Contact: Kurt Walters
Today, 10 organizations representing more than 10 million Americans called on U.S. Trade Representative (USTR) Michael Froman to publicly release all records of communication between himself and representatives of the 10 largest U.S. financial institutions – including his former employer Citigroup – while he has served in the USTR position.
The groups, including Rootstrikers, Communications Workers of America, CREDO Action, Friends of the Earth, Public Citizen’s Global Trade Watch, MoveOn.org Civic Action, Demand Progress, The Other 98%, Daily Kos, and National People’s Action propose that the Administration could rebuild credibility and trust and help the prospects of its embattled trade agenda by promptly releasing Mr. Froman’s communications with Wall Street. They note that former Obama Administration financial regulators, prominent academics, and a Bloomberg News fact-check have all refuted the Administration’s attempts to dismiss widespread concerns about the threat Trade Promotion Authority (TPA) and various proposed trade agreements pose to robust financial regulation in general and the American financial reforms implemented after the financial crisis in specific.
The letter states: “If these communications demonstrate that you personally and privately communicated to the Wall Street banks lobbying for financial reform rollbacks to be included in the TTIP that that can never happen under any circumstances, that would help build trust in the Administration’s position that TPA poses no threat to financial reform. On the other hand, if your communications with large financial institutions on this issue are somewhere less clear with respect to these regulatory concerns – or if there is anything in your communication that undercuts the Administration’s public position that these concerns are ‘baseless’ – that is something members of Congress and the American people have a right to know.”
“Michael Froman is not just President Obama’s trade representative, he is also a former senior executive of Citigroup,” said Justin Krebs, Campaign Director of MoveOn.org Civic Action. “He raised money from Citigroup for Obama’s Senate and presidential campaigns and remained on the Citigroup payroll late into 2008 while helping select Obama’s policy staff as a senior member of President Obama’s transition team – all while Citigroup was making history as the biggest bailout recipient ever.”
The groups highlighted the links between Citigroup, which has lobbied extensively on TPA, the Trans-Pacific Partnership (TPP), and the Transatlantic Trade and Investment Partnership (TTIP) – and Froman, who received a more than $4 million golden parachute from Citigroup upon leaving the large financial institution to join the Obama Administration in 2009.
As a senior official on President Obama’s transition team, Froman successfully pushed to install Tim Geithner – the Chairman of the New York Federal Reserve and architect of the bailout – as Treasury Secretary while Froman’s employer, Citigroup, continued to receive record-shattering cash infusions as part of the bailout to prevent it from collapsing.
The advocates noted that President Obama’s nominee for deputy USTR, Marisa Lago, is also an alumna of Citigroup, raising additional questions about the level of influence Citigroup and other Wall Street banks have over the Administration’s trade policymaking.
“It’s no surprise that the TPP – an unprecedented corporate giveaway – is being negotiated by someone as cozy with Wall Street banks as Michael Froman,” said Murshed Zaheed, Deputy Political Director at CREDO Action. Zaheed continued, “The American people deserve transparency. The Administration must make public all communications between Froman and the massive financial institutions that stand to benefit from proposed trade deals.” Zaheed added “the American people and Congress need to see what kinds of commitments Froman is making to his Wall Street cronies behind closed doors.”
President Obama has called the concern expressed by Sen. Elizabeth Warren (D-Mass.), leading economists and legal scholars, and others that the passage of TPA could threaten financial reform “absolutely wrong.” However, a recent fact check from Bloomberg News – headlined “Why Obama is Wrong and Warren is Right on Trade Bill Quarrel” – indicated that “Elizabeth Warren has got the law on her side” and that “a number of constitutional scholars and other legal experts say she’s right.”
In addition, the Canadian finance minister recently alleged that the Volcker Rule violates the North American Free Trade Agreement (NAFTA). This has intensified congressional scrutiny of the president’s assertion that trade deals can’t be used to roll back financial regulation.
“Citigroup snuck a lobbyist-written Dodd-Frank rollback into last December’s CRomnibus, so we already know they’re willing to hijack unrelated bills to weaken regulations on Wall Street,” said Kurt Walters of Rootstrikers. “Wall Street has been lobbying to include financial regulation in ongoing trade negotiations, and Americans deserve to know what Froman has been privately saying to these big banks.”
Because TPA would provide a means for trade pact legislation written exclusively by the executive branch that is not subject to committee mark-up to remove extraneous terms to be passed under expedited rules by a mere 50-vote simple majority in the Senate, future presidents could use the process to roll back U.S. financial regulatory policies that would not survive normal congressional voting procedures. In the past, presidents have used this extraordinary authority to alter non-trade policy, with a rewrite of the Pension Benefit Guarantee Corporation statute in the fast-tracked implementing legislation for the World Trade Organization just one example.
“If the Obama Administration gets Fast Track, it would delegate Congress’s constitutional authority to a U.S. Trade Representative who, by background and mindset, responds to Wall Street rather than ordinary people,” said Michelle Chan, Director of Economic Policy at Friends of the Earth.