The Bailout: Business Lobbyists Bear Down

Lobbyists for everyone from carmakers to air-conditioning companies to AARP tell Congress they need the Paulson plan to pass

by Jane Sasseen and Theo Francis

As the Treasury Dept.'s on-again, off-again $700 billion rescue package headed for passage in the Senate (BusinessWeek.com, 10/1/08) on Wednesday night, corporate lobbyists were taking no chances. Over the past several days, as the bill appeared to falter amid intense public opposition, they have launched a massive, coordinated lobbying effort to help keep it on track. Trade associations, corporate executives, and small business groups all targeted naysaying members of Congress directly. And, to put pressure on the politicians, in more recent days they went all-out to convince John and Jane Q. Public back home that the rescue plan is a good idea for the economy as a whole, not just Wall Street.

Now, with the bill headed back to the House for a much tougher test, corporations and business groups will see if their full-court press paid off.

"Hundreds of thousands, if not millions, of jobs would be in jeopardy" and investors will continue to see values decline if the bill is not passed, warns John Castellani, the president of the Business Roundtable, a group representing large-company CEOs. While many first dismissed the package as simply benefitting the banks, he added in a conference call with reporters on Wednesday morning, the impact of the credit squeeze is now spreading. More businesses and individuals are seeing "that they can't get a car loan or a loan to finance their payroll or their student loans."

Leading the Charge: Financial Services

The financial-services industry, which stands to benefit hugely from the bill, led the charge. In the first few days after Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke proposed the plan, most of the industry's efforts were focused on ensuring the package was shaped in ways that helped its interests.

Lobbyists from such groups as the Financial Services Roundtable and the American Bankers Assn. worked nearly nonstop buttonholing Congressional staffers, talking with Treasury officials, and tracking each new iteration of the bill. They successfully fended off a measure, which consumer groups fought equally hard to get, that would have allowed judges in bankruptcy court to reduce a homeowner's mortgage obligation. They also won support for moves to loosen the application of "mark-to-market" accounting rules that many financial institutions say were forcing them to write down illiquid mortgage-backed securities to unreasonably low values.

But in some sense the industry may have been too successful for its own good. The bill quickly became perceived as little more than a bailout (BusinessWeek, 9/24/08) for Wall Street. That sparked a public fury and helped lead to its stunning defeat on Monday. The House rejection caught many business lobbyists off guard and has since sent its business supporters, collectively, into overdrive to try to assure the bill's passage. "We're using the entire arsenal," says Scott Talbott, senior vice-president for the Financial Services Roundtable. "This is the time to pull all out the stops."

Indeed, in the wake of that drubbing, the financial-services players have leaned more heavily on allies across the business spectrum for support, as well as some consumer groups.

Small Business Lobby Mobilized

The U.S. Chamber of Commerce has begun airing radio ads in Washington and is planning more in the next couple of days. It also lined up 56 groups to sign an open letter to Congress on Tuesday, from the Air Conditioning Contractors of America to the Software & Information Industry Assn.

The Business Roundtable organized a conference call with 90 CEOs on Tuesday to coordinate the appeals their members are making to Congress, as well as to their employees, customers, and others they can tap.