[Corp. Watch] Corporate foxes guarding financial chicken coop

[Corporation Watch]

Top Geithner Aide Fought CEO Pay Reform

By David Corn and Jonathan Stein

(Mother Jones, March 20) -- On Wednesday afternoon, as President  
Barack Obama was leaving the White House for a town hall meeting in  
California, he spoke for 15 minutes to reporters about the AIG  
controversy.

	Responding to the rising rage over the $165 million or so in bonuses  
paid to executives at the bailed-out insurance firm, Obama noted that  
he was quickly developing policies to prevent future AIG-like  
catastrophes.

	The president slammed Wall Street's culture of "excess greed, excess  
compensation, excess risk taking", and to demonstrate that he's  
committed to battling such greed, he cited his work in the Senate to  
rein in executive compensation.

	Noting that he and Rep. Barney Frank (D-Mass.) had each introduced  
legislation on this front in 2007, Obama declared that "there were  
some people who attacked us, saying government has no business doing  
that."

	One of Obama's opponents at that time was Mark Patterson, a lobbyist  
then for Goldman Sachs, the investment banking firm, which opposed the  
Frank-Obama initiative.

	Yet Patterson is now chief of staff to Treasury Secretary Timothy  
Geithner, the embattled point man in the Obama administration's  
endeavor to undo the notorious AIG bonuses.

	That is, a Washington influence-peddler who worked against Obama's  
effort to limit excessive corporate pay is now a key member of the  
Obama administration team that is supposed to contain excessive  
compensation in the AIG case and in general.

	In 2007, Rep. Frank, the chairman of the House financial services  
committee, introduced H.R.1257, the Shareholder Vote on Executive  
Compensation Act. The bill required public companies to allow  
shareholders to hold non-binding votes on executive compensation plans.

	The measure -- dubbed "say on pay" -- was a modest step, though only  
one of the few attempts then to address exorbitant salaries. It did  
not limit pay for corporate managers; it merely would have allowed  
shareholders to express their displeasure with compensation packages.

	Corporations would have been free to ignore the outcomes of these  
symbolic votes. Still, the banking industry opposed the bill. But  
Goldman Sachs, for which Patterson was a registered lobbyist from  
September 2005 to April 2008, was no fan of "say on pay."

	Sachs' chief executive, Lloyd Blankfein, who took home at least $70  
million in 2007, has argued that shareholders are "less sophisticated  
and have less understanding" of compensation issues than corporate  
board members.

	According to lobbying disclosure forms, Patterson was one of four  
Goldman Sachs lobbyists registered to work on HR 1257. In January, a  
Treasury official confirmed to the Associated Press that Patterson's  
lobbying portfolio included this compensation measure.

	Despite industry opposition, the House approved Frank's bill on a 269- 
to-134 vote on April 20, 2007. That same day, Obama introduced a  
version of the legislation in the Senate.

	The Senate bill, which initially attracted only five co-sponsors, was  
then referred to the Senate banking committee. Weeks later, Obama sent  
a letter to Sen. Chris Dodd (D-Conn.), the chair of that committee,  
asking him to hold a hearing on the proposed law. Obama wrote:


> I believe public discussion and debate over executive compensation  

> packages would force corporate boards to think twice before signing  

> over millions of dollars to CEOs. Certainly, many CEOs are ably  

> steering their firms and deserve their paychecks. But the rate at  

> which executive pay has grown, as compared to stagnating wages among  

> American workers, is rightfully frustrating shareholders and  

> employees alike, especially given the lackluster performance of many  

> of the companies paying these high salaries.


	Dodd, then running against Obama in the Democratic presidential  
primaries, apparently was not convinced. He held no hearings on the  
bill, and the measure met a quiet death in his committee.

	Whatever Patterson had done, he could claim a success. But on the  
campaign trail last year, then Obama repeatedly touted the legislation  
to show he was serious about corporate reform.

	At an Indiana press conference in April 2008, he said of the measure,  
"This isn't just about expressing outrage. It's about changing a  
system where bad behavior is rewarded -- so that we can hold CEOs  
accountable, and make sure they're acting in a way that's good for  
their company, good for our economy, and good for America, not just  
good for themselves."

	As vice president for government relations at Goldman Sachs,  
Patterson -- who had previously been policy director for Sen. Tom  
Daschle (D-South Dakota) -- handled a wide assortment of financial,  
banking, patent, energy, and insurance issues.

	He worked on tribal gaming matters. And he was registered to lobby on  
credit default swaps and carbon trading. Because of his lobbying  
activities, Patterson did not meet the tight ethics rules Obama  
adopted to slow down Washington's ever-spinning revolving door.

	His appointment -- which was not subject to Senate confirmation --  
was questioned by White House reporters and criticized by government  
reform groups. But the Obama administration granted Patterson a waiver  
to allow the ex-Goldman Sachs lobbyist to join Treasury.

	(Goldman Sachs has been one of the biggest beneficiaries of the  
federal rescue of AIG; the fallen insurance firm, which has received  
$170 billion in funds from the Federal Reserve, has used $6.8 billion  
of that money to pay Goldman Sachs.)

	A spokesperson for Goldman Sachs would not provide any details  
regarding Patterson's lobbying, and the White House each declined to  
comment on Patterson's past lobbying for Goldman Sachs or his present  
work for Geithner.

	A Treasury Department spokesman said that "Mark Patterson is in full  
compliance with the administration’s strict ethics policy, and has  
recused himself from discussions on this and all other issues he  
worked on during his time in the private sector."

	Does this mean that Geithner's chief of staff cannot be involved in  
conversations and decisions regarding corporate compensation issues,  
including the AIG bonuses? If so, wouldn't that place Geithner at a  
disadvantage as he tries to handle such matters?

	On Wednesday, while recounting his and Frank's attempts to enact  
shareholder say-on-pay legislation, Obama pointed to the measures as  
examples of "smart regulations" that enhance "oversight, transparency,  
accountability."

	And he remarked, "All we're trying to say is you've got to be  
accountable to somebody. And it's that measure of accountability that  
I think is part of what has made America strong, and we have to get  
back to those kinds of values."

	But Geithner's right-hand man was not long ago paid well to help  
undermine those values. How Patterson has gone from serving Goldman  
Sachs to serving the Obama administration is a tale that could use  
some more transparency.