Chip Somodevilla / GettyThis morning the Wall Street Journal broke the news that former SEC head Mary Schapiro is joining Promontory Financial Group, a consulting firm and lobby group that works with the financial services industry.
This news is sure to upset those who already decry the revolving door between Washington and Wall Street — not just because Schapiro (given her resume) is a great get for any industry group, but because in the last few years Promontory has come to be known as the industry group.
In a massive profile in this month’s American Banker, the Promontory is described as Wall Street’s “shadow regulator.” Founded in 2001 by Eugene Ludwig, a college friend of Bill Clinton’s who served as Comptroller of Currency during his administration, Promontory is stacked with former bureaucrats from every corner of Washington that matters.
More importantly, once they get to the firm, they stay there. Recent hires include not only Schapiro, but also Amy Friend, a former staff director for the Senate Banking Committee.
Ludwig’s hires include former senior officials from the OCC, the Federal Deposit Insurance Corp., the Treasury Department, the Federal Reserve System, the Securities and Exchange Commission, and assorted state agencies and foreign regulatory bodies. Promontory’s past and current employees and advisors include sitting Fed Governor Sarah Bloom Raskin, a former CFPB chief operating officer, a former acting FDIC Chairman, former National Football League Commissioner Paul Tagliabue and the now-deceased former Italian Finance Minister credited with inventing the euro. It even has half a dozen former staffers from the Consumer Financial Protection Bureau, which is not even three years old yet.
Their leg up is that these former staffers know regulation so well that they can be prescient about where the industry is going. Ludwig, says American Banker, foresaw (and “championed”) the dive into securities markets that have characterised the last 30 years on Wall Street. Former Citi CEO Sandy Weill is a fan.
Promontory doesn’t necessarily describe its government dealings as “lobbying” on its website.
Promontory experts are regularly called upon by congressional committees and federal supervisory agencies to advise on legislative and regulatory matters. Promontory also assists industry associations and their members in understanding regulatory developments and preparing for regulatory changes.
Ludwig doesn’t seem to like the word “lobbying” either. Here’s what he told American Banker:
“We don’t lobby — it’s not our business. We do the opposite of influencing government,” Eugene Ludwig says. “We try to influence the private sector in terms of what the government wants it to do.”
So reverse lobbying?
The money tells a simpler story. According to OpenSecrets.org, Promontory’s financial services lobbying efforts have exploded in the last two years.
In 2012, had $1.3 million in total lobbying expenditures in the industry. In 2011 it was $1.2 million. Data for 2009 and 2010 is not available, but the last two years’ numbers make 2008’s $180,000 worth of expenditures look like chump change.
Additionally, OpenSecrets.org points out that all of the lobbyists that Promontory contracted outside of its own staff fit the “revolving door profile” of individuals who worked in the public sector before working in the private sector.
Salaries at Promontory can range from $40,000 annually for an analyst to over $259,000 for a Director, according to GlassDoor.
On the whole, it seems like a decent place to work too. Former employees said that the hours were long but that they worked with smart people and were fairly paid for the most part.
“The financials services industry lives here,”said one reviewer.
Sounds like a great club.
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