WASHINGTON — If you went looking for a story that encapsulates why Americans are cynical about politicians, a perfect example may be the tale of a one-sentence bill that the House Financial Services Committee will vote on Thursday.
The legislation offers an unusually stark look into the role of money in politics, as a bipartisan group of lawmakers push a measure that would benefit a single campaign contributor.
Even the title of the bill is misleading, suggesting its goal is to collectively help all small banks: "A bill to amend the Dodd-Frank Wall Street Reform and Consumer Protection Act to adjust the date on which consolidated assets are determined for purposes of exempting certain instruments of smaller institutions from capital deductions."
But as American Banker reported on May 18, the bill would impact only one of the nation's 7,307 banks — Emigrant Bank of New York.
Emigrant currently has $10.5 billion of assets, but on Dec. 31, 2009 it had more than $15 billion. As a result, it's subject to the Collins Amendment, a section of Dodd-Frank which prevents banks above the $15 billion asset threshold from counting trust preferred securities as part of their Tier 1 capital. The House bill would push back the capital provision's enactment date to March 31, 2010, by which point Emigrant had fallen below the $15 billion mark.
So a more honest title for the legislation would be: "A bill to prevent Emigrant Bank from losing $300 million in Tier 1 capital."
To be sure, there is a reasonable argument in favor of changing the law for the benefit of Emigrant. The bank was above the $15 billion threshold for just two years, and only because it was exercising prudence near the height of the financial crisis. Moreover, there's nothing wrong per se with legislation being tailored to help one company, though such bills should merit close scrutiny.
But lawmakers aren't just trying to help a local institution with a potentially significant issue—they are also using the legislative process to assist a single campaign contributor and trying to pass the bill without any public examination.
The sponsor of the Emigrant Bank bill is Rep. Michael Grimm, a Staten Island Republican. In March, Grimm received $2,500 in campaign contributions from Howard Milstein, Emigrant's chief executive officer, and his wife, Abby, according to campaign-finance records.
The bill has eight co-sponsors, including others who have received campaign cash during the 2012 election cycle from Milstein and his members of his family.
Rep. Carolyn McCarthy, a Long Island Democrat, received $4,000 last year from the Milsteins and their son, Michael. Democratic Rep. Gregory Meeks of Queens received $3,000 from Milstein and his wife in 2011 while Rep. Carolyn Maloney, a Manhattan Democrat, received $2,000.
In the House of Representatives, there's a process for allowing certain bills — usually non-controversial proposals — to skip the committee stage and move directly to a vote by the entire House.
In the case of the Emigrant Bank measure, the Republican staff of the House Financial Services Committee asked the committee's Democratic staff whether there would be objections to using that procedure. But Rep. Barney Frank, the committee's top Democrat, objected, which led the committee to schedule a hearing on the bill earlier this month.
At that hearing, Frank said he wanted to ensure there was a public discussion of the bill.
"The piece of legislation we're talking about today affects one institution," he said. "I have no objection to that, but I must be honest and say I was asked if we could do this is in a way that would move quickly. And my answer was, 'Yes, I'd like to move quickly, but I think it's important that it be done in the light of day.'"
