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Corporate Interests Give More Than Their Two Cents in Financial Reform Implementation, New Public Citizen Report Says

Financial Institutions That Have Spent Millions Lobbying Are Fighting Proposal to Compare CEO Pay to That of Median-Paid Employees

WASHINGTON - Corporate interests eager to weaken the new Wall Street reform law are a strong force when commenting on specific rules to implement the law. For instance, four groups working to undermine a new executive pay rule before it is even proposed publicly spent more than $4.5 million on lobbying last year on a variety of issues and made $660,180 in campaign contributions, a new Public Citizen report reveals.

Public Citizen’s report, titled “Two Cents,” helps demonstrate the intense battle by corporate interests to disguise their pay packages. Publication coincides with the annual spring meeting season when companies disclose executive compensation as part of required shareholder votes on pay packages and the board directors who approve them. 

The provision that’s subject to this scuffle would require companies registered with the Securities and Exchange Commission (SEC) to reveal how much their CEOs make in comparison to their average employees. The SEC has asked the public to comment on its responsibilities generally but has not yet formulated a specific pay ratio proposal for public comment.

“Regulators are asking for people’s two cents, but big corporations are giving more like $2 million worth of opinion,” said Negah Mouzoon, a researcher for Public Citizen’s Congress Watch division and one of the report’s authors.

The report is the first in a series that Public Citizen plans to release over the next few months. The series will document Wall Street’s efforts to weaken the rules that will implement the Dodd–Frank Wall Street Reform and Consumer Protection Act, signed into law on June 22, 2010. Public Citizen will analyze lobbying expenditures, campaign contributions and revolving door connections of Dodd-Frank opponents.

“Publishing the ratio of pay won’t cure the problem of excessive executive compensation, nor did sponsors in Congress hold such aspirations,” said Bartlett Naylor, financial policy advocate in Public Citizen’s Congress Watch division and another report author. “But it could help determine whether the CEOs’ pay is appropriate.”


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 Not surprisingly, businesses and business trade associations have deployed their highly paid lobbyists and complained that the provision is burdensome, cost-prohibitive and difficult to calculate, and involves too much paper.

 Among the 23 people and organizations that commented on the provision as of April 1, Public Citizen focused on the extensive lobbying operations of four of the rule’s top critics: the Retail Industry Leaders Association; Davis, Polk & Wardwell (which acted as counsel for six of the largest U.S. banking organizations and other financial institutions); the Center on Executive Compensation, and the American Benefits Council (a lobbying firm that represents Fortune 500 companies).

 These four groups in 2010 spent more than $4.5 million lobbying on financial regulation and other issues, a sum that accounted for half of the total lobbying expenditures by those commenting on the pay reporting provision. Although the groups didn’t lobby exclusively on the executive pay rule, the money they spent provides an indication of their clout in Washington. They deployed 46 individuals – 37 of whom are former government employees – to lobby specifically on financial regulation issues. Employees and political action committees (PACs) of the commenting entities collectively gave $660,180 in political contributions in the 2010 election cycle. Their former government affiliations are listed in the report’s appendix.

 As federal financial regulators ask the public to put in its two cents on recent financial rulemakings, Wall Street has over-invested, Naylor said. In total, Wall Street dispatched 2,533 lobbyists and spent $251 million in 2010 to sway Congress about issues including financial reform.

 “Public Citizen encourages people to continue to submit comments to increase the chances that the final rules reflect the reforms Congress intended,” Naylor said.


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Public Citizen is a national, nonprofit consumer advocacy organization founded in 1971 to represent consumer interests in Congress, the executive branch and the courts.

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