Financial Regulatory Forum

U.S. lobbying rules for bailout firms seen soon

September 5, 2009

USA/   WASHINGTON, Sept 4 (Reuters) – The U.S. Treasury Department is expected to soon issue final lobbying restrictions for companies receiving taxpayer funds from the government’s $700 billion bailout program, two sources familiar with Treasury’s thinking told Reuters on Friday.
   The rules to curb outside influence in allocation of bailout funds are expected to severely restrict contacts with lobbyists in applications for investments in banks and other firms under the Troubled Asset Relief Program (TARP).
   The new rules have been under development since January and could be published as early as next week, one source said.
   The Treasury has indicated the rules will be modeled on the approach taken in the Obama administration’s $787 billion economic stimulus program to shield disbursements from lobbyist influence.
   Under those rules, once government employees establish they are speaking to a federally registered lobbyist regarding stimulus expenditures, they must decline or immediately end the conversation and report the incident. Similar restrictions would apply to the Treasury and financial regulators that evaluate TARP investment requests.
   The Treasury has similar rules in place to curb political influence on tax matters.
   A Treasury spokeswoman declined to comment on the timing of the new lobbying restrictions for TARP bailouts.
   When the Treasury announced the rule-making effort in January, it said it would be required to certify to Congress that “each investment decision is based only on the investment criteria and the facts of the case.”
   Since the bailout program was launched in October 2008, the Treasury has invested $204.5 billion into over 600 banks in its Capital Purchase Program, of which more than $70 billion has been repaid.
   It has put up over $80 billion in support to the the auto industry and invested another $115 billion to prop up American International Group, Citigroup <C.N> and Bank of America <BAC.N>.
   The special inspector general for the TARP program, Neil Barofsky, recently conducted a study that found no evidence that the Treasury’s TARP investments were unduly influenced by lobbyists or politicians, but he recommended that the controls over these decisions be improved.
   (Reporting by David Lawder and Rachelle Younglai; Editing by Andrew Hay)
   ((rachelle.younglai@thomsonreuters.com; +1 202 898 8411))
Keywords: FINANCIAL/BAILOUT LOBBYING 
  
Friday, 04 September 2009 22:35:04RTRS [nN04189459] {C}ENDS

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