A House ethics office investigation involving a bipartisan group of lawmakers is focusing on an amendment to the financial regulatory reform bill that passed late last year.
Some details of the probe emerged a day after The Hill reported that the Office of Congressional Ethics (OCE) has asked lobbyists for detailed fundraising information on five House Republicans and three Democrats.
Watt is among the eight lawmakers cited by the OCE.
Two GOP members suggested on Monday that the office was homing in on the final House vote on reform, but the scrutiny of Watt’s amendment suggests the investigation is more nuanced.
Most Democrats, including the three in the probe, voted for the bill, while all Republicans opposed it.
Last October, Watt sponsored an amendment that would have included auto dealers under the oversight of a proposed finance industry watchdog, a position supported by several consumer advocacy groups.
The proposed Consumer Financial Protection Agency would oversee companies that provide auto financing, and used-car dealers offering “buy here, pay here” financing. Without Watt’s amendment, franchised auto dealers would be exempted.
Watt withdrew the amendment on Dec. 11, two days after a fundraiser for him at the Democratic National Committee headquarters.
While the invitation to the Dec. 9 fundraiser did not say it was sent to a specific industry, several financial-services industry political action committees (PACs) donated to Watt’s reelection committee in mid-December, including Bank of America, KPMG, Goldman Sachs Group, American Express, Promontory Interfinancial Network and Ameriprise Financial. Several of these companies offer auto financing.
In a statement, Watt said it was unfortunate the investigation was leaked to the press, because this could “leave the impression that there has been some impropriety.” He then said he would not comment until the investigation was completed, “except to assure the constituents and the public that I am fully confident” the probe will find there was no violation of “either the letter or the spirit of any laws or ethical standards.”
OCE declined to comment for this story.
Asked on Tuesday about whether the OCE was investigating the timing of the fundraiser and the amendment’s withdrawal, Watt said he didn’t know and declined to comment.
The launching of an OCE probe does not mean the cited lawmakers have done anything wrong. This probe is at a preliminary review stage. Nearly half the 48 “preliminary reviews” launched during this Congress through the first quarter of this year did not go further.
It is unclear whether the ethics office is investigating whether other members held suspect fundraisers close to a critical floor vote on regulatory reform.
The other lawmakers involved are Reps. Joseph Crowley (D-N.Y.), Earl Pomeroy (D-N.D.), John Campbell (R-Calif.), Jeb Hensarling (R-Texas), Chris Lee (R-N.Y.), Frank Lucas (R-Okla.) and Tom Price (R-Ga.).
Campbell openly opposed the Watt amendment. After Watt withdrew it, he thanked him on the House floor for working with him and making “a number of suggestions” that “clarified some things that were, frankly, confusing and conflicting in the bill.”
Campbell held two fundraisers just a few days before Watt withdrew the amendment. One was at the National Republican Congressional Committee’s Capitol Hill Club on Dec. 8, and another was a California wine tasting held December 9.
Several financial-services industry PACs contributed to Campbell around that date, including KPMG, Ameriprise, the Mortgage Bankers Association, Credit Suisse Securities, Charles Schwab and Ford Motor Co.
On Monday, Brent Hall, a spokesman for Campbell, called the OCE investigation “routine.” Hall did not comment by press time on Tuesday.
When the House debated financial regulatory reform, Financial Services Committee Chairman Barney Frank (D-Mass.) acknowledged differences on the panel and said the majority supported “some kind of exemption” for auto dealers.
Frank told The Hill Tuesday that Watt withdrew the amendment because he didn’t have enough votes to support it. A roll call vote was not taken. Frank said he didn’t know whether the OCE was looking into the Watt amendment.
Frank is aware of the problem with holding fundraisers close to conference committee action and has canceled two recent fundraisers and one scheduled for Thursday.
He did so, he said, because it was a “mistake” to hold them when Congress was beginning final consideration of the reform bill. “I didn’t want to have to talk to people like you about it,” he said, adding, “I thought it was a mistake to have financial industry-related fundraisers while this bill was being considered.”
The Massachusetts Democrat said his decision to cancel was not a response to the OCE investigation, because he didn’t know about it.
House ethics rules do not bar members of Congress from holding fundraisers immediately before action on bills that would affect donors who cut checks at the event, but the House ethics committee has a history of scrutinizing the timing.
In 2004 the ethics panel admonished Majority Leader Tom DeLay (R-Texas) for hosting a political fundraiser attended by energy lobbyists on the eve of a critical vote on an energy bill.
DeLay’s involvement “created the appearance that donors were being provided with special access,” the committee stated.
In his interview with The Hill, Frank repeatedly said that Watt opposed the car dealer exemption. But in remarks on the House floor Dec. 9, Watt insisted that he supported the exemption and only wanted to make technical changes to it.
“Both Mr. Campbell, who is a member of the committee, and I agree that automobile dealers ought to be exempt in their primary duties from the CFPA, the Consumer Financial Protection Agency supervision and what have you. There was broad bipartisan and philosophical agreement on that general proposition in the committee when Mr. Campbell offered his amendment, and there was broad agreement that there were some practical problems with the way the amendment was written; and the chairman delegated to me and to Mr. Campbell the responsibility to try to find the right language. We set about trying to do that, and we have been diligently trying to do that.”
Watt then blamed auto industry lobbyists for mischaracterizing his position and lobbying against the amendment.
“And then the automobile dealers, because they don’t like my amendment, decide that they need to lobby against it and make it sound as if I’m opposed to what I was in favor of all along,” he said on the House floor.
He added, “And finally, yesterday, Mr. Campbell and I sat down and talked again and decided that we should not allow the perfect to be the enemy of the good. What we have in the bill with the manager’s amendment substantially advances the process. We are not [at] the end of the process anyway. The Senate is going to have to deal with this. And both of us are still intent on the philosophy that automobile dealers ought to be exempt from CFPA. We agree on that.”
This article was updated on June 16 at 8:10 a.m.