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Treasury fails on transparency rules
In one of his first official acts as Treasury secretary, Timothy F. Geithner promised to make sure the public knew what lobbyists were up to when contacting his department about the bailout of troubled financial institutions.
But by one important measure, the lobbyists appear to be the more transparent.
An analysis by The Washington Times found more than a dozen recent examples in which special interests reported to Congress that they lobbied the Treasury on the Troubled Asset Relief Program (TARP) or on the legislation that authorized what now amounts to an $862 billion bailout.
However, Treasury never disclosed those lobbying activities, despite new rules requiring the government to post reports after registered lobbyists come calling on bailout policy or applications for funding.
Ethics analysts say the findings raise questions about whether a lack of enforcement could undermine Treasury’s pledge for greater openness and transparency - a signature issue during President Obama’s run for the White House.
“We’ve already seen some reports late by weeks,” said Daniel Schuman, an attorney for the nonpartisan Sunlight Foundation. “This is unacceptable, as they are required to be published online within three days.”
Another ethics analyst, Craig Holman, of the watchdog group Public Citizen, said Treasury lags behind other federal agencies when it comes to transparency.
“Mr. Geithner’s rules are excellent rules, but it’s a matter of implementing them,” he said. “By the time he implemented the rules, the TARP program was just about over with. What this suggests is Treasury is not seriously working to implement them.”
Treasury officials defended their disclosure program.
“We will investigate these claims of failure to adhere with our policy and take corrective action where necessary,” Treasury spokeswoman Meg Reilly said.
Ms. Reilly also said Treasury has given formal guidance to employees on the new rules, in addition to providing “a significant amount of training for all employees regarding their responsibilities to comply with the disclosure requirements.”
By law, lobbyists must file reports with Congress on their activities each quarter. A review of fourth-quarter 2009 reports provides numerous examples of lobbyists who said they had contacted the Treasury on TARP or on the Emergency Economic Stabilization Act (EESA), the legislation funding the bailout program.
But those lobbying contacts do not appear on the Treasury’s Web site.
Genworth Financial, for instance, spent more than $1 million lobbying lawmakers and federal agencies from October through the end of 2009, according to the company’s Senate disclosure report. Among other activities, Genworth reported lobbying Treasury, the House and the Senate on the EESA and TARP.
Jackson National Life Insurance Co. also reported contacting the House, the Senate and Treasury, lobbying on TARP proposals to extend funds to life insurance companies. In April, the company’s top executive even appealed to Mr. Geithner personally, sending him a letter outlining the company’s position against giving bailout money to life insurance companies.
CV Starr & Co., an investment company headed by former AIG chief executive Maurice Greenberg, paid $80,000 to lobbyists who contacted Treasury and other agencies on “insurance issues related to the implementation of the Troubled Asset Relief Program,” according to filings.
The Securities Industry and Financial Markets Association spent more than $1 million on lobbying during the last quarter of 2009. Its activities included contacting Treasury and other agencies on the EESA, filings show.
None of those activities has been disclosed on Treasury’s Web site.
Under Treasury’s transparency rules, employees contacted by a registered lobbyist on “EESA policy or applications for funding” must, with limited exceptions, document the date, name of the lobbyist and the nature of the conversation. Then, the information is supposed to be posted on the Treasury’s Web site within three days.
Mr. Geithner first announced in January 2009 his call for new rules to limit lobbyists’ influence in the federal bailout of financial institutions.
“American taxpayers deserve to know that their money is spent in the most effective way to stabilize the financial system,” he said.
Mr. Obama also pointed to the need for transparency on the TARP program at Mr. Geithner’s swearing-in ceremony.
Speaking of efforts to stabilize the financial system, Mr. Obama said that “we’ll do it in a way that protects the American taxpayer and includes the highest level of transparency and oversight so that the American people can hold us accountable for results.”
But Mr. Geithner made the announcement in a press release and the rules were not promulgated until September, observers have pointed out. Last year, the special inspector general for the Troubled Asset Relief Program noted Treasury’s delays in implementing the rules.
In a report, the inspector general said Mr. Geithner said the new rules arose from concern about news reports about the potential for “external influence to affect decisions.”
However, Mr. Geithner also told the inspector general that “other issues had consumed Treasury’s time and taken precedence over completing the guidance,” the report stated.
Since September, Treasury has posted information about eight lobbying contacts, with four of them coming from the same organization, the American Bankers Association.
Sunlight’s Mr. Schuman has been following the issue since Mr. Geithner first announced his call for lobbying rules.
In October, weeks after the disclosure rules were put into place, Mr. Schuman was preparing to post a blog item questioning why Treasury had not made any disclosures. The day before he planned to release his findings, he said, he made one last call to Treasury before publishing his findings. That afternoon, he said, two disclosures were posted on Treasury’s site.
But both disclosures detailed lobbying contacts weeks earlier, failing to meet Treasury’s guideline to disclose the information within three days.
Mr. Schuman called the new rules “a step forward” overall, but he added that it’s now up to Treasury supervisors to enforce the policy.
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