When the U.S. Chamber of Commerce hosts Securities and Exchange Commission Chair Mary Jo White and other Washington regulators at its Capital Markets Summit today, you’ll have to excuse our skepticism that it’s speaking to the concerns of any businesses other than those on Wall Street.
We suspect the Chamber leaders are more concerned about the Dodd-Frank Wall Street Reform Act’s impact on the mega-banks that fund the Chamber and sit on its board, such as Charles Schwab, JP Morgan, Wells Fargo, Capital One and others that remain mostly undisclosed. These mega-banks caused the financial crash that savaged Main Street – and then they demanded bailouts and paid the Chamber to lobby against meaningful reforms.
The Chamber’s claims to represent Main Street are misleading and inaccurate. At last year’s Capital Markets Summit, for example, the Chamber presented a survey called “How Main Street Businesses Use Financial Services” – but its polling of “Main Street businesses” explicitly excluded any businesses making less than $75 million per year in revenue. Meanwhile, the U.S. Small Business Administration defines a small business for many industries as making no more than $7 million to $35.5 million per year in revenue (sidebar—we feel even those numbers are too high, as no ”mom and pop” shop we know pulls in $7 million a year.)
The Chamber has been the leading opponent of an effort at the Securities and Exchange Commission to require publicly traded companies to disclose information on political spending to shareholders, and that is likely to be an issue raised today. This is a logical corollary to the fact that the Chamber has been one of the largest spenders of aggregated corporate money in politics over the last decade. In 2012, it was the biggest or second-biggest non-disclosed outside spender in 29 of the 35 congressional races Public Citizen’s Chamber Watch Project studied. And its business model is to spend to influence races without ever disclosing its donors.
In January 2013, the Chamber and two other business associations submitted a comment to the SEC opposing political spending disclosure. The new rule would make it impossible for public corporations that give money to the Chamber to remain hidden as they oppose policies widely supported by many of their shareholders and most Americans—on issues ranging from climate change to banking policy.
The Chamber vs. small banks on Dodd-Frank
At today’s event the Chamber will also likely oppose many of the still-uncompleted Dodd-Frank rules. Since the law’s passage, the Chamber has ranged from vehemently opposed to the bill to presenting “fixes” that would completely disable it. Meanwhile, many of the small businesses the Chamber purports to speak for have been more nuanced and supportive of the reforms. Groups like the Independent Community Bankers of America have said that Dodd-Frank, while complex and introducing new compliance costs, has done good things for them. If anything, they want further modifications in the law distinguishing them from big banks – not to be spoken for by those who are skewed toward Wall Street. The Main Street Alliance has testified in explicit support of Dodd-Frank, saying, “The efforts to repeal all or part of Dodd-Frank are doing more to create uncertain circumstances than any other factor related to the Act.”
The Chamber has pulled out all the stops to delay and kill Dodd-Frank, and then had the audacity to criticize it for being “only one-third implemented.” While calling the bill “byzantine,” it proposes “fixes” that would add steps making the Consumer Financial Protection Bureau and other Dodd-Frank innovations unworkable.
And in what’s become a routine exercise in chutzpah, agents from the Chamber of Commerce show up at congressional hearings and in the media claiming the reform act stifles small business. Invariably, the Chamber’s agent claims to represent 3 million small businesses across the nation, even though more than half of its donations came from 64 donors. Invariably, they launch into examples only relevant to the mega-banks.
A case in point: On February 26, Chamber representative Tom Quaadman claimed that new Dodd-Frank restrictions on bank investments in collateralized loan obligations (CLOs) would harm small businesses.
CLOs are packages of loan, and each loan in the package is likely to be for more than $20 million. As one of the Chamber’s own fact sheets explains, they are “portfolios” of “large commercial loans.” They are not standard small business loans for the corner grocery, and they are generally purchased by large banks. Of the $300 billion CLO market, banks hold $70 billion. Of this, the largest three banks hold about 70 percent.
Protecting bloated CEO pay
More evidence that the Chamber represents big banks rather than small ones is its longstanding defense of outsized, taxpayer-subsidized CEO compensation. Chamber speakers may reference a simple rule to require disclosure of CEO pay today. The rule would require companies to publish the ratio of the CEO’s pay to that of the median paid employee. On May 23, 2013, Chamber envoy Quaadman criticized this reform in congressional testimony. The rule only applies to firms traded on the stock market—hardly small companies. Quaadman nevertheless dared to cite a company that claimed it would cost $7.6 million to figure the ratio. The company isn’t named, possibly because of the embarrassment that it doesn’t know what its employees are paid, or can’t figure a median. Or more likely, the number is fabricated hyperbole.
Again, is the Chamber truly focused on small business concerns or on the protection of the wealthy elite? In a mom-and-pop shop, presumably mom and pop know what each other makes.
Wall Street crashed the economy where Main Street lives. If the Chamber truly represented Main Street, it would champion stronger rules to make Wall Street small and stable enough to avoid crashing the economy again.
This post was written by Sam Jewler, communications officer for Public Citizen’s U.S. Chamber Watch program, and Bartlett Naylor, financial policy advocate for Public Citizen’s Congress Watch division.