Why Did Chuck Schumer Hire an Ex–Goldman Sachs Lobbyist?

Why Did Chuck Schumer Hire an Ex–Goldman Sachs Lobbyist?

Why Did Chuck Schumer Hire an Ex–Goldman Sachs Lobbyist?

And what role will he have in recommending minority-party regulatory nominees?


The notice in Politicos “Playbook” a couple weeks ago didn’t draw much attention. “TRANSITIONS — MARK PATTERSON is returning to Capitol Hill to work as Senate Minority Leader Chuck Schumer’s general counsel overseeing investigations and approps. The former Daschle policy director was at Perkins Coie. He is replacing Rebecca Kelly Slaughter, who the Senate confirmed to the Federal Trade Commission.”

The blurb conveniently left out Patterson’s résumé in between working for then–Senate Democratic leader Tom Daschle and white-shoe law firm Perkins Coie. From 2005 to 2008 Patterson was a lobbyist for Goldman Sachs, which at the time was shaking the very foundations of the global economy. In 2007, Patterson worked to block the Democratic Congress from advancing “say on pay” rules, which would enable shareholders to have a voice in approving or disapproving executive-compensation decisions. It was a half-measure, but one Goldman Sachs vigorously opposed. Patterson also lobbied for Goldman on credit-default swaps, one of the financial innovations that contributed to the financial meltdown. Goldman eventually got paid out on its credit-default swaps with failed insurance-giant AIG at 100 percent; while at the New York Federal Reserve, Timothy Geithner brokered the bailout.

After that, Patterson got hired by Geithner as his chief of staff, serving in that position throughout Geithner’s tenure. An Obama-administration order restricted lobbyists from getting jobs within the government, but Patterson was waved in with some recusals to avoid working on matters on which he had directly lobbied. This prompted early criticism of Obama’s team for saying one thing and doing another on the revolving door between industry and government. This led to a classic moment at a House hearing between Geithner and Representative Marcy Kaptur (D-OH), who was critical of the AIG bailout and Goldman Sachs’s counter-party payoff.

“Who is your chief of staff?” [Kaptur] demanded.

“Mark Patterson,” Mr. Geithner responded.

“Who did he work for before?” she asked.

“The president’s transition team,” said Mr. Geithner, eliciting laughter because virtually everyone in the room seemed to know that Mr. Patterson’s primary employer before he joined the government was Goldman Sachs.

Patterson was a high-level member of the Treasury economic team that dominated the response to the financial crisis and prevented more aggressive interventions. He was present for the disaster Geithner’s Treasury made of foreclosure mitigation, as his team was concerned more with protecting bank balance sheets than homeowners. Famously, Geithner told Senator Elizabeth Warren (D-MA) that his foreclosure program was merely intended to “foam the runway” for the banks, with the homeowners, in that analogy, representing the foam crushed by a jumbo jet. The Treasury Department lobbied against Congress changing bankruptcy laws to give borrowers more leverage to work out resolutions on their mortgages. And the Treasury stepped in to prevent size caps on the largest banks, via what was known as the Brown-Kaufman amendment. As a senior Treasury official told New York magazine at the time, “If enacted, Brown-Kaufman would have broken up the six biggest banks in America. If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.”

After Geithner left, Patterson stayed on with his successor, Jack Lew, for a time, before joining his mentor Pete Rouse at Perkins Coie, in a classic Washington role of lobbyist-who-isn’t-a-lobbyist. The duo boasted they would “provide advice to the firm’s clients on how to navigate complex problems involving the government, public relations and the legal process.” So instead of getting marching orders from industry and talking to friends in the government, they talk to friends in the government and then advise the industry.

Now Patterson has landed in Schumer’s office. It’s not entirely clear what he’s there to do. When I asked Schumer’s communications director Matt House what Patterson would be doing, he e-mailed the “Playbook” blurb. When I asked him to elaborate on what “overseeing investigations and approps” actually means, he said, “No, not going to be more specific.”

It’s not like Schumer hasn’t faced criticism for closeness to Wall Street in his career; hiring a Goldman Sachs lobbyist doesn’t ameliorate that. Plus, Schumer is in a different role from a backbench senator welcoming someone back to Capitol Hill. He represents the caucus and makes decisions with wide-ranging effects on policy.

For example, the Senate minority leader recommends nominees for open seats on federal regulatory commissions that have multi-member panels and require some minority-party representation. If you think these minority-party seats don’t matter because they get outvoted by the president’s party, I have two words for you: Ajit Pai. While a minority-party commissioner on the Federal Communications Commission, Pai created a record of opposition and carried the banner for conservative ideas and principles. And when the presidency shifted, Pai was primed to take over the FCC as chairman and quickly enact hard-line policies.

Schumer faced criticism for considering his former chief of staff David Hantman, a lobbyist for Yahoo and Airbnb, to a post at the Federal Trade Commission, before responding to pressure and selecting consumer advocate Rohit Chopra. His former counsel Becca Slaughter, whom Patterson is replacing, got the other FTC slot.

Now there are three important bank regulatory seats for which Schumer can recommend nominees: two at the Federal Deposit Insurance Corporation; and one at the Securities and Exchange Commission, replacing Kara Stein, a stalwart reform figure throughout the financial crisis and its aftermath, whose presence on the panel expires at the end of the year. “She is somebody who was fighting for needed reforms, who understood those reforms, and was making the case for why they are needed,” said Marcus Stanley, policy director at Americans for Financial Reform. “You need someone who’s demonstrated and shown commitments to protecting ordinary investors and the public.” Between the FDIC, which handles unwinding failed banks, and the SEC, which governs the capital and trading markets, you’re talking about practically everything at the heart of the meltdown. Strong voices there who can become future leaders are absolutely crucial.

Slaughter, Patterson’s predecessor, was involved in interviewing and vetting for positions on federal commissions. Schumer’s office insists that Patterson will play no role in the process. But the longest-serving chief of staff in Treasury Department history didn’t return to Congress to be a potted plant. Even if he’s thoroughly uninvolved in choosing the next SEC and FDIC commissioners, he will have an imprint on Schumer’s actions at some level.

This is a time of transition within the Democratic Party. The establishment has shifted its pitch to the left to catch up to the desires of the rank and file. The 2016 party platform was among the most progressive in decades on a range of issues. The midterm campaign message, when not distracted by Trump corruption, hits kitchen-table issues like wages, investment in infrastructure and public housing, protecting pensions, and reining in corporate power. But these are rhetorical pledges. When the most important Democrat in the Senate hires an ex–bank lobbyist from the corporate wing of the party to fill a high-level counselor position, it undercuts that rhetoric. When you hire someone who lobbied against reining in executive pay at a time when part of your main message is based on challenging oversize salaries while the average worker struggles, it damages it. This isn’t giving a speech at Goldman Sachs; it’s hiring someone from Goldman Sachs to join you in the halls of power. 

UPDATE: After publication, Schumer communications director Matt House offered further comment: “Not to let the facts get in the way of a nonsense story based on conjecture, but Mark Patterson doesn’t work on financial services issues for our office.”

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