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Schumer and the hedge fund lobbyists
By: Timothy P. Carney
Examiner Columnist
07/07/09 9:52 PM EDT
Poking around the lobbying activity of hedge funds, I came across this N.Y. Times story from a month back (via Christopher Hayes at The Nation's felicitously named "Capitolism" blog).
The Managed Funds Association, the lobbying group for hedge funds and private equity firms, has hired big K Street firm Brownstein Hyatt Farber Schrek, and one of the lobbyists on the account is Carmencita Whonder, a former top staffer to Sen. Chuck Schumer, D-N.Y.
Hayes has pointed to it as a "depressing example" of the power of "establishment social networks." Liberal newsletter writer Sam Pizzigati has this take on the Whonder story: "Whonder’s new clients are hoping she can save the loophole that lets hedge fund managers claim huge chunks of their fee income as a capital gain."
Full context makes the Whonder tale even more interesting.
Check the lead on this NYTimes piece from early 2007, just after Democrats took control of Congress:
On a cold evening in late January, Senator Charles E. Schumer invited a who's who of hedge funds to dinner at Bottega del Vino on the Upper East Side of Manhattan. More than $100 billion worth of wealth sat around the table, including Paul Tudor Jones of Tudor Capital; Steven Cohen of SAC Capital; Stanley Druckenmiller of Duquesne Capital; and James Chanos of Kynikos Capital, according to a person who was briefed on the dinner.
Mr. Schumer, the New York Democrat, had some simple advice for the billionaires in his midst: If you want Washington to work with you, you had better work better with one another.
The article pointed out how little hedge funds spent on lobbying and campaign contributions until that point. Schumer's little talk fixed that, as I reported in a column in September:
throughout the summer, hedge fund and private equity managers accelerated their political donations. In June alone, they sent $1 million to the Democratic Senatorial Congressional Committee, whose chairman, Sen. Charles Schumer, D-N.Y., was publicly undecided on the tax hike [on hedge fund managers]. In August, after the generous donations from investment moguls, Schumer came out against the tax hike.
Then in the fall, Brownstein Hyatt hired Whonder away from Schumer's office. "My banking person is going on to other things," , Schumer said.
Two weeks later, Whonder got her first client--a private equity firm called Welch, Carson, Anderson, and Stowe, for whom Whonder and others lobbied on HR 2834, to change the taxation of hedge fund and private equity managers.
Now, we find out, Whonder is lobbying for the Hedge Fund mothership, the MFA.
This story--and it deserves more digging--is one of how the lobbying problem gets as big as it is. The culprit is not always the businesses, but often the politicians.
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