Lobbying by firms which are majority-owned by U.S. Treasury

Spurred by news that GM had hired lobbyists, someone asks if I "could explain how a company which is 63% owned by the US Government could justify spending money to hire lobbyists?" Here is my response...

Personally, I do not subscribe to the notion that  "lobbying" is some kind of social "evil" that is counter to the interest of citizens. Lobbying is primarily an informational process, with the lobbyist trying to "paint a picture" that is advantageous to their client, frequently in terms of how legislation or regulation may help or harm "jobs" and "businesses" in the politician's local district. Lobbying per se is not directly tied to illegal political "contributions" or bribes.

Whether the government owns 0% or 100% of a firm has no bearing on the business-value of engaging in lobbying of Congress and regulators. If the will of Congress and the regulators can affect your business, you have a right and fiduciary obligation to your owners (including Uncle Sam) to make sure that Congress and the regulators are informed of the business and economic ramifications of their actions.

The U.S. Treasury is the nominal owner of that 63% government ownership. They have a fiduciary duty to their "owners", the citizen taxpayers of the U.S., to get a "return" for that investment. Treasury certainly has an obligation to make sure that the firm acts in the best interests of the firm and assuring that Treasury gets its return.

That is not to say that every action of the firm is 100% aligned with Treasury's interests, but generally Treasury can "justify" the actions of the firm if those actions are likely to be in the best interests of the firm's survival and health and "return" of the investment money to Treasury.

Sometimes the interests of firms are way out of line with the interest of U.S. citizens (e.g., Wall Street "banks"), but that is more the exception than the rule.

The simple truth is that Congress and the regulators depend on the lobbyists because the lobbyists generally tend to have a better grasp of the facts and principles involved than the politicians and regulators and their staffs. The problem is weeding out the bad apples without throwing out the overwhelming majority of good apples.

Of course, political partisans who have a contrary interest to the legislative and regulatory priorities of the firm may not agree with the positions being "lobbied" by the firm, but that is all about politics and not about whether lobbying is "justified" or not.

I understand the negative popular image of lobbyists and the political "power" that accrues from attacking them, so maybe it is just another one of those "grimace and bear it" scenarios where you publicly deplore what you privately support. The old saying in Washington is "Never confuse public pronouncements with private intentions."

So, in short, Treasury should publicly decry and excoriate the use of any of the taxpayers' money for lobbying, but privately encourage them to lobby as aggressively as they need to and maybe even offer to help them do it.

But let me reiterate that this is all independent of any illegal financial "contributions" from any firm to any member or staff of Congress or any regulator.

I also understand that many naive individuals lump the legal forms of lobbying in with illegal activities and call the whole collection "lobbying" with no distinction, but that is a misuse of the term. Put more simply, not everyone who "lobbies" is necessarily a "lobbyist". True lobbyists must be registered and are regulated by the government.

In any case, I have no problem with GM lobbying Congress and the regulators. The (temporary) majority ownership by the U.S. Treasury should have no impact on what lobbying activities the firm can engage in.

Ditto for Fannie Mae and Freddie Mac.

-- Jack Krupansky