OGR ramps up reg reform practice

Congress Daily

Industry's Increased D.C. Presence Reflects New Reality

by Bill Swindell

July 28, 2010

Passage of the landmark Dodd-Frank financial regulatory overhaul has not slowed lobbying activity. In fact, there is a growing realization that now Washington plays such a central role within financial markets that banks and other firms that do not have a D.C. presence will be at a competitive disadvantage.

The finance, insurance and real estate sector spent $125.5 million in lobbying for the first quarter, putting it on pace to break the $467 million figure that it reached in 2009 when the Senate and House began tackling the revamp, which President Obama signed into law last week. Despite passage, lobbying activity is expected to thrive as agencies began writing rules over some of the most contentious parts of the package, such as restricting proprietary trades for a bank's account rather than its clients, and the extent to which broker/dealers will have to be held to a higher legal standard when advising their customers.

"A financial institution -- whether it's a bank or a nonbank of any size -- needs to have a Washington office," said Steve Bartlett, president of the Financial Services Roundtable, a trade group which represents 100 major firms. Roughly half of those firms have a D.C. office. "It puts you at a competitive advantage to have a Washington presence. First, you can understand what's coming, because if you wait to get the press release about it, you are already behind. You can have input into the process."

One top lobbyist was even blunter: "I think you are going to see a lot of firms doubling down in Washington."

For example, Nomura Holding Inc. in May named Heather Wingate to open its D.C. shop, luring her away from her job as head of federal affairs for Citigroup. She previously worked in legislative affairs for the Bush White House. "This is a critical step for the firm as we build out our Americas and global businesses," said Naoki Matsuba, president & CEO of Nomura. Nomura wasn't finished. This month it recruited Mark Schuermann from the Financial Services Forum to give the firm a bipartisan imprimatur. Schuermann has worked for Senate Majority Leader Reid and former Rep. Harold Ford Jr., D-Tenn.

That pattern follows that of Bank of New York Mellon, which established its D.C. office last year and hired Ann Costello away from Goldman Sachs to be its head of government affairs.

It later brought on Rob Getzoff, who served as counsel to then-Rep. Rahm Emanuel, D-Ill., before he left to serve as Obama's chief of staff.

U.S. Bank picked up former Wachovia lobbyist Walter Price to establish a Washington presence for the Minneapolis institution that has grown tremendously in recent years to become the 11th largest bank holding company.

And Regions Financial Corp. has moved its public policy manager, Chris Scribner, to Washington from its Birmingham, Ala., headquarters. "Over the past year, we've increased our outreach in Washington and would expect that to continue," said Regions spokesman Tim Deighton.

The movement comes as even some large banks continue to recruit staff, especially those in regulatory expertise.

"You can tell where a company is in their evolution in terms of their sophistication in the need to engage in lobbying, like where their head of government affairs is based. If they're not in Washington, then you can tell where they are on that learning curve," said Dan Crowley, a partner overseeing the financial services practices at K&L Gates. "Every corporation I witnessed for the last dozen years goes through this."

Even while firms bulk up in-house, there is still a need for outside lobbying firms, whether for consultants to guide them through unfamiliar committees, or for legal guidance as rulemaking begins.

For example, BNY Mellon during the 1st quarter paid Capitol Tax Partners $60,000 and the Duberstein Group $100,000 for their services.

"Anytime the government is involved in this area -- and in this area they are actively involved and will be for some time -- companies are going to see increase in Washington," said Steve Elmendorf, whose firm Elmendorf Strategies was retained by Citigroup, Goldman Sachs and the Managed Funds Association during the legislative debate over the Dodd-Frank bill.

"It could mean hiring a Washington office, or hiring consultants if they didn't have them, or hiring lawyers if they didn't have them. The more the government gets involved in an industry's life, the more industry hires people to figure that out," Elmendorf added.

Besides the rulemaking process, lobbyists point to other items that should spark wrangling, such as a bill to make technical corrections to Dodd-Frank; recommendations from the Financial Crisis Inquiry Commission that could garner subsequent legislation; and ongoing international efforts to harmonize rules across borders such as the Basel Committee on Banking Supervision, the G20, and the International Organizations of Securities Commissions.

Ogilvy Government Relations has ramped up a new practice specializing in the rulemaking process, especially those at the SEC and Commodity Futures Trading Commission, two agencies that will map out regulations for the over-the-counter derivatives market.

Ogilvy just hired De'Ana Dow away from the CME Group, and has paired her with Justin Daly, a former SEC counsel, to spearhead the unit.

"Lobbying firms who have legal and regulatory experts with prior agency experience will add tremendous value to this debate because they understand not only the technical aspects of the regulations, but also have an appreciation for how the agencies develop rules and where the pressure points are," said Drew Maloney, chief executive officer for Ogilvy Government Relations.