Volcker Overruled?

by Brooke Williams

What do banking giants Citigroup and Barclays have in common with the nonprofit Bipartisan Policy Center, a think tank in Washington, D.C.? It depends where you look.

Two weeks after the Bipartisan Policy Center (BPC) launched an initiative to “analyze, assess, and recommend ways to improve financial regulatory policy,” one of Wall Street’s top lobbying firms, Rich Feuer Anderson, added the think tank to its list of clients—alongside Citigroup, PricewaterhouseCoopers, Barclays and others.

Mitchell Feuer, former counsel to the Senate Banking committee, and John Anderson, previously an executive of the too-big-to-fail Credit Suisse, have been simultaneously lobbying on behalf of the think tank’s advocacy arm and big banks (including one donor to the think tank) to influence implementation of the Dodd-Frank financial reform legislation, according to disclosure reports filed in October.

Some of their lobbying has focused on the Volcker rule, a part of Dodd-Frank that bans federally backed banks from gambling with their own money—a practice that contributed to the economic crisis in 2008. Five federal agencies responsible for writing the rule have faced a lobbying blitz, and yesterday, the New York Times reported they are debating how stringent to make it and whether to close loopholes.

Last month, scholars with the BPC’s financial regulatory initiative released a paper, “A Better Path Forward on the Volcker Rule and the Lincoln Amendment,” which largely echoes the position of big banks and Wall Street. Slow down, phase in and provide ample opportunity for input (and regulatory capture) along the way.

A bipartisan group of former Senate majority leaders created BPC in 2007 to do “rigorous analysis” and combine “politically balanced policymaking with strong proactive advocacy and outreach.” On its website, BPC is upfront about industry’s involvement, saying business leaders are part of deliberations that produce policy recommendations.

But what about the money they donate?

BPC accepts undisclosed amounts of money from big banks, natural gas interests and medical companies while its scholars publish papers on Wall Street reform, the future of fracking and affordable health care. Meanwhile, BPC’s advocacy arm collects millions in donations from undisclosed sources and pays to lobby on all of the above.

BPC and its lobbying arm, BPC Advocacy Network, share a suite on the 10th floor of an office building a block from K Street. The think tank created the lobbying shop because “ideas, roundtables, and reports go only so far.” As a tax-exempt “social welfare” group known as a 501(c)4 organization, BPC Advocacy Network doesn’t have to disclose its donors and can influence public policy with little accountability.

Donations to BPC Advocacy Network have increased from $1 million in 2008 to $4.1 million in 2011, according to tax filings. So far this year, lobbying records show, it has hired five outside lobbying firms and employed seven in-house lobbyists.

Lobbying Interests Aligned

A cross-examination of disclosure reports shows the BPC think tank’s corporate donors and its advocacy arm lobby on many of the same issues, including the Volcker rule.

Citigroup is one of the think tank’s top corporate donors, and along with the American Bankers Association, is listed as a member of its 2012 Leaders Council, which provides opportunities to "engage with the founders, policy project members and staff" and "help guide BPC activities." (BPC recently removed that language from its website.)

James Cox, a professor at Duke University who co-authored the position paper on the Volcker Rule, said he had no idea big banks were funders of the think tank. There was no evidence of “any hidden hand” in their research, he said, so he isn’t sure why it matters. Plus, he said, the report wasn’t all that friendly to Wall Street.

“They may actually be looking at the report, thinking my god what bastard did this?” he said. “When you’re putting sophisticated people in a room and asking them to draft a position, it’s hard to understand why it would matter who paid for that room.”

The paper included a disclaimer stating it didn’t necessarily “represent the views or opinions of the Bipartisan Policy Center, its founders, or its board of directors.” Co-authors Jonathan Macey, a professor at Yale, and Annette Nazareth, a former commissioner for the Securities Exchange Commission, did not return phone calls requesting interviews.

Rosemarie Calabro Tully, spokeswoman for BPC, didn’t respond to questions about how it handles situations in which donors have a financial interest in the outcome of policy research. She pointed to a chart in the think tank’s 2012 annual report showing that about 19 percent ($4 million) of its contributions come from corporations and individuals.

“The merit and integrity of our work rests on the transparency of our consensus-based process, and the diversity of our funding and participants,” she said in an email.

Tully said there is no minimum required to join the Leaders Council and didn’t respond to a request for amounts contributed. Tax filings show another 2012 Leaders Council member, America’s Natural Gas Alliance, donated $250,000 in 2011.1

Industry Ties Run Deep

Last month, former Lab Fellow Ken Silverstein wrote a blog about BPC’s deep ties to energy companies and how it “routinely advocates, under the guise of independent scholarship, for policies that benefit its donors.” In July, Lee Fang wrote in The Nation about BPC’s ties to retailers it helped as they refused to sign a plan to improve worker conditions after garment factory disasters in Bangladesh.

In August, consumer advocacy and lobbying group Public Citizen published a report finding BPC had launched its financial regulatory initiative only “after Citigroup and ABA became substantial funders” and that “the experts it recruited disproportionately bring pro-big-bank credentials.”

ABA’s president, Frank Keating, who earned more than $1.7 million in that position in 2011, is also on BPC’s board of directors and was a member of its “Debt Reduction Task Force.” Candida Wolff, head of global government affairs for Citigroup, is on the board of the BPC Advocacy Network, according to her bio.

In October, Keating testified at a Senate Banking, Housing and Urban Affairs committee hearing on financial stability and growth. He cited a BPC figure and disclosed his positions with the think tank, but he didn’t mention ABA had financed its work.

The BPC Advocacy Network has spent about $1.25 million in-house and $610,000 on outside firms this year to lobby federal lawmakers on dozens of issues, including the implementation of Dodd-Frank, according to the most recent disclosure reports.

As BPC describes its system, the think tank “impacts the public dialogue” and its lobbying arm “influences the policy outcomes.” Their goal is big: “influencing legislative language, changing minds, changing laws, and even changing the nation.”

But the portrayal is missing important players: the think tank’s corporate donors that have a financial interest in these public policies, and anonymous donors to its advocacy arm that just might have a stake in them, too.


1 The ANGA 2012 Form 990 filing wasn’t available as of publication.