The Progressive


A project of Common Dreams

For Immediate Release

Rootstrikers Blasts Newly Revealed Collusion Between Obama Administration and Big Banks on Financial Provisions in TPP

FOIA documents reveal coordinated effort between Obama administration and Wall Street lobbyists to deliver unprecedented benefits for financial industry


Today, activist organization Rootstrikers criticized collusion revealed in new FOIA documents between US Trade Representative Michael Froman - formerly a high-paid Citigroup executive - and representatives of some of the largest financial institutions on Wall Street.

Amid rising public opposition to the Trans-Pacific Partnership (TPP) and precarious legislative prospects for the trade deal, the emails show for the first time:

  • Froman and a top Wall Street lobby shop directly coordinating efforts to lobby Congress in order to secure passage of "fast track" Trade Promotion Authority and push for passage of TPP.
  • Senior banking representatives successfully pushing Froman to deliver a dramatic expansion in banks' abilities to challenge financial regulations in ISDS tribunals in TPP.
  • Froman asking a top Wall Street executive for advice on the shape of financial provisions in upcoming trade deals covering Europe and China, which experts believe pose a grave threat to financial regulations.

"Wall Street knows it can get favors in closed door negotiations that could never survive the light of day in Congress," said Kurt Walters, campaign director at Rootstrikers. "One thing has been consistent during Michael Froman's frequent trips through the Wall Street-to-Washington revolving door: He's repeatedly used his official positions to deliver for his friends at the biggest banks on Wall Street."

The group noted that Froman was instrumental in the 1999 repeal of Glass-Steagall as the Treasury Secretary's chief of staff, a move many credit with contributing to the problem of Too Big To Fail.

In the emails, a lobbyist at Goldman Sachs, apparently Robert O'Connor, wrote:

"Good for the US if u can get tpa and tpp; will do what i can to assist. At some pt, after present rush, perhaps we can discuss some thoughts on how to better position ttip in europe and the US for your successor. Also, if i pick up useful intell from Hill calls, i'll try to relay. May be useful to be sure Matt N (former USTR congressional, now with me at GS) has a good contact in your office, since he will come to many of my Hill meetings. See you thurs, bob." [sic]

In a reply, Froman assigns a member of his staff to be in close contact with Goldman Sachs's lobbying team and tells the Goldman Sachs lobbyist he would "welcome the chance to pick your brain on T-TIP, including the regulatory coherence element."

Experts write that "regulatory coherence" in the TTIP deal covering financial centers in London and New York poses a grave threat to U.S. financial regulations.

Furthermore, the documents for the first time show high-ranking bank officials pushing for behind closed doors - and securing - the ability to bring cases in the controversial ISDS tribunals under a "minimum standard of treatment." This right has never been previously granted to the financial industry in similar trade deals.

A leading Goldman Sachs lobbyist tells Froman this expanded power to challenge regulations is "critical to making the TPP a meaningful agreement for our industry" and that it would "set a powerful precedent for the US-China BIT [Bilateral Investment Treaty]."

Three quarters of known ISDS cases under U.S. trade and investment agreements in which the foreign investor has "won" have found violations of MST or FET (fair and equitable treatment), which is also included in the MST section of the TPP.

"It's fair to ask whether Froman is negotiating on behalf of the American public or to benefit the financial sector that gave him a massive golden parachute bonus upon his shift from Citigroup executive to U.S. Trade Representative," added Rootstrikers' Walters.

Froman received more than $4 million in exit payments from Citigroup upon joining the Obama administration. Democratic presidential candidates Hillary Clinton and Bernie Sanders have endorsed legislation that would make golden parachutes for government service criminally illegal under the bribery statute.

The documents were obtained under a Freedom of Information Act request for written communications between Froman and representatives of the 10 largest U.S. financial institutions.

The FOIA request followed Rootstrikers' call in May 2015 for Froman to voluntarily release copies of his correspondence with large financial institutions, as the administration sought to calm concerns of risks to financial reform in the TPP.

Froman refused, and a USTR spokesperson said Froman had "been very clear, on repeated occasions, in public and in private, that this administration will do nothing that puts at risk the Wall Street reforms," a statement activists note stands at odds with the results of the FOIA request.

Rootstrikers is a project of Demand Progress dedicated to reclaiming our government so it works for everyone and not just the wealthy and the well-connected.