I don’t want to let the day pass without a nod to a bit of accountability reporting by Gretchen Morgenson and Andrew Martin* (see note below) in yesterday’s Times, unearthing Citigroup’s hiring of a lobbyist notorious for helping the then-all-powerful thrift industry fend off regulators in the 1980s.
A nifty timeline details the career of lobbyist Richard F. Hohlt and his work beginning in 1981 for the United States League of Savings Institutions, the Mortgage Bankers Association of its day, around when Congress agreed to lift lending restrictions on taxpayer-insured thrifts, as well as his relationship with Richard Parsons, now Citi’s chairman, beginning in 1990 when Parsons headed Dime Savings Bank
Hohlt himself doesn’t defend his record, but merely says he’s learned.
“I wish that everyone would comprehend that because of these past experiences, mistakes made, some problems that were created because of those mistakes, I can maybe offer more candid advice,” he said. “There has to be something said that a person who’s been in the operating room and watched 13 surgeries may be a good person to watch the 14th. That makes me valuable because I can say: ‘Don’t do it! Don’t let these guys come in and say they want to change the accounting.’ ”
Fair enough. It’s clear from quotes in the story, though, that former regulators still bristle at the memory of Hohlt throwing his industry’s considerable weight around back then:
Two former officials, a banking regulator and an under secretary of the Treasury, said they banned Mr. Hohlt from their offices. “He wasn’t my style,” said Richard T. Pratt, the Federal Home Loan Bank Board president in the early 1980s. “He was very aggressive I thought, kind of the caricature of a lobbyist.”
What’s more, Hohlt in defending his record then makes the same arguments the banking industry is making today as it seeks to fend off oversight.
Mr. Hohlt said his actions should be considered in the context of the times. He said there were fears that “draconian” regulatory action could set off a run on banks and even a depression.
Mr. Hohlt noted the significant parallels between the savings and loan mess and today’s financial crisis, only this time he says he is wiser.
“The mistake I did was follow the policy of the trade association,” he said.
Just doing his job, I guess. Now that so much of the financial story has moved to Washington, it’s good to know who the players are. Nice job.
(*Note: An earlier version didn’t credit Martin with a byline, while the headline said that Morgenson alone had unearthed the S&L-asaurus.)Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.