US moves to curb lobbying on bailout package

Treasury Secretary Timothy Geithner, in his first full day in office the job, announced new rules on Tuesday to limit special-interest influence on the government's $700 billion financial rescue programme.

The new rules are designed to crack down on lobbyist influence over the rescue programme by restricting their contact with officials who are reviewing applications for money and deciding how to disburse it. Treasury officials also will seek to limit political influence over the funds, saying they will use similar restrictions that forbid such influence in tax matters as a model.

The department's Office of Financial Stability will be required to certify to Congress that each government investment is based solely on objective criteria. As part of that effort, only banks recommended by their primary regulator will be eligible for capital investments.

Obama administration officials said the new rules go farther than the lobbying rules imposed by the Bush administration, and they are designed to ensure that bailout money is distributed with the goal of promoting the health and stability of the financial system.

"American taxpayers deserve to know that their money is spent in the most effective way to stabilize the financial system," Geithner said in a statement. "Today's actions reaffirm our commitment toward that goal."

In making required reports to Congress on the operation of the $700 billion rescue programme, officials will have to certify that each investment decision was based only on objective criteria and the facts of each case. The rescue program will be required to publish a detailed description of the review process conducted in making the awards.

It remains unclear, however, how the Treasury will implement the new changes and on what timetable. The Treasury did not detail how the department plans to limit lobbyists' contact with decision makers. It also offered few specifics about how the agency will prevent politics from playing a role in the bailout process, or precisely how it will create a more transparent and objective application review structure for troubled banks.

A Treasury official acknowledged to The Washington Post that the administration cannot stop individuals from trying to lobby the Treasury or other federal regulators, but said that attorneys are working to develop the strictest limits allowed by law. In addition, the agency said a log of communications from public officials and others regarding specific financial institutions would be posted on the Treasury's Web site and updated weekly.

The new rules come in the wake of fresh reports filed with the government showing some big banks stepped up their lobbying efforts late last year even as they received billions of dollars from the bailout programme.

The Bush administration committed the first $350 billion of the rescue fund in ways that left many lawmakers fuming about a lack of accountability and transparency. While lawmakers failed in an effort to block release of the second $350 billion, the Obama administration said it would institute a number of reforms.

Lobbyists, as might be expected, are none too happy. ''This just probably causes more harm than good," said Scott Talbott, chief lobbyist at the Financial Services Roundtable, adding that the new rules "limit the flow of information at a time when it is most crucial".

Stefan Passantino, a partner at the law firm of McKenna Long & Aldridge, said lobbyists play a valid role providing input to those in power, and to forbid that would result in less informed decisions and curb the right of private citizens to petition the government.

Along with the new lobbying rules, the administration has pledged to better track lending patterns by financial institutions to ensure that they are using the government assistance to increase lending. The Obama administration also has sought to limit executive compensation at institutions receiving government support, and prevent shareholders at those companies from benefiting at taxpayers' expense.

Geithner gets cracking
Besides unveiling the new lobbying rules, Geithner had a busy first full day as the nation's 75th treasury secretary. He met with senior Treasury staff on initiatives to reform the current financial regulatory structure, something the administration has promised to address quickly to help prevent another crisis.

Treasury officials said the staff meetings also focused on efforts to overhaul the financial rescue programme. The new administration has pledged to devote at least $50 billion of the second $350 billion toward helping people avoid losing their homes because of mortgage foreclosures.

Geithner also participated in the president's daily economic briefing, which is modeled after the daily security briefing.

Shortly after Geithner won Senate confirmation Monday, President Barack Obama came to the Treasury Department to participate in a swearing-in ceremony and to project a sense of urgency on the part of the new administration in combating the country's deepening economic troubles.

The Senate voted 60-34 to put Geithner in charge of the administration's economic team. Those who opposed the nomination said they could not accept Geithner's explanation that his failure to pay $34,023 in self-employment taxes from 2001 to 2004 when he worked at the International Monetary Fund was an unintentional error.

However, Geithner's supporters said he had paid the back taxes plus interest and that Obama deserved to have someone of Geithner's skills in financial crisis management leading the new administration's efforts.

Geithner, 47, served as undersecretary of the treasury for international affairs during the Clinton administration and was selected to be president of the New York Federal Reserve Bank six years ago. In that position, he has been a key player in the government's response to collapsing financial institutions and the housing and credit markets since last summer.