Encyclopedia of Interest Groups and Lobbyists in the United States

Immanuel Ness

• Publisher: Routledge
• Year: 2015
• Print ISBN: 9780765680228
• eBook ISBN: 9781317471738
• Topic: History
• Subtopic: Social History
• Index: History

A comprehensive general reference on major American interest groups. This encyclopedia provides information on the lobbies and interest groups that dominate modern American politics. It provides descriptions of 13 categories of groups, followed by A-Z entries on the groups within that category.

Part I
Interest Groups

Section One
Banking, Finance, Insurance, and Real Estate

The interests of banking, finance, insurance, and real estate organizations affect virtually every aspect of today's material existence. Whether you are born into wealth or poverty, whether you experience upward or downward mobility, your career options, the taxes you pay, your housing, your workplace, the car you drive, how you invest, the retirement you experience, and the estate you leave all come within the influence of these organizations. Although the American Bankers Association, for example, is not an everyday term in most households, the resources it and other groups in this sector are able to wield make them politically important. Members of these organizations have the same professional and economic interests. All of the organizations in this sector are resource rich. The smallest of their budgets is $4 million a year. Although money is not everything, it is a flexible resource that allows an organization to buy at least some of what it may not have otherwise—for example, a skilled lobbyist, if none of its members has a relationship with an important member of Congress.

The current-issue agenda of groups in this sector is a long one, but financial services restructuring is clearly at the top of the list. Major changes have already taken place over the past two decades, but pending legislation has the potential to foster more dramatic, rapid alterations in how Americans save, spend, borrow, invest, insure, and conduct other financial transactions.

Finance, insurance, and real estate interest groups use all the lobbying tactics known to scholars and observers. They are strongest in direct types of lobbying activities, where their lobbyists and members work directly with legislative and executive decision makers and their staffs. Because of the positions these groups occupy in the economy, their expertise, input, and cooperation are critical to successful policy-making. While these groups use grassroots techniques, they typically interact with their members and employees rather than with the public. They do, however, use advertising and the mass media to bolster their public standing.

These organizations focus on all three branches of government at both the national and state levels. The focus of this encyclopedia is at the national level, but a careful student must also be aware of state and local policy decisions on many of these issues.

Areas of Interest

Finance, insurance, and real estate interests have been influential in American politics since before the nation’s founding. Thomas Jefferson warned that banks are more dangerous than standing armies, while Alexander Hamilton promoted cooperation with financial interests. The debate has continued. In modern times, the health of this sector has been regarded as critical to a sound economy and political stability. Instability, scandal, or failures have led to governmental efforts to impose reforms in order to restore political order, foster prosperity, protect consumers, and promote the public interest.

Individualism and materialism remain powerful forces at the end of the twentieth century. Americans, to borrow a phrase from historian Richard Hofstadter, are all "expectant capitalists"—demonstrating a faith in the continued expansion of prosperity that is almost utopian. The generation that remembers the Great Depression is no longer influential. Today’s hero is the billionaire who invents a new technology and uses his wealth for mansions around the world, or the college student who makes millions trading stocks on the Internet on a daily basis and retires at age 19 to play at her computer.

The economic context at the turn of the century assumes continued growth, restrained inflation, and continuing development of new technologies. Recent successes persuade some that the old law that what goes up must come down no longer applies. Low unemployment rates bring more goods within the reach of the upwardly mobile; thus poverty is regarded as a matter of personal responsibility. There is widespread faith in the outcomes of competition and the allocation of a free-market economy. Any cloud on the horizon takes the shape of the pending retirement of baby boomers. There is little attention to wages lagging behind while profits are soaring; any mention of extraordinarily high executive salaries as compared with average wages is quickly labeled "class warfare."

The late 1990s political context in which finance, insurance, and real estate interests operate has been very nearly ideal for them. Most voices support free trade and praise democracy combined with capitalism as the successful model for the entire world. The collapse of the former Soviet Union is openly used to illustrate that higher powers do indeed smile on the American model.

Few seriously question whether the rules of the game are fair; the focus is on the successful players who are vocal and seem to be larger than life. The possibility of redistributing wealth to those who have fallen out of the capitalist competition is not even a consideration. The current focus is on which subsector can claim a larger share of an expanding pie; government scurries to catch up with changes already made by specific industries but faces barriers thrown up by their refusal to compromise or be harnessed.

Types of Organizations

Most members of the interest groups in the finance, insurance, and real estate sector are institutions such as banks or insurance companies. Having institutions or organizations as members offers numerous benefits, including greater financial resources, expertise supported by corporate positions, and relative permanence. The main disadvantage is that the members tend to vary more in size than is possible among individuals. For example, Prudential Insurance and Woodmen Accident and Life may both be members of the American Council of Life Insurance, but they are so different in size as to have significantly different perspectives on many issues. In fact, the staff of the organization spends substantial resources interpreting issues in order to forge a consensus.

Some of the organizations in this sector only have individuals as members. Members of these groups have the same profession, such as accountants, insurance agents, or real estate agents. For these groups, difference in size is not an obstacle, but they may have different subspecialties, which create similar internal divisions. Individual membership groups do not have the same access to financial resources that financial, insurance, and real estate institutional groups enjoy, but neither do they have to penetrate organization structures to motivate individuals to be politically active.

Measured in financial terms, these organizations are very well supported. Not all of them release budget figures, but the average budget of the 12 organizations from which data are available is over $36 million annually. The range of budget figures is from the $4 million American Financial Services Association annual budget to the $145 million American Institute of Certified Public Accountants (AICPA).

Data on staff size are available from all the organizations profiled and are another valid measure of the resources that the group can bring to bear on issues. The average staff size of the 17 groups is 193 persons; the largest staff is employed by the AICPA, with 700, and the smallest is nine, employed by the National Venture Capital Association. Volunteer support from well-placed persons with institutional support and expertise is also of tremendous importance for some of these organizations. While it is difficult to develop data on volunteer resources, one of the groups noted an effort including over 1,000 volunteers from member companies, another an effort by 3,400 volunteers spending 21,000 hours.

Current Issues

The most important legislative issue in finance, insurance, and real estate in the late twentieth century is the restructuring of the financial services industry, which includes commercial and savings banks, mutual funds, insurance companies, and the securities industry. This issue has been brought to the agenda by the aggressive efforts of banks to break down traditional barriers between types of financial service providers. The main target is the 1933 Glass-Steagall Act, which, in an effort to promote soundness and confidence, required separate financial underpinnings for banks, insurers, savings and loan associations, credit unions, and securities companies, with so-called fire walls between them. The intent was to prevent the sort of massive collapse of financial institutions that characterized the Great Depression. The merger of Citicorp with Travelers Group in April 1998 sparked government efforts to overturn Glass-Steagall, which were successful in October 1999.

Spurred by technological changes in moving funds to the best investment, the various businesses began over the last several decades to compete for market share. Large banks started offering insurance, selling securities and stocks, and providing other financial services. Their efforts have been facilitated by the Office of the Comptroller of the Currency (OCC), the courts, and Congress. Interests other than banks have not had similar regulatory support to counter competition and have been seeking legislation to give them the same opportunities. However, they are hampered by being unable to reach satisfactory compromises that would serve to protect all their interests.

Finance, insurance, and real estate interests are perennially attentive to the tax code and how their segment of capital is defined and treated. During the 1980s and 1990s, they weighed in on proposals to revise the treatment of capital gains, mortgage interest deductions, value of life insurance, employee benefits, benefits bought by the self-employed, and the deductibility of consumer interest.

Revision of bankruptcy laws is also on the legislative agenda for finance, insurance, and real estate groups. With more debtors filing for bankruptcy, lenders and creditor interests want to make it harder for debtors to write their debts off entirely. There is also competition among types of credit holders to obtain more favorable standing relative to repayment criteria.

A number of the consumer protection provisions passed in the 1960s and 1970s are under attack by these interest groups. Requirements for fuller information disclosure on interest rates, terms for saving and borrowing, and specified procedures for closing a real estate mortgage are attacked as cumbersome and confusing. Community reinvestment requirements imposed on banks, demanding that their lending patterns undergo scrutiny and meet standards of local stewardship, are also challenged as burdensome and antimarket.

Environmental laws governing liability for toxic and hazardous waste sites are on the legislative lists of real estate development interests. Their argument is that if liability could be limited legislatively, large areas that are now unused could become available for development. Proposals to reform America’s healthcare system draw attention from insurance interests, as do vehicle and driving safety.

Although these interests generally portray themselves as favoring less government, in some areas they advocate on behalf of government protection. For example, they want to protect deposit insurance, federally subsidized insurance for crops, and federal support for mortgage lending. It has been accepted for two decades that major players in the industry are too big to be allowed to fail, so smaller players often voice these concerns and expect government support if necessary.

Regulatory relief has been a rallying cry for American business for more than two decades. However, the current focus on financial services restructuring makes clear that most businesses are comfortable with known relationships and are eager only to have their competitors’ relationships altered. For example, insurers want expanded financial services functions to be structured as holding companies regulated by the Federal Reserve, whereas banks want them to be structured as subsidiaries, regulated by the U.S. Treasury and the OCC. Holding companies are entities that control subsidiaries but do not generally participate directly in their operations. This same issue displays how federal and state regulators compete to determine who will oversee insurance sold by banks.

Many issues relevant to these groups have already been acted upon by Congress. Most recently, the federal government provided protection against year 2000 liability lawsuits for businesses that made good faith efforts to resolve known computer problems.

Other major policy questions that concern these interests are on the agenda but unresolved. Funding the impending wave of baby boomer retirements calls for revamping Social Security and improving savings rates and pensions. The possibility of partial privatization of Social Security holds the promise of dramatic expansion of the pool of capital available to be managed by this business sector.

A number of increasingly important issues have the potential to affect these interests. All of these organizations and their members are increasingly reliant upon technology but are only beginning to deal with resulting client privacy concerns. Growing interest in selling their products and services via the Internet raises the issue of whether and how Internet commerce will be taxed. And finally, the efforts by these groups to compete in the global economy also require that they come to grips with demands and institutions outside the United States.

Although an increasing share of Americans hold equity investments, own real estate, and anticipate retiring in the next decade, public opinion does not appear to be very attentive to critical but complicated issues in this sector. A very positive climate of confidence, growth, and well-being characterizes the present era. Consumer questions tend to focus on automated teller machine charges, home equity loans, and the availability of credit cards. Troublesome questions about speculative financial instruments, the growth of conglomerates, and the increasing detachment of financial institutions from communities are seldom raised.

Activities: Current and Future

Lobbying by contributing to campaigns for federal office is the norm for organizations in this sector. Only the National Association of Insurance Commissioners has no political action committee (PAC). The other organizations have active PACs, as do many of their institutional members; there is evidence that their individual members are also active contributors. A scan of these PAC contributions from 1987 through 1998 reveals interesting patterns. Standing consistently head and shoulders above the rest is the National Association of Realtors PAC, with contributions ranging from $1.9 million to $3.1 million per election cycle. The American Bankers Association, the American Institute of Certified Public Accountants, and the National Association of Life Underwriters are also major contributors, with amounts over $1 million per election cycle. The American Financial Services Association and the Securities Industry Association are smaller PACs in this sector.

Data from the past decade also display interesting partisan activity because of the change from Democratic to Republican majorities in Congress. From 1987 through 1992, contributions leaned slightly toward Democratic recipients, with only two exceptions. The Investment Company Institute consistently was the most generous to Democratic candidates, giving approximately 80 percent of its contributions to them. On the other side, the National Association of Independent Insurers (NAII) gave most (about 80 percent) of its funds to Republicans.

In the 1993–1994 election cycle, before the Republicans gained a majority, contributions still leane...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• Contributors
• Abbreviations and Acronyms
• Introduction
• Part I Interest Groups
• Part II Political Action Committees and Lobbyists: Tables and Figures