Bailed Out Companies Spend Millions On Lobbying
Story from the Washington Post

Top recipients of federal bailout money spent more than $10 million on political lobbying in the first three months of this year, including aggressive efforts aimed at blocking executive pay limits and tougher financial regulations, according to newly filed disclosure records.

The biggest spenders among major firms in the group included General Motors, which spent nearly $1 million a month on lobbying, and Citigroup and J.P. Morgan Chase, which together spent more than $2.5 million in their efforts to sway lawmakers and Obama administration officials on a wide range of financial issues. In all, major bailout recipients have spent more than $22 million on lobbying in the six months since the government began doling out rescue funds, Senate disclosure records show.

The new lobbying totals come at a time of mounting anger in Congress and among the public over the actions of many bailed-out firms, which have bristled at attempts to cap excessive bonuses and have loudly complained about the restrictions placed on hundreds of billions of dollars in government loans. Administration officials said this week that top officials at Chrysler Financial turned away a $750 million government loan in favor of pricier private financing because executives didn't want to abide by new federal limits on pay.

The reports revived objections from advocacy groups and some lawmakers, who say firms should not be lobbying against stricter oversight at the same time they are receiving billions from the government through the Troubled Assets Relief Program, or TARP.

"Taxpayers are subsidizing a legislative agenda that is inimical to their interests and offensive to what the whole TARP program is about," said William Patterson, executive director of CtW Investment Group, which is affiliated with a coalition of labor unions. "It's business as usual with taxpayers picking up the bill."

But several company representatives said yesterday that none of the money borrowed from the government has been used to fund lobbying activities — though there is no mechanism to verify that. Financial firms have successfully quashed proposed legislation that would explicitly ban the use of TARP money for lobbying or campaign contributions.

'Very complicated policy debates'
GM spokesman Greg Martin said that maintaining a lobbying presence is vital to ensure that the automaker has a say when major policy decisions are made. "We are part of what is arguably one of the most regulated industries, and we provide a voice in very complicated policy debates," Martin said.

According to quarterly lobbying reports that were due Monday, more than a dozen financial firms and carmakers that have received TARP assistance spent money on lobbying during the first three months of this year. After Citigroup and J.P. Morgan Chase, top lobbyists included American Express, Wells Fargo Bank, Goldman Sachs and Morgan Stanley.

Most of the companies spent less on lobbying this year than they did during the first quarter of 2008. J.P. Morgan, for example, spent $1.43 million in early 2008, compared with $1.31 million this year. Others, however, showed increased spending, including Capital One Financial, which doubled its quarterly lobbying expenditures to more than $400,000.

The lobbying records do not yet include campaign contributions by corporate lobbyists. Bank of America, for example, which spent $660,000 on lobbying in the first quarter, also gave more than $218,000 in campaign contributions through its PAC, according to the Federal Election Commission.

The Citigroup lobbying report provides a glimpse of the troubled company's interests in Washington, including credit card rules, student loan policies, and patent and trademark issues. Citigroup chief executive Vikram S. Pandit and other company officials lobbied fiercely against a House bill approved in March that would have placed a 90 percent tax on bonuses for traders, executives and bankers earning more than $250,000 at firms that had been bailed out by taxpayers. The proposal stalled in the Senate.

Citigroup spokeswoman Molly Meiners said the company "specifically prohibits the use of TARP funds for lobbying-related activities" and said the funds "are subject to an oversight and approvals process."

Banks Getting TARP Funds Not Paying It Forward
Story from the Wall Street Journal

The largest bank recipients of U.S. government aid are offering less credit to businesses and consumers, the Treasury Department said Wednesday, reflecting and exacerbating the tenuous state of the current economic environment.

In a monthly snapshot of lending by the 21 largest banks receiving Troubled Asset Relief Program funds, the Treasury said credit being offered fell 2.2% across all commercial-lending and consumer-lending categories in February, compared with the prior month.

Particularly problematic: continued deterioration in commercial real estate and general business lending, as well as the credit being made available for auto and alternative student loans.

The lone bright spot remained home loans, with consumers eager to take advantage of record-low interest rates to refinance their home, business, or church mortgages.

The Treasury said 16 of the 18 banks surveyed increased mortgage originations in February, resulting in a 35% increase in mortgage lending from January levels.

The February decline in lending adds to pressure on the Obama administration's efforts to restart the still-fragile credit markets.

The Treasury has committed $95 billion in TARP funds for new programs to boost consumer and business lending, though they are either just getting started or are still in the development phase.

The report suggests that jawboning by federal officials for banks to use TARP funds to boost lending is having a limited effect.

The Treasury blamed the decrease on the broader economic weakness, including low consumer confidence, high unemployment and a decrease in U.S. exports.

It also said lending would have been lower absent the nearly $200 billion in capital injections the government has provided to about 550 banks.

Banks' diminished appetites for lending are forcing businesses and consumers alike to curb their spending, which risks prolonging the U.S. economic recession.

Demanding New Collateral

Dan Carl, who owns a handful of businesses including several car dealerships in Michigan, said Fifth Third Bancorp, Cincinnati, refused to renew some of his company's credit lines when they came due earlier this month. On other loans, Fifth Third raised interest rates and demanded Mr. Carl's firm put up additional collateral.

The lack of affordable credit was one factor prompting Mr. Carl's company to recently lay off 20% of the work force and close at least one dealership.

Lenders such as Fifth Third are punishing "the good customers to make up for the banks' mistakes," he said.

Fifth Third received $3.45 billion through TARP.

It made $634 million of new commercial and industrial loans in February, down from $785 million in January and $1.3 billion in December, according to the bank's filing with the Treasury Department.

"Demand for Small Business credit is still relatively stable but showing signs of weakening as application volume is starting to slow," Fifth Third said in its filing.

Fifth Third's Response

Fifth Third spokeswoman Stephanie Honan said the bank won't comment on specific customers.

In reviewing loans, she said, Fifth Third considers overall economic conditions and "any changes to the customer's business environment."

Overall, she said, the bank tries "to balance our commitment to our customers with safe and responsible lending practices."

The banking industry's lending pullback was particularly severe with consumer credit.

In February, according to the Treasury report, originations of new U.S. credit-card accounts fell 2.7%.

That number likely understates the magnitude of the retrenchment. Many banks have been slashing borrowing limits on cards, especially for customers who rarely approach their limits.

By reducing the credit lines, the banks can free up space on their balance sheets. But the move risks infuriating consumers.

Bank of America Corp., which received $45 billion through TARP and has the industry's largest U.S. card portfolio, said in its submission to the Treasury that credit-card loan balances and new account originations declined in February "due to continued reduction of exposure on long term inactive customers and line reductions on high risk accounts."

Bank of America recently informed longtime customer James S. Jensen that the interest rate on his credit card would leap into the double-digits, even though he had never been late on a payment.

Canceling His Account

"I could borrow on the street for less than this," says Mr. Jensen, a 61-year-old vice president at Navistar Truck Group in Warrenville, Ill.

Mr. Jensen says he is canceling his Bank of America card as a result.

Bank of America spokeswoman Betty Riess said the Charlotte, N.C., bank is "taking a more aggressive look at accounts to control risk given the current environment."

Bailout Cash For Energy Efficiency
Story from the Wall Street Journal

I'm not among the one-in-nine homeowners who currently qualify for aid under the new federal housing-rescue plan. But Uncle Sam may still foot the bill for nearly $19,000 worth of upgrades at my house. And he could for you, too.

Potentially lucrative new and expanded tax incentives for energy-efficient and renewable-energy home improvements may offer some consolation to homeowners who feel they are falling between the cracks with the government's various economic stimulus efforts.

They include up to $1,500 in tax credits for adding qualifying windows, doors, insulation, roofs, heating and cooling equipment, water heaters and even wood and pellet stoves to your your Raleigh real estate in 2009 and 2010. Perks for installing pricier solar technology, small wind-energy systems or a geothermal-well system include a tax credit of 30% of qualifying expenditures with no upper limit through 2016.

The credits helped spur Joe Lombardi of Pleasant Valley, N.Y., to recently sign a contract for a solar-electric system with Hudson Valley Clean Energy in Rhinebeck, N.Y. He expects to get about $10,500 back via the renewable-energy credit on a system costing him roughly $35,000 after a state rebate. He also plans to invest in a heat pump to work in conjunction with the new solar system, which could net him another $1,500 via the energy-efficiency credit. "That's significant," says Mr. Lombardi, who has been considering investing in a solar system since the late 1970s. "I'm an environmentalist. ... It also adds value to the house."

Notably, these incentives are tax credits, which lower your tax bill dollar-for-dollar, versus a tax deduction, which trims money off taxable income. The Internal Revenue Service is expected to issue firm guidelines on details of the credits soon, and consumers should consult tax professionals for clarity on filing.

To be sure, consumers still have to put out cash to get the incentives, and the products that qualify are those generally deemed to be at the highest efficiency levels, which can cost more. Plus, the $1,500 energy efficiency credit currently lasts only last two years, which means consumers must find the fortitude to spend at a time when their instinct may be to save. "This is a pretty lucrative deal, and I don't think the government can continue to do it going forward because it's expensive," says Steven Nadel, executive director of the American Council for an Energy-Efficient Economy, a not-for-profit based in Washington, D.C.

The credits fall into two primary camps. One is energy efficiency, which covers certain improvements to an existing home's structural elements, such as windows and insulation, as well as for the purchase of qualifying high-efficiency heating, cooling and water-heating equipment. The second is for renewable energy, which includes solar, wind, geothermal (heat generated from the earth) and fuel-cell technologies (which convert the chemical energy of a fuel, such as hydrogen, into electricity).

In a nutshell, the energy-efficiency tax credit increases to 30% of qualifying costs from 10%, and the cap also rises to $1,500 from $500. (That's a $1,500 total credit for all applicable improvements combined in 2009 and 2010.) It also extends the credit to include stoves that use renewable biomass fuel -- wood, pellets, plants -- as well as to certain roofing materials; in certain cases, installation costs can be included. Appliances such as refrigerators, dishwashers and clothes washers aren't eligible. For new construction, consumers won't qualify for the $1,500 efficiency credit but are eligible to receive the renewable-energy credit and a separate energy-savings incentive.

With the 30% renewable-energy credit, the richest change is that for systems placed into service after 2008, there is no longer a cap on claims (except for fuel cells). Previously, it was $2,000 for solar systems. "It's a big deal -- it's a really big deal," says Jeff Irish, owner of Hudson Valley Clean Energy, which sells solar and geothermal systems. He says he doesn't expect to raise his prices because of the credit, particularly given the current state of the economy. "We just want to sell more systems."

Manufacturers are hurrying to figure out which products will earn credits under the government's rules, which means testing them for various standards of energy efficiency. The shakeout could have significant impact on future product lineups. "We have one wood stove that apparently doesn't qualify, and it's our third best-selling stove," says Dave Kuhfahl, president of HearthStone Quality Home Heating Products Inc. "We're wondering if it will ever sell again."

Still, manufacturers aren't waiting to educate dealers and consumers about this potential sales chit. Hearth & Home Technologies, a division of HNI Corp., mailed a letter late last month to dealers of its Harman-brand stoves with a list of models they could start promoting in conjunction with the credit. "We are trying to be proactive, so when the dead-on rule comes, they are up to speed," says Dane Harman, Harman's founder. One of his dealers, John Enea of Home & Hearth in Cortlandt Manor, N.Y., echoes the sentiment: "The government is helping us sell stoves."

Others are ramping up advertising campaigns that, in essence, will compete for consumers' tax-credit business. Insulation makers such as Icynene Inc. and BioBased Insulation have prominent Web pages outlining details of the federal tax breaks. Same with makers of several brands of high-efficiency tankless water heaters, including Bosch Group, Takagi USA and Rinnai Corp. For its part, Andersen Corp. and has been playing up the $1,500 perk online and is preparing an ad campaign to explain the tax credits.

"We are hoping [the credit] really does inspire people," says Maureen McDonough, Andersen's director of corporate communications. While windows are always a significant investment, she says, "it seems like something people might be more interested in now."

Of course, tax credits can only do so much to stanch the spending slowdown amid rising unemployment, which last month surged to the highest rate since 1983.

And in the case of solar electric and geothermal systems, costs can still be in the tens of thousands of dollars even after the tax credit. For instance, an estimate I received this year for a solar system to power my electricity clocked in at $49,003 after a state rebate. The new 30% federal tax credit would knock an additional $14,701 off the bill, while a $5,000 state tax credit would help some more.

But that would still leave me with some hefty out-of-pocket expenses. A less-expensive solar system to heat water would cost about $4,111, down from $9,135 after a 30% federal credit and 25% state credit. If I invested in both solar technologies, and tossed in, say, new qualifying insulation, I'd be looking at nearly $19,000 back from the federal government in tax credits over the next few years.

However, consumers who spent on some energy-efficient and renewable-energy improvements in 2008 may be out of luck. For instance, the $3,600 I forked over for a wood stove in July apparently won't earn me a dime under the new plans. "The little bit of backlash we are seeing is from people who bought in '08," says Mr. Enea of Home & Hearth.