U. S. Treasury Announces Rules to Limit Influence of Lobbyists on Emergency Economic Stabilization Act Funds
Financial Services Task Force Update 02/04/09 James D. Friedman, Jeff Peelen
One of the central tenets of President Obama's campaign pledge to bring change to Washington was his promise to curtail the influence that lobbyists have in every aspect of the political landscape, most notably in the way that the federal government conducts business. The president moved quickly in an effort to implement that promise by issuing an executive order on his second day in office: Executive Order - Ethics Commitments by Executive Branch Personnel. The executive order imposes new ethics restrictions on executive branch personnel, including their ability to accept gifts as well as their ability to leave government service in order to lobby (so-called "revolving door" restrictions).
In keeping with this focus on executive branch ethics issues, Treasury Secretary Geithner has outlined new ethics rules in connection with funding provided pursuant to the Emergency Economic Stabilization Act ("EESA"), including the Toxic Assets Relief Program ("TARP"). A recent Treasury Department press release explains that the rules will be "designed to limit the influence of lobbyists and special interests in the EESA process and ensure that investment decisions are guided by objective assessments in the best interest of the health and stability of the financial system."
Although drafts of the rules with specific details have yet to be published, the press release states that the rules will prioritize:
- Combating Lobbyist Influence in the EESA Process: The Treasury Department will implement safeguards to prevent lobbyist influence over the program, including restricting contacts with lobbyists in connection with applications for, or disbursements of, EESA funds.
- Keeping Politics out of Funding Decisions: The Treasury Department will ensure that political influence does not interfere with EESA decision making, using as a model for these protections the limits on political influence over tax matters.
Similarly, the press release states that the new rules will strive to increase transparency, accountability and oversight in the way EESA decisions are made, and they will include provisions requiring:
- Certifications to Congress on Objective Decision Making: In reporting to Congress, the Office of Financial Stability will certify that each investment decision is based only on investment criteria and the facts of the case.
- An Investment Process that is Transparent and Based on Objective Criteria: Only banks recommended by the primary bank regulator will be eligible for capital investments. OFS will publish a detailed description of the investment review process undertaken by the regulators and OFS. The Treasury Department will ensure adequate resources exist to process applications as quickly as possible, with priority to the date of the application as received by OFS, and will formulate procedures to ensure integrity and regularity in the application process.
Organizations involved in outreach with federal government officials in connection with the EESA and related federal programs will need to be mindful of these new executive branch personnel ethics rules as well as the myriad other laws governing federal lobbying and advocacy. More generally, organizations should be mindful that ethics, lobbying and related rules exist and apply to all branches of government (executive, legislative and judicial) and each level of government (federal, state and local).
If you would like additional information regarding how the proposed executive branch ethics rules may affect your organization or information regarding public outreach strategies generally, please contact Jim Friedman at 414-277-5735 / [email protected], Jeff Peelen at 414-277-5773 / [email protected] or your Quarles & Brady LLP attorney.