIP

Staffers and members of Congress who deal with lobbyists know that,
if they play nicely, there will be career opportunities to come.

"Traditionally, the money committees as a whole have always been the
most valuable places to jump from the Hill to K Street," says Ivan
Adler, a headhunter at the McCormick Group. "Money committees" also
include the tax-policy-writing Ways and Means Committee and the Energy
and Commerce Committee. "Folks that are working on financial services
and taxes are more valuable, no doubt."

K Street's paychecks flow to both parties. HuffPost compiled a list
of committee staffers throughout the decade from Legistorm.com and
cross-referenced their names with lobbying disclosure reports filed
with Congress. Of the 126 people who have left the financial services
committee since the end of 2000, lobbying disclosure forms show that 62
have registered as lobbyists at some point. That doesn't even include
people who did not register as lobbyists but who nevertheless worked
for law firms with lobbying departments.

Committee spokesman Steve Adamske, relying on information provided
by personnel staff, identified the Democrats on the list that HuffPost
showed to him. Of the 104 Democratic staffers, both current and former,
31 have been registered to lobby. Of a total 149 GOP staffers, 53 have
registered to lobby, roughly the same percentage of total staff as the
opposition. (The GOP has more total staffers over the time period in
question because it controlled the committee until the 2006 elections.
Frank became the highest-ranking Democrat on the committee in 2003; he
became chairman in 2007.)

Staffers who go on to lobby are forbidden for one year from directly
lobbying the committee they left. Adamske says that when staffers
return from downtown to the committee, they are barred from working on
the issue they lobbied on for one to two years, depending on the
circumstances.

HuffPost was able to speak with a dozen of the 62 staffers who left
the committee to become lobbyists; only a handful were willing to speak
on the record while others spoke on background or off the record.
Several said they left their jobs after being recruited by downtown
firms. It's a process that Joe Ventrone, a former Republican deputy
staff director for the committee, calls "cashing out."

"Cashing out is using your position to get a significantly greater
salary in the private sector," says Ventrone, who now works for the
National Association of Realtors. He says there's nothing wrong with
leaving the Hill for K Street but he argues that, on the Hill,
perception is reality; that if it looks like staffers sell their souls
when they take jobs lobbying their former colleagues on behalf of
industry, it's because they do.

Ventrone lobbies for realtors, but he says that he never contacts
former colleagues in Congress. ("I didn't cash out like a lot of the
other people on the Hill," he says.) He left the committee in 2001 to
work for the Department of Housing and Urban Development during the
Bush transition, then for the Federal Housing Finance Board. The
realtors hired him in 2003 and he registered as a lobbyist in 2008.

For staffers leaving a committee job, a higher-paying position
downtown is "a very logical progression," says former committee lawyer
Howard Menell, who is currently retired. "They knew the people, they
knew the laws, and that's what they did." Menell's only lobbying client
after he left the committee was the National Multi Housing Council. He
says he never contacted former colleagues and only did work that would
help low-income housing. "I think I'm different because I particularly
did not want to lobby on the issues that I worked on for so many years."

The lobbyists insist they don't fit the Jack Abramoff caricature of
the profession painted by the media; they don't capitalize on their
connections to pervert the legislative process on behalf of big-money
clients.

In reality, lobbying is more boring: lobbyists visit the Hill for
meetings with members and staffers to explain how proposed legislation
might have "unintended consequences" that could hurt an industry. Or,
lobbyists might be invited to make a large campaign contribution and
share concerns with members over a meal. Opportunities to attend such
events abound -- almost any member of Congress is available for
breakfast, lunch, or dinner at some point during the week. And anyone
is welcome so long as she or he brings a big fat check.

On Sept. 10, for instance, you could catch all 11 banking committee
frontliners for breakfast at the D.C. headquarters of the Credit Union
National Association, which over the years has employed at least two
committee staffers as lobbyists. The price of admission was a donation
to the DCCC ranging from $1,000 to $20,000, according to an invitation
obtained by the nonpartisan Sunlight Foundation. The event was well
timed -- the committee was just preparing to mark up its regulatory
reform bill. Frank himself was billed as a special guest.

From the point of view of lobbyists, their work is just a matter of
providing information and then telling clients where they stand in the
legislative process. There is no incentive to provide bogus information
to sway legislation. "If you lead them down a path that gets them
burned, you're gone," says a former Republican staffer. "It's not in my
best interest to tell a member if something's true that isn't."

But there's little doubt that former committee staffers use their
familiarity to smooth the process. "All of them will come in and say
they used to be you. 'I know what you're going through,'" recalls a
staffer who left the committee for non-lobbying work. "They try to be
real friendly."

When talking to reporters, lobbyists generally laugh at the idea
that they have to power to shape legislation, despite such feats as the
exemption of auto dealers from the purview of the Consumer Financial
Protection Agency. And it's true that they're mere middlemen. But then
again, banks and other financial interests can afford an army of
aggressive and well-connected middlemen, while consumers groups are
left with one or two sentries to cover two chambers. It can mean the
difference between winning and losing.

Sometimes, the notion that one lobbyist can be a negative influence
is taken seriously. Michael Paese served as a lawyer and deputy staffer
director for the committee until 2008, when he jumped ship and wound up
lobbying for the Securities Industry and Financial Markets Association.
Goldman Sachs scooped him up over this past summer. In an unusual move
in September, Frank forbade his staff from talking to Paese for an
additional year after his official 12-month "cooling off" period
expired. Frank calls the suggestion that Paese might have been carrying
water for potential future employers while still on Hill "paranoia."

Hill staffers who work on financial issues are particularly
susceptible to lobbyists because, while they may be among the brightest
to come through their college class, they often don't know all that
much about finance. "They're stretched too thin, covering three or four
issue areas," says a former staffer. And on the Hill, "issue area"
doesn't mean bond markets or derivatives. "Financial services" is an
issue; "health care" is another; "trade" and "education" could be two
more, all covered by the same staffer.

"What they know is people," says a former staffer, "and the way you
get to know these people is through happy hours or the [free]
receptions" on the Hill, often sponsored by trade associations. Because
staffers aren't always deeply versed in the particular issue they've
been lobbied on, their advice to their bosses often reflects what
they're hearing from K Street.

Frank is sometimes able to overcome that influence by going around
the staffer. "The staffer is usually pushing something he heard from a
lobbyist. If you can get the staffer and the member split up, you can
usually get the member to agree to something," says a former staffer.
He recalls a time when staff persuaded Rep. Al Green (D-Texas) to
demand certain concessions from Frank; during the meeting, Green went
out in the hallway to take a phone call; Frank met him out there and
got him to change his vote.

ROUND AND ROUND THEY GO

Menell and others claim that nobody used to bat an eye when staffers
went to K Street and back. It was all part of the pro-Wall Street
consensus that developed during the boom years. By contrast, the new
climate is creating tensions on the committee. When the financial
system collapsed last fall, the bipartisan consensus on Wall Street
came down with it. Amid populist fury, banking regulation has become
more partisan. Some current staffers now say the hopping back and forth
between competing sides should be seen for what it is: betrayal.

"You couldn't pay me enough to go be the spokesman for things like
exploding mortgages, 39 dollar overdraft fees and double-cycle billing.
These things might not have been 'party issues' a few years ago, but
they very much are today," says a staffer.

Of the 16 people on the committee payroll who previously worked as
lobbyists, former clients include H&R Block, the New York Stock
Exchange, the Bond Market Association, Wachovia, MetLife and Experian.
One staffer lobbied on behalf of the National Employment Lawyers
Association, yet no staffers have done lobbying gigs with consumer
advocacy groups like the Consumer Federation of America, Public Citizen
or U.S. PIRG.

At least five are serving the committee for their second time.
Committee lawyer Clinton Columbus Jones, for instance, worked for the
committee for years before leaving to lobby for Fannie Mae in 2007. He
returned to the committee in 2008, just before the Federal Housing
Finance Board took the home-loan giant into receivership. Lawyer Jason
Todd Spence served as a legislative aide to Rep. Bob Ney (R-Ohio)
before a brief lobbying stint with the Independent Insurance Agents
& Brokers of America; he returned to the committee in 2008.

"Sometimes you're puzzled at what causes that," says Rep. Lynch. "Is
that the downsizing on Wall Street or is that a directional intent
there, that staffers are coming back to carry water for a certain
perspective? You have to be careful with that."

Mel Watt says he's seen how staffers with K Street backgrounds can
be a boon to the committee. He also says he's seen it cut both ways.
"If you get too connected to somebody and you start carrying their
water, it can be a problem whether you're a member or a staffer," he
says. "On the one or two occasions where I've experienced it, I called
it to Barney's attention." A third member, who asked not to be named,
said he had also seen particular staffers undermining reform
legislation before heading off to K Street.

The chairman, however, says he is not concerned about staffers
carrying water for past or future clients and employers. "What we have
sought to achieve in our staff is a good diverse group of people who
have different backgrounds and can bring different things to the
table," says committee spokesman Steve Adamske. "At the end of the day,
it is Barney's decision what the committee will be doing and it's the
members who will vote on it."

 

 

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