POLITICO.com
Lobbyists look to profit on bailout
By: Lisa Lerer
September 30, 2008 06:21 AM EST
K Street is seeing green in the sweeping $700 billion financial bailout.
Already, lobbyists are using the rescue plan to drum up business from financial services companies fearing a regulatory push by Congress and the new administration.
Financial services associations say they have received a wave of solicitations over the past two weeks from lobbyists, law firms and public relations experts.
“Edelman has the expertise and experience to help you and your members minimize the punitive effects of any new federal regulations,” the public relations firm wrote in a pitch letter sent last week.
“The industries and individual companies with the most to lose or gain at the hands of lawmakers have partnered successfully with us to protect or advance their business interests.”
While some firms pushed for new clients, others offered new services specifically tailored to financial services clients.
Several law firms set up e-mail alerts and websites to keep their clients informed about the financial crisis.
And on Monday, two firms, K&L Gates and Fried, Frank, Harris, Shriver & Jacobson, announced financial markets groups formed to represent clients in litigation, lobbying and government enforcement efforts related to the economic crisis.
“The transformation of the financial industry and markets is unprecedented, and developments are occurring rapidly,” said Peter Kalis, K&L Gates’ chairman and global managing partner. “This initiative has helped us meet client demands during these challenging times.”
Fried, Frank’s group — run by lawyers from the firm’s banking, bankruptcy and restructuring, corporate, government contracts, litigation, real estate, and securities practices — plans to host a series of briefings on the crisis.
“The financial services sector has undergone in a matter of weeks what might have otherwise taken decades to unfold, and those of us who serve it must change with it to help our clients efficiently and effectively address the complex challenges before them,” Thomas Vartanian, head of the firm’s banking and financial institutions practice, said in a press release.
Lobbyists hope the financial bailout will provide their firms with their own economic rescue.
“In the short term, the overall economic environment in which we find ourselves will mean some clients will take a harder look at outside consultant expenditures,” said Torod Neptune, global public affairs practice leader at Waggener Edstrom.
The Wall Street meltdown worries many on K Street, who fear struggling companies will cut contracts as finances tighten. The spate of acquisitions and bankruptcies also means fewer dues for financial services trade associations.
Fannie Mae and Freddie Mac have dropped many of their outside advocates, according to lobbyists at firms that did business with the mortgage giants.
Last year, the two mortgage giants spent more than $14 million on lobbying, according to data from the Center for Responsive Politics.
In July, Bear Stearns filed termination reports with Congress, ending its contracts with in-house and outside lobbyists. And lobbyists working for Merrill Lynch and Lehman Brothers expect the investment banks to keep them only until their sales are finalized.
Over the past two years, financial services companies have increased their presence in Washington.
In the first six months of this year, the financial services, insurance and real estate industries spent almost $231 million on lobbying.
Two trade associations formed specifically to represent alternative investment vehicles — the Private Equity Council and the Managed Funds Association — have expanded in the wake of legislation that would have imposed tax hikes on private equity firms and hedge funds.
Still, many lobbyists and political strategists expect the lobbying downturn to be only temporary.
“Whenever there is significant legislative and regulatory activity on an issue as significant as this, the need for clients to seek out and retain smart lobbying and public affairs agency support always increases,” Neptune said.
Financial services firms are expected to come under heightened scrutiny next year as Congress attempts to impose new regulations on banks, mortgage lenders and credit card companies. Furthermore, the bailout legislation requires the Treasury secretary to report to Congress by April 30 on whether to impose additional regulations on participation in the financial markets.
“While there’ll be some short-term dislocations, in the long haul, looking at the next couple of years, there is no doubt that the footprint of the financial services industry in D.C. is going to do one thing, and that’s grow,” said a financial services trade association head.
“I predict a record year in advocacy expenditures,” said Dan Mica, a former Democratic congressman from Florida who now heads the Credit Union National Association. “It will be one of the most activist years that I’ve ever recalled, and anyone that has decent credentials and credibility in the advocacy field will be as busy as they want to be, or busier.”
© 2008 Capitol News Company, LLC
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