Bail them out, regulate them, then work for them

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In the summer of 2008, Senate banking committee chief counsel Amy Friend helped bail out Bank of America and the rest of the mortgage industry. A couple months later, Friend helped craft the Great Wall Street Bailout. After that, she helped her boss, Sen. Chris Dodd, D-Conn., pass a sweeping financial regulation bill.

On Tuesday, Friend started her new job on K Street as managing director at Promontory Financial Group, the self-described "premier global financial services consulting firm," to work with clients on "the regulatory implementation of the Dodd-Frank," according to the firm's press release.

It's an unseemly storyline, but not a rare one in Washington: Bail them out. Regulate them. Then go to work for them.

Friend worked for Democrats Chuck Schumer and Rosa DeLauro before serving under the Comptroller of the Currency in the Clinton and Bush administrations. In 2008 Dodd hired her as chief counsel for the banking committee.

Dodd, on the Senate floor, thanked Friend by name repeatedly for her work crafting the 2010 financial regulation bill. After Dodd retired, Friend went to K Street. She may not register as a lobbyist, but instead consult with clients and prepare regulatory filings.

There are two types of people on K Street: access people, who can get you in the door; and policy people, who know what's on every page of every relevant bill and regulation. Friend is the latter. While business will dry up for other Dodd alumni on K Street, Friend is valuable because -- to quote one Republican lobbyist -- "she knows what's on page twenty-three-[bleep]ing-hundred of that bill," and every other page, too.

In other words, Friend didn't just write a landmark piece of legislation -- she wrote her meal ticket.

Friend's personal financial situation has blended murkily with her public service before. Bloomberg reporter Robert Schmidt wrote last year about her investments in banking and real estate stocks during the Year of Bailouts, 2008.

Two weeks before a Dodd-sponsored bailout of Fannie Mae passed the Senate, Friend purchased debt in the GSE. She invested tens of thousands of dollars in bonds from the Federal Home Loan Bank Board, including purchases in June, when Dodd was pushing a housing bailout. Her 2008 investments included bailout barons AIG, Freddie Mac, Bank of America (which bought subprime king and Dodd benefactor Countrywide that year), Wells Fargo, and mortgage insurer MGIC.

Friend didn't comment at the time, and Dodd defended her.

The story of Friend's cashout is not about her, but about how regulation and bailouts breed lobbyists.

A recent Politico article documented a handful of Obama officials who cashed out on K Street, despite Obama's continued rhetoric about stopping the revolving door. One Obama administration alumnus, lobbyist Doug Richardson, said Republicans were worse. "We're Democrats. We don't have as many places to go."

Heaps of factual evidence belie that self-serving claim, but Democrats get away with it. Behind this little lie is the premise that the GOP is the party of lobbyists, special interests, and big business, while Democrats are the party of the little guy. In truth both parties are in bed with K Street and corporate America.

But back to Amy Friend. Check out Promontory's press release about Friend's hire: She will work on "the regulatory implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which, at 2,300 pages, is one of the most complex and wide-ranging overhauls of the financial regulatory framework in decades."

Translated: "There's a lot of lobbying left to do on this bill, and thousands of hurdles and loopholes to navigate -- you'd better get the bill's author on your side."

If Friend had gone to the banking committee with the intention of maximizing her potential cashout -- and I don't think she did -- it's hard to imagine how she would have done anything differently. After bailing out banks, her committee passed a complicated bill that increases government's involvement in the industry while leaving regulators with unprecedented amount of discretion.

Imagine if she had written a bill shrinking government's role in finance -- then financial firms would have less need for a lobbyist or revolving-door consultant. Imagine a bill that set new rules in stone rather than igniting lengthy, high-stakes regulatory processes -- what use would she be to future clients?

No one should assign motives to Friend's legislative work (she did not respond to requests for comment), but her story shows us that big government is a breeding ground for revolving-door lobbyists.

Timothy P.Carney, The Examiner's senior political columnist, can be contacted at tcarney@washingtonexaminer.com. His column appears Monday and Thursday, and his stories and blog posts appear on ExaminerPolitics.com.

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