Wells Fargo has built up a significant lobbying presence in state capitals to manage the torrent of mortgage-related bills flooding legislatures.
Five years ago, the San Francisco bank reported a limited state lobbying presence focused on the West Coast and Iowa. After becoming a national bank, Wells Fargo now has lobbyists bending state legislators’ ears everywhere from Denver to Baton Rouge, La.
It has built its East Coast lobbying presence beyond that of Wachovia, the Charlotte bank Wells acquired in 2008. The bank also has spent more money on lobbying in states including California and Minnesota, courted city mayors, and sought more government business.
The bank registered more than 150 lobbyists in 31 state capitals in 2012, according to an Observer review of state lobbyist registration rolls. That’s an increase from the 47 in 10 states it had five years ago – or 60 in 14 states if you add in Wachovia’s lobbyists.
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Wells Fargo says the increase is largely tied to evolving rules on who must register as a lobbyist. About half of U.S. states require people who seek government contracts to put their names down.
The bank also says that while it may have more contracted lobbyists registered under its name, Wells’ in-house government relations team hasn’t grown.
But in at least 11 states, Wells has registered lobbyists to influence legislation where neither it nor Wachovia had voices five years ago, the Observer’s analysis found.
The growth is yet another example of the pre-eminent position the bank has taken in the financial industry, particularly in mortgage lending and servicing, as rivals have pulled back. Charlotte-based Bank of America has pared its state lobbyist registrations by about a quarter, to 136, the Observer’s data shows.
At the federal level, Wells Fargo is again the top commercial bank lobbying spender, with $3.8 million spent in the first half of the year, according to data from the Center for Responsive Politics. Last year, Wells Fargo led the industry to a record-high level of lobbying spending.
Wells Fargo has also aimed its message at mayors. The bank has hosted four gatherings of city executives in recent months – most recently last week in Charlotte, where the bank showed a group of mayors around its housing preservation workshop.
But since the real estate meltdown, statehouses have been a hotbed for banking bills – especially since 49 state attorneys general reached a $25 billion settlement this year with Wells Fargo, Bank of America and three other big banks over shoddy mortgage servicing practices.
The American Bankers Association is tracking more than 200 statehouse bills on topics ranging from foreclosure rules to homeowners’ rights to mortgage fraud, said Mathew Street, deputy general counsel for state relations.
California and other states have created forms of a “Homeowners Bill of Rights,” while Arizona and Hawaii considered bills that would allow governments to use eminent domain powers to seize troubled mortgages.
“It’s not inherently bad to increase the number” of lobbyists, said Peggy Kerns, director of the ethics center at the National Conference of State Legislatures. “If there are certain policy issues that are being taken up, that happens. The number of lobbyists ebbs and flows based on what the issues are.”
Wells Fargo says the increase is driven in part by changes in laws that require some employees seeking government contracts to register as “procurement” lobbyists, also known as “executive” lobbyists. These lobbyists vie for government entities’ business, like bond underwriting and investments.
“There’s been an increase in procurement lobbying laws over the past few years, and Wells Fargo strives to comply with applicable laws and regulations,” Wells spokesman Josh Dunn said in an email.
North Carolina is one state where Wells has added procurement lobbyists. In 2007, Wells had five registered lobbyists at the state level. This year, it was 23. Many are based in Charlotte and involved in public finance.
Bank of America, which had 39 lobbyists registered in Raleigh five years ago, including procurement lobbyists, this year registered just two. Spokeswoman Shirley Norton said the bank’s state lobbying strategy has not changed significantly.
Kathy Carmichael, the Wells Fargo government relations executive charged with overseeing lobbyists in North Carolina and other states, declined to comment, citing bank rules against speaking to the media.
“I have to wonder at some level if (registering more lobbyists) is out of an abundance of caution,” said Nathan Batts, an attorney at the N.C. Bankers Association. “They obviously have a larger footprint within the state.”
Idaho is another example of the growth of procurement lobbyists. Wells Fargo registered 14 lobbyists this year in the state, the first time the bank had done so. All are labeled executive lobbyists.
Even though these are not traditional lobbyists trying to sway lawmakers, they do interact with the government at many different levels. A number of states decided to regulate them as lobbyists after scandals involving public officials doling out contracts to campaign contributors and friends, according to the watchdog group Public Citizen.
In South Carolina, Wells has one lobbyist registered. There is no record of any registered there by either Wells or Wachovia in 2007. Bank of America has three registered in the state this year, up from two in 2007. All appear to be legislative lobbyists.
Most states do not make a distinction between the two types of lobbyists in their records. But a closer look at registration data show that in many cases, Wells’ new lobbyists are indeed working to influence legislation.
In at least 11 states – including Michigan, hard hit by foreclosures – Wells Fargo has put legislative lobbyists in state capitals where none had been before.
In Maine, state records show Wells lobbied on three bills, including one that would require banks to provide original documents while foreclosing. It was vetoed by the governor. Wells had no lobbyists in Maine five years ago.
In California, financial reports show Wells Fargo spent $106,000 on lobbying in the first half of 2012. That compares with $80,000 in the same time period in 2007. An increase in lobbying spending also appears in Minnesota, records show.
“Certainly states have increased regulations on who is a lobbyist,” said Kerns, with the association of legislatures. “But I also think that issues are more complex. Therefore these special interests probably feel like they need more lobbyists.”
Lawmakers in California have been considering a raft of bills introduced at the behest of state Attorney General Kamala Harris after the large-scale mortgage servicing settlement. Legislation included a “Homeowners Bill of Rights” and expanded power for the attorney general to prosecute mortgage fraud.
Massachusetts made major revisions to its foreclosure laws, including considering a provision to require mandatory mediation before foreclosure – but that was ultimately killed, Street of the American Bankers Association said.
“There’s a huge amount of banking-focused legislation that’s amounted from the recession,” he said. “It’s certainly been the focus of an awful lot of time and effort.”