By Jessica Holzer - 04/17/07 07:47 PM EDT
Last month, a panel of the Senate Homeland Security Committee grilled credit card executives on late fees and disclosure practices. Members of the House Government Reform Committee probed experts on the scourge of predatory lenders. And a panel of the House Education Committee held a hearing entitled “Are Hidden 401(k) Fees Undermining Retirement Security?”
“This is the busiest I’ve been in the three years I’ve been at the Big ‘I,’” said Charles Symington, the chief lobbyist of the Independent Insurance Agents & Brokers of America, using the nickname of the trade group.
“We’ve just been swamped,” Dan Berger, senior vice president of government affairs at the National Association of Federal Credit Unions, said.
At 38, the total number of congressional hearings on financial-services issues is only slightly more than the 35 such hearings held by this time last year.
But so far this Congress, the hearings have been spread among nine committees, compared with just five last year: Aside from the two banking committees and the House and Senate judiciary committees, only the House Education Committee held any hearings on financial-services issues in 2006.
The burst of activity is driven partly by jurisdictional spats: Last week, the Banking and Commerce committees in the Senate held hearings on overlapping insurance issues that began just 15 minutes apart.
New committee chairmen also are seizing on timely consumer issues, such as credit card fees and predatory loans. “It seems to me they are excited about their ability to call hearings,” one financial-services lobbyist said.
The stepped-up pace comes at a time when financial-services lobbyists are struggling to form relationships with scores of new members on the House Financial Services Committee and assess their views on various issues. There are 11 freshman members of the committee, compared with just one freshman on the House Commerce Committee and no new members on the Ways and Means Committee.
“One of the challenges we’ve been having is that we don’t know a lot about these members. We don’t how they’re going to be voting,” one financial-services lobbyist said.
Meanwhile, the chairman of the Financial Services Committee, Rep. Barney Frank (D-Mass.), is pushing forward with an aggressive agenda. He has introduced five bills and passed legislation out of his committee on such divisive issues as allowing shareholders to vote on executive pay and beefing up oversight of Fannie Mae and Freddie Mac.
There are new threats from the tax-writing committees, which are looking for ways to raise revenue under pay-as-you-go budget rules. Wall Street firms that administer deferred compensation plans are fighting legislation attached to the Senate-passed minimum-wage bill that would cap the amount of pay employees can defer. The credit card and mortgage banking firms are concerned about proposals to narrow the tax gap that would hit their industries.
Many lobbyists are wondering when the pace will let up.
“It’s almost inhuman. I think it’s overwhelming for everyone — and not just us,” Ben McKay, senior vice president for federal government relations at the Property Casualty Insurers Association of America, said. He added that financial-services staffers look “even more tired than I feel.”
One staffer for a Financial Services Committee Democrat offered, “A Democratic staffer is certainly happy to be in the majority, so any additional work is offset by the benefit of controlling the agenda.”
Some sectors of financial services are facing particularly intense scrutiny this year. Student lenders are being probed for bribing school aid officers as they fight to keep their federal subsidies. Insurers are in the hot seat as Gulf state lawmakers have assailed the industry for its response to the hurricanes of 2005. There have been about a dozen major insurance hearings this year, McKay estimated.
The mortgage banking industry is also under the microscope, with the meltdown in the sub-prime mortgage market. “We generally testify about six or seven times a year. We testified six times in the first quarter,” Erick Gustafson, who heads lobbying for the Mortgage Bankers Association, said.
Yesterday, there were two hearings held on the crisis — one in the House and one in the Senate. Tomorrow, a Financial Services subcommittee will look into overhauling the Federal Housing Administration to boost homeownership and stem the tide of foreclosures.
Though the pace has raised stress levels and cut into sleep, financial-services lobbyists don’t believe that it has hurt policymaking. For the most part, legislation introduced so far this year has been recycled from previous Congresses. “While there’s limited time to react, they are bills that are known to people,” Gustafson said.
But lawmakers should not rush legislation on issues such as data security and predatory lending through committee, one lobbyist warned: “We are urging them to proceed cautiously.”