About a year ago I noted that it was difficult to see how Mark Patterson, the former Goldman Sachs lobbyist who now serves as chief of staff to Treasury Secretary Tim Geithner, could join the administration without a waiver of the Obama Executive Order regarding former lobbyists. It subsequently appeared that Patterson would be appointed without a waiver, and that his recusal would not be based on Goldman Sachs’s public lobbying filings, but on a secret list of issues that Patterson and the Treasury General Counsel had developed.
This February 4, 2009 memorandum from the Treasury General Counsel’s office, which I obtained through a FOIA request, confirms that this is indeed how Patterson was appointed. The Treasury Department is not prohibiting Patterson from participating in many of the specific issue areas listed in Goldman’s 2008 and 2007 lobbying reports. Instead, the General Counsel’s office came up with a smaller and narrower (although still substantial) list of issues from which Patterson must be recused.
It is not clear exactly how Treasury came up with this list, but here are a few possibilities. First, some of the issues on the Goldman report are so general (e.g., “general economic conditions” and “investment banking issues”) that they may not be thought to qualify as “specific issues” at all, although this term is not defined either in the LDA or the E.O. Second, the Treasury memorandum emphasizes that the issue must involve a “particular matter,” which means the matter must be focused “on the interests of specific persons, or a discrete and identifiable class of persons.” Thus, one might suspect that Treasury excluded some issues on the grounds that they did not involve a particular matter at all. This, however, seems less likely when one considers that all of the issues listed by Treasury involve general public policy questions, and it is difficult to see how these issues would be any more focused on Goldman Sach’s interests than most of the issues it chose not to list.
Third, Treasury may have determined that Patterson did not in fact lobby or work on some of the issues that are listed in the Goldman reports. Since the reports only identify the lobbyists who engaged in lobbying activities with respect to each general issue area, it is possible that Patterson did not work on some of the specific issue areas listed in the reports. Moreover, the Treasury General Counsel’s office apparently decided that Patterson did not need to recuse himself from “auction rate securities” matters because he merely “facilitated” briefings of congressional staff by his Goldman Sachs colleagues. In the (debatable) judgment of the G.C.’s office, this activity did not constitute “lobbying” within the meaning of the Executive Order.
Finally, Treasury may have decided to more narrowly define some of the issues that Goldman listed on its report. For example, Goldman listed “over-the-counter derivatives” as one of the specific issues on which it had lobbied. Treasury, however, precludes Patterson from participating only in “energy derivatives.”
I have previously suggested some of the deficiencies in Treasury’s approach to this issue:
What are the problems with this approach? First, it seems inconsistent with the E.O.’s purpose in basing its restrictions on the LDA. Presumably, the reason for using the LDA is that it provides an objective and publicly available record of who is a lobbyist, who was lobbied and what subjects were lobbied on. Allowing individual appointees and their agencies to deviate from the public record based on arbitrary and undisclosed criteria hardly seems designed to enhance public confidence in the process.
Second, there are bound to be questions raised with regard to discrepancies between LDA forms and the recusal decisions of particular agencies. How does the administration know that Goldman’s LDA form does not accurately identify the issues Patterson worked on? Is it making its determinations solely on Patterson’s current recollection? Has it looked at the records underlying the LDA filing?
Some of these deficiencies are illustrated by the follow-up Treasury memo of March 19, 2009, which expands the restricted issue list to include “alternative energy investment tax credits,” based on the fact that Patterson “recently recalled” working on this issue during his employment at Goldman.
Perhaps an even more serious question is raised with respect to Treasury’s approach to section 3(c) of the E.O., which bars a former lobbyist from appointment “with any executive agency that [he or she] lobbied within the [prior two years].” Goldman’s reports indicate that Patterson lobbied the Treasury Department with respect to financial issues in 2007, which would have barred him from his current position. The Treasury General Counsel, however, “determined after careful consideration that the informational briefing that you provided at the request of a Treasury official in July 2007 did not constitute lobbying.”
This determination, which is not further explained in the memorandum, seems very questionable. Even if the briefing was given at the request of a Treasury official, this would not exempt it from the definition of “lobbying contact” under the LDA (see Section 3(8)(B)(viii) of the LDA). Moreover, even if the briefing were not a “lobbying contact” (if, for example, no covered executive officials were present), it still seems very likely that it would constitute “lobbying activity” (ie, activity in support of lobbying contacts) under the LDA.
Whether or not Treasury’s determination is defensible under the literal terms of the E.O., one should step back and consider the situation in terms of the administration’s supposed aversion to employing lobbyists. Patterson’s calendars for the first half of 2009 reveal, as one would expect, that he has been involved in the major issues facing the department, including matters such as the auto bailout, TALF/TARP, the stimulus, housing, regulatory reform, stress tests, “munis” (perhaps referring to issues concerns the safety of municipal bonds), and the Public Private Investment Program for buying up toxic assets.
Many of these issues clearly have a major impact on Patterson’s former employer. Goldman Sachs, for example, was a TARP recipient which announced in early 2009 that it wished to exit the TARP program as soon as possible, which it did in June 2009. Patterson participated in various meetings regarding TARP, including a June 4, 2009 meeting regarding “TARP repayment.” If one believes (as the Obama administration presumably does) that lobbyists are predisposed to favor the interests of their former employers, why wouldn’t one be just as concerned about Patterson’s involvement in these issues as in the issues listed in Treasury’s memorandum? And if, on the other hand, one believes that Patterson can be trusted to put the public interest over that of Goldman Sachs, what is the point of requiring Treasury to find loopholes in the E.O. in order to hire him?