Lawmaker ties to banking business go beyond norm

[June 17, 2010]  WASHINGTON (AP) -- Anyone with a bank account or credit card has a stake in the overhaul of financial rules Congress is working on. But the industry ties of some politicians writing the law go far beyond the norm.

One senator's wife is a director of a futures and options exchange; another senator and his wife run a multimillion-dollar title company. And a congresswoman's husband drew salaries from three industry players last year.

Several lawmakers hashing out a House-Senate compromise on the legislation have millions in financial services company investments or owe big mortgage debts to banks lobbying on the legislation, according to an Associated Press review of financial disclosure reports released Wednesday.

None have stepped away from the deal-making.

The legislation is the most ambitious rewrite of financial regulations since the Great Depression. It aims to prevent a repeat of the 2008 financial crisis that drove the economy into a deep recession. Lawmakers hope to get the measure to President Barack Obama by July 4.

Sen. Chris Dodd, a Connecticut Democrat and chairman of the Senate Banking Committee, is leading the negotiations for the Senate. Dodd's wife, Jackie Clegg, serves on the board of CME Group Inc., which has spent at least $2.9 million since January 2009 lobbying on federal issues, including the financial regulation overhaul.

CME Group, formed when the Chicago Mercantile Exchange, Chicago Board of Trade and the New York Mercantile Exchange merged, is the world's largest futures and options exchange. It has a huge stake in the overhaul.

Exchanges charge a fee for processing trades, and under the legislation, derivatives traders would have to execute over-the-counter swaps through the exchanges. CME has opposed that requirement, putting it at odds with the Senate bill. CME executives have said such a mandate might drive some of their business overseas.

Clegg received $153,219 in compensation from CME Group last year, divided between cash payments and stock awards, CME filings with the Securities and Exchange Commission show. Clegg's CME stock was worth $252,642 as of the end of 2009, the latest date covered by Dodd's new personal financial report disclosed Wednesday. Since then, she's acquired more CME stock.

Clegg "has never been lobbyist and has gone above and beyond to ensure that her work remains absolutely independent of Senator Dodd's work, including personally hiring an ethics attorney to review her work," Dodd spokesman Bryan DeAngelis said in a written statement.

It's not the first time Dodd has had a personal financial connection to an industry he's taken a lead role in regulating. As Dodd was put in charge of writing Senate health care legislation last year, his wife sat on the boards of four health care companies. Dodd announced earlier this year he would not seek re-election.

Another panel member, Alabama Sen. Richard Shelby, the top Republican on the Banking committee, is president of an Alabama-based title company that he and his wife Annette co-founded. State corporation records list Mrs. Shelby as the secretary. The Shelbys' stake in the Tuscaloosa Title Co. was worth $1 million to $5 million at the end of last year, according to his financial disclosure report covering 2009. The reports typically value assets in ranges rather than exact dollar amounts.

The financial services legislation would put title companies under the oversight of a new consumer protection agency. Shelby voted against the Senate's version of the bill last month. His spokesman, Jonathan Graffeo, said Wednesday that Shelby complies with all ethics rules and won't step away from the negotiations.

Another negotiator, Sen. Judd Gregg, R-N.H., has $1 million to $5 million invested in Bank of America and stock holdings of up to $50,000 each in Commonwealth Bank, JP Morgan and Capital One and up to $15,000 each in Citicorp and the Mony Group. Gregg has no plans to recuse himself, spokeswoman Laena Fallon said.

A House negotiator, Rep. Shelley Moore Capito, R-W.Va., disclosed that her husband, Charles Capito, received salaries from Citigroup Global Markets, Morgan Stanley Smith Barney and United Bank Inc., last year. Capito spokesman Joel Brubaker declined on Wednesday to reveal how much Charles Capito earned from the companies, saying the congresswoman wasn't required under House ethics rules to disclose that.

Charles Capito left Citigroup/Morgan Stanley last July and now works for United Bank in Charleston, W.Va., as executive vice president and director of business development, Brubaker said. He said the congresswoman checked with the ethics committee.

The Capitos had $146,000 to $365,000 invested last year in Citigroup, which spent at least $6.8 million since January 2009 lobbying on the financial services bill and other legislation. The couple owes CitiMortgage $100,000 to $250,000 for the mortgage on property in Lexington, Va., Rep. Capito's financial report shows.

The legislation would set up a council of regulators to oversee the entire financial system and watch for trends and risks that could threaten the economy. It would give regulators broad new authority to police financial institutions and curtail banks' ability to trade in securities.

Among several other members involved in negotiations:

• Rep. Darrell Issa, R-Calif., reported that he and his wife had $5 million to $25 million invested in a Goldman Sachs high-yield fund and a similar range invested in a JPMorgan Chase & Co. high-yield fund. The Justice Department is investigating mortgage speculation at Goldman Sachs, which also faces civil fraud charges from the Securities and Exchange Commission.

• Rep. Carolyn Maloney, D-N.Y., reported that she owes CitiMortgage $500,000 to $1 million for a Washington, D.C., property and Cardinal Bank up to $500,000 for the mortgage on an Arlington, Va., condominium.

• Rep. Maxine Waters, D-Calif., disclosed that her husband has $350,000 to $750,000 invested in OneUnited Bank.

• Small Business Committee Chairwoman Nydia Velazquez, D-N.Y., disclosed a Chase mortgage of $1 million to $5 million on a property in Brooklyn, N.Y., and a Chase home equity line of credit debt of $100,000 to $250,000.

• The wife of another conference committee member, Rep. Melvin Watt, D-N.C., used to be executive director of the Minbanc Foundation, a charity that promotes minority- and women-owned bank ownership. The foundation's board during Eulada Watt's years of service included top American Bankers Association lobbyist Ed Yingling. Watt said he would not recuse himself from negotiations on the bill because of his wife's foundation employment, which appears to have ended in 2008.

[Associated Press; By SHARON THEIMER]

Associated Press writers Jim Kuhnhenn, Larry Margasak and Andrew Miga contributed to this report.

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