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Seidman, C. (2011). Senate for Sale? A look into the role of 
Lobbyists during the passage of

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Senate for Sale? A look into the role of Lobbyists during the passage of “Dodd-Frank” in the U.S. Senate.

Casey Seidmanunconfirmed user (Public Administration, Arizona State University)

Published in politi.philica.com

Abstract
I looked at the role lobbyists had during the passage of “Dodd-Frank.” I did this by looking at existing literature, creating a content analysis and looking at campaign donations. After reviewing all of the data, I came to the conclusion that lobbying did not effect the passage of “Dodd-Frank”.

Article body




Introduction

2008 yielded one of the worst financial disasters the United State and the world had ever suffered. The banking sector had lost more firms in one day than at any other time since the Great Depression. This resulted in mass layoffs, bankruptcies, loss of pensions, declining wages and other associated issues with a financial crisis. The financial crisis caused the election to tilt in favor of the Democratic Party which in turn gave the democrats a record majority in both the House of Representatives and the Senate, and elected then-Senator Barack Obama to the Presidency.

Background

Since the election, President Obama had called for “wall street reform.” Obama believed that this was the best measure in order to ensure that the financial crisis had never occurred again. In 2010, Senator Chris Dodd of Connecticut and Representative Barney Frank of Massachusetts co-authored the piece of legislation that would set out to reform “wall street”. This piece would be entitled the “Dodd-Frank Wall Street Reform and Consumer Protection Act”.

In July 2010, “Dodd-Frank” passed the both the House and the Senate and was then signed in to law by President Obama. Controversial legislation such as “Dodd-Frank” passed too easily. This leads us to consider how such legislation could pass with little opposition. Due to the ease of passage, one has to wonder what is going on in the deliberation process.

That led me to examine the lobbying activity that occurred during the policy deliberation process. To be more specific, I examined the following question: “Did lobbying have a positive effect on the passage of ‘Dodd-Frank’ in the Senate?” I believe that lobbying did have a positive effect on the passage of “Dodd-Frank” in the Senate.

Studying whether or not lobbying positively affected the passage of “Dodd-Frank” in the Senate is important because we need to know who is affecting the legislation that affects our daily lives. We need to know this because lobbyists have the ability to change, manipulate and transform public policy that could affect our way of life.

Literature Review

Due to how recent the passage of “Dodd-Frank” was, there is no current scholarship on this topic. Scholarship on lobbying could be best described as minimal. For this reason, I drew upon theory and current news articles. These are the best sources for this topic.

First, I drew upon Theodore J. Lowi who wrote the piece “The End of Liberalism: The Indictment.” In this piece, Lowi asserts that interest groups are dominant in the political process; especially in the deliberation over policy (Lowi, Pg.353). This piece creates grounding for the research laid out in this piece. The reason that this creates grounding is that it supports the idea the lobbying controls the legislative agenda. We must examine this source because it provides a firm, theoretical framework that establishes paradigms we must examine.

Second, I examined an article from The Atlantic. The Atlantic, much like NewsWeek or Time Magazine, is a news magazine. The article is entitled “5 Ways Lobbyists influenced the Dodd-Frank bill.” This article discusses and gives the reader a clear understanding of the relationship between the lobbyists and the senators (Indiviglio, The Atlantic). This article is important because it articulates the lobbyists’ role in persuading the senators votes on the legislation.

Third, I examined an article from Forbes Magazine. This article is entitled “Treasury, Dodd Sell out to Wall Street.” The article discusses how lobbyists convinced the writers of “Dodd-Frank” to drop some portions of the legislation (Lezner, Forbes Magazine). This article is important because it talks about the direct effect of lobbyists and their effect on the legislation.

Fourth, I examined an article in Bloomberg Business Week. This article gives an in depth look into the relationship between regulators and lobbyists (Loder, Bloomberg Businessweek). This article is important because it gives a look into the lobbying process.

The final article I examined is from the Wall Street Journal. While this article does not focus on the relationship between lobbying and the legislation; it does explain what “Dodd-Frank” actually does. The article claims that “Dodd-Frank” only “expands” the government and its powers instead of addressing all problems in the banking sector (Taylor, Wall Street Journal). Even though the article does not address lobbying directly, it is interesting to note that the bill does not address the problems in the banking industry.

When looking into how to build a theoretical framework, I drew upon Richard Fenno’s book entitled Home Style. Home Style was a study that political science Professor Richard Fenno conducted in the 1970’s in which he examined the relationship between members of congress and their constituencies (Fenno, Home Style). The most important piece of this research study is how Fenno utilized both qualitative and quantitative methods. As a result of Home Style, mixing qualitative and quantitative methods is now the paradigm in social science research.

The decision to draw upon Fenno’s method of mixing qualitative and quantitative methods because it was the most appropriate for a research study on lobbying due to the fact that lobbying is difficult to quantify. Because of the difficulty in measuring something intangible such as lobbying, it was imperative that I utilize Fenno’s method.  

Data

The first piece of data I have is the Federal Election Commission’s donation list from the 2010 Midterm elections. More specifically, I examined ten U.S. Senators that where up for re-election and had to vote on “Dodd-Frank.” I chose five democrats, and five republicans (Federal Election Commission). This delegation makes it fair and representative.

The second piece of data I examined is three news articles that either document the lobbying during the deliberation over “Dodd-Frank” or what the “Dodd-Frank” bill actually does. I conducted a content analysis in which I looked for connections between lobbying and “Dodd-Frank.”

I had a survey I created for Dr. James Thurber to fill out. This survey questions the role of lobbyists in the deliberation over “Dodd-Frank”. However, after multiple attempts, he has not been able to fill out my survey and therefore I cannot consult his expertise. Thurber was unable to fill out the survey due to prior time commitments.  

Model

Because of the intangible nature of lobbying, I had to create a correlative model. Causation would be an onerous task to prove. Not to mention, lobbying has to be viewed in the broadest of terms. In order to keep within the broad, correlative framework; I defined lobbying as any connection between a special interest and a politician. That is why I kept this research model purely correlative.

My dependent variable was the passage of “Dodd-Frank”. My independent variable was “Lobbying Influence”. When my data yielded a relationship between lobbying and the passage of “Dodd-Frank”, I considered it lobbying. This is how I defined the relationship between the independent and dependent variable.

Next, I would like to discuss my primary variables. More specifically, I want to address how my variables where conceptualized. During the course of my project, in order to stay within the broad, theoretical framework; I decided that it was necessary to have multiple variables. The variables that I decided upon were “political donations”, “passage of legislation” and “lobbying”. I defined “political donations” as any kind of campaign contributions donated from banking interests to senators. I defined “passage of legislation” as whether the legislation passed or not. And finally, I defined “lobbying” as any kind of connection between special interests and the senators. It was required that these definition be broad in order to fit within the framework.

In the operationalization stage, I kept the variables broad as I had previously done in the conceptulization phase. As broad as the variables are, they were narrowed down to looking at “campagin donations”, “connection to lobbyists”, and “expert interpretation.” It had seemed as though this was the most effective way to operationalize these variables.

Potential Issues

First, I wanted to note that Dr. James Thurber, a scholar on lobbying and the director of the Center for Congressional and Presidential Studies, intended to fill out a survey regarding the role of lobbying in the deliberation over “Dodd-Frank” in the senate. However, after multiple attempts at filling out the survey, he was unable to fill it out due to previous time commitments.

Second, the campaign donation list from the Federal Election Commission is limited to only ten senators. The ten senators, five democrats and five republicans, are important, but the sample is fairly limited. The reason that I was only able to look at ten senators is due to time constraints. However, it is a representative sample because it looks at senators from both parties.

And finally, I examined current news articles. I examined three news articles that documented the lobbying activities surrounding “Dodd-Frank”. The key problem with using news articles is that they come from news magazines, which in turn are usually political biased. This created the risk of skewing the data. However, due to the lack of scholarship on this topic, this is the strongest source we have. In any event, we must consider the role of politic bias.

This experiment seemed to be reliable. You could put it in a pre-test, then a post-test, and come up with the same results. The reason for this is that the data is static and does not change as it could in experiments in which the data is not static.

However, I noticed that there is a threat to internal validity. The specific threat to internal validity is history. Aside from the lobbying that occurred during the deliberation over “Dodd-Frank”, you had extraneous factors that one must consider. For example, one and a half years ago, the economy completely failed and it was blamed on the banking institutions. Since that period, and prior to, the number of home foreclosures has gone up. Also, bankers of failed institutions received proverbial “golden parachutes”. In the same time period, people had lost their wealth in the stock market. Within the same time period, bankers and members of the banking community were arrested for crimes and had a negative image in the public.

It seems as though history, or more specifically, the political climate may have affected how the senators voted on this legislation. Regardless of how much money or favors banking industry lobbyists lobby the senators, it might not be enough to fight back against the proverbial “headwinds” that demanded “wall street” be reformed. Perhaps the politicians felt as though they their constituency would hold them accountable if they had voted against the legislation. Their constituency might have felt as though the senators were only helping special interests.

As a result of the political climate, the senators-regardless of lobbying contributions-decided to vote based upon political trends. Typically, politicians vote on their self-interest and their self-interest was to vote on what their constituents wanted.

After an examination of the votes, it is worth noting that the senators voted strictly on party lines. This bill is one that was sponsored by democratic members of congress and is considered to be a “democratic bill”. “Dodd-Frank” had support of the democratic majority and the republicans voted against it just so that they can oppose President Obama. It is worth noting that perhaps political motivations caused the senators to vote the way that they voted. I only noted this because this could be the cause and would threaten the internal validity of my experiment.

Methods

The main analytic methods that I used were descriptive and correlative. These analytics are mainly qualitative in nature. Despite this, some of the research that I examined contains numbers; however the numbers fail to explain the relationship in depth.

I was mainly descriptive because all of the sources do not have direct relationships. There is not a clear connection between the sources. This stimulus between the data and sources had to be connected. So what I will do is take a look at the senatorial campaign donations from the 2010 election cycle and document which senators received campaign donations from the banking sector. I also made note of the amount donated to each senator. This is the most firm piece of evidence and strongest connection that I have. This evidence probably shows the most direct relationship; however, I have to keep it descriptive in order for everyone to see the relationship.

I was also descriptive when I used my survey. However, despite the fact that I concentrated on being very descriptive, Dr. Thurber was unable to answer the survey due to prior “time commitments”. However, if he had filled it out, we would have gained knowledge that would greatly advance the answer to the research question. He did not have the time to answer the question and could not give his valuable feedback.

Analysis

First, let’s examine the data provided by the Federal Elections Commission. In Appendix A, you will notice that there is a chart that provides the following information: “Senator”, “Banking industry donations”, and “Vote on ‘Dodd-Frank”. Every Senator, with the exception of Barbara Boxer, received donations from the banking industry (Federal Elections Commission). Some received money in excess of four thousand (Federal Elections Commission). By looking at Appendix B, you can see that Senator David Vitter received the most money from the banking industry (Federal Elections Commission).

Next, I conducted a content analysis on the three aforementioned news articles in my literature review. After a thorough examination of the three articles, there were only five references to lobbying. These references indicate that lobbying activity went on during the deliberation over “Dodd-Frank”. Five references do indicate that at least a fair amount of lobbying did occur. It is expected that legislation as controversial as this would yield moderate to high levels of lobbying.

 

 

Conclusion

After looking over the data, I can conclude that it is likely that lobbying did not positively affect the passage of “Dodd-Frank” in the Senate. My hypothesis, in which I stated that I believed lobbying had a positive effect on the passage of “Dodd-Frank”, is incorrect. All of the senators in my data sample, with the exception of one, received donations from the banking industry (Federal Elections Commission). Those who received money voted for or against the legislation based upon party lines. Some of those who voted for it received some of the most from the banking industry. It is because of this that I cannot conclude that lobbying positively contributed to the passage of “Dodd-Frank”.

 This topic needs further research and discussion. The reason for this is that it is a new topic. “Dodd-Frank” passed several months, and was signed into law thereafter. Due to this, there was a lack of literature to draw upon. Also, when I looked for peer reviewed publications on lobbying, there was very little. Lobbying as a general field of study must be expanded upon in order to continue this research.

More specifically, we need to wait another one to two years in order to further this research. In a few more years, more information about the deliberation over “Dodd-Frank” will become readily. As a result of more information becoming readily available, researchers will be able to conduct stronger research. In one to two years we will know all of the details regarding this and researchers will be able to conduct more thorough research.

My final recommendation for future research is to look at the roles of lobbyists on both sides of the issue. After they look at both sides, then they could determine which side had a stronger lobbying arm. This would give a more in-depth look at the lobbying process. This would also help advance any other research done on lobbying.

                                                                 

 

                                     

 

Senator

Banking industry donations

Vote on "Dodd-Frank"

 

 

 

Appendix A

Harry Reid(Democrat)

3800

Yes

Barbera Boxer(Democrat)

0

Yes

Kirsten Gillibrand(Democrat)

2400

Yes

Patty Murray(Democrat)

1000

Yes

Russell Feingold(Democrat)

500

Yes

John McCain(Republican)

3072

No

Richard Burr(Republican)

2000

No

Richard Shelby(Republican)

4000

No

Charles Grassley(Republican)

4400

No

David Vitter(Republican)

4600

No

Appendix

 

Appendix B

 

 

 

 

 

 

 

 

 

 

 

 

Works Cited

Indiviglio, Daniel. July 5th, 2010. 5 Ways Lobbyists influenced the Dodd-Frank Bill. The Atlantic. Retrieved from http://www.theatlantic.com/business/archive/2010/07/5-ways-lobbyists-influenced-the-dodd-frank-bill/59137/

 

Lezner, Robert. June 24th, 2010. Treasury, Dodd Sell Out To Wall Street. Forbes Magazine. Retrieved from  http://www.forbes.com/2010/06/24/chris-dodd-barney-frank-markets-bob-lenzner-financial-reform.html

 

Loder, Ashjylyn and Mattingly, Phil. September 7th, 2010. Goldman Sachs, BP Met With Derivative Regulators on Dodd-Frank. Bloomberg Businessweek. Retrieved from http://www.bloomberg.com/news/2010-09-07/goldman-sachs-bp-met-with-derivative-regulator-on-rules-after-dodd-frank.html

 

Taylor, John B. July 1st. 2010. The Dodd-Frank Financial Fiasco. Wall Street Journal

Retrieved from

http://online.wsj.com/article/SB10001424052748703426004575338732174405398.html

 

Fenno , Richard. 1978. Home Style: House Members in Their Districts. Longman.

 

Lowi, Theodore J. The end of Liberalism: The Indictment. 1969. Retrieved from Classics of Public Administration.

 

Federal Election Commission. 2010 Campaign Donations. Retrieved on October 14th, 2010. Retrieved from http://www.fec.gov/DisclosureSearch/mapHSApp.do?election_yr=2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

Information about this Article
This Article has not yet been peer-reviewed
This Article was published on 24th February, 2011 at 02:07:22 and has been viewed 2704 times.

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The full citation for this Article is:
Seidman, C. (2011). Senate for Sale? A look into the role of Lobbyists during the passage of “Dodd-Frank” in the U.S. Senate.. PHILICA.COM Article number 228.


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