W.H. uses K Street as foil in reform push

The White House is stepping up its war against special interests and K Street as it fights opposition to healthcare, financial-services and other reform efforts.

After implementing rules designed to keep lobbyists at arm’s length, administration officials now are working to link their critics to high-priced lobbying campaigns that they say stand between reform and the status quo.

Perhaps the best example of this is the administration’s push to create a new regulatory authority to stand guard over consumer financial products like home loans, short-term, high-interest “payday” loans and credit cards.

This Sunday, senior administration officials blasted Wall Street executives for receiving big bonuses and lobbying against the creation of the Consumer Financial Protection Agency, a central plank in President Barack Obama’s efforts to revamp the financial regulatory system in response to the near-collapse of the credit markets a year ago.

Appearing on ABC’s “This Week,” David Axelrod, a senior adviser to the president, called the bonuses “offensive” in light of the billions in bailout money many of the firms received. He said financial firms should stop lobbying against the administration’s proposal to erect a new consumer products regulator.

White House Chief of Staff Rahm Emanuel also criticized the banking lobby’s push against financial-services reform, even after several large banks received billions of dollars in government bailout money to keep them from collapsing.

The president himself has criticized financial firms and their lobbyists. In a speech earlier this month, Obama accused banks and their K Street hired guns of “descending on Congress” and using “every bit of influence” to maintain the status quo that has “maximized their profits at the expense of American consumers.”

“These Americans can’t afford high-priced lobbyists to argue their case,” the president said.

Scott Talbott, a lobbyist for the Financial Services Roundtable, defended the bonuses as evidence that executives were doing hard work to revitalize the financial sector and, by extension, the economy.

He distinguished the new bonuses from the huge sums handed out before the financial crisis pushed the economy into a deep recession by saying that companies were increasingly rewarding executives who were minimizing long-term risks instead of short-term profits. They do this by attaching a “clawback” provision that would require some of the money to be returned if future targets aren’t met and would withhold some payouts until a later date.

The criticism leveled by the president and his advisers comes as Congress begins in earnest to tackle the financial-services reform proposals. The House Financial Services Committee will continue a markup of that legislation on Tuesday.

Lobbyists have had some early success tweaking the reform proposal. The House panel, for instance, adopted an amendment last Thursday to scale back the consumer agency’s power over small banks and credit unions. The change, introduced by Reps. Brad Miller (D-N.C.) and Dennis Moore (D-Kan.), would leave the agency full authority over 115 banks and 80 credit unions, the two told The Hill.

The amendment was adopted after a strong lobbying push by bank and credit union interests, which generally praised the change even as they pledged to lobby for further restrictions on the new regulator’s authority.

Targeting the lobbying activities of the opposition is a tried-and-true practice in Washington. But the administration’s relationship with the influence industry may be particularly strained given the introduction of policies to keep lobbyists at bay. The White House banned federal officials from discussing specific requests for stimulus money with lobbyists. More recently, it encouraged federal agencies to keep lobbyists off influential advisory panels.

But some lobbyists said the more aggressive stance of the White House against critics of its proposals reflects the increasing level of maturity of the reform bills.

“They are stepping up their rhetoric,” said one financial-services lobbyist. “The issue is on deck.”

It’s more than financial services. The White House had been accused this summer of being disengaged on healthcare. But after the insurance industry moved against a reform bill out of the Senate Finance Committee by releasing a report saying it would raise premiums, leading administration officials quickly refuted the industry’s claims.

“This is a distorted and flawed report from the insurance industry and cannot be taken seriously,” said Reid Cherlin, a White House spokesman.

White House officials have also criticized the U.S. Chamber of Commerce’s opposition to its efforts, in particular on climate change legislation to reduce carbon dioxide and other greenhouse gas emissions.