Lt Gov. hopeful Ferri has a plan to reform lobbying


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Rep. Frank Ferri testifies on his bill that would reform paypay loans in RI. In the background is Bill Murphy, former House speaker, a lobbyist opposed to the reform.
Rep. Frank Ferri testifies on his bill that would reform paypay loans in RI. In the background is Bill Murphy, former House speaker, a lobbyist opposed to the reform.

Frank Ferri, who bills himself as a “progressive Democrat for Lt. Governor,” released a plan today that would distance legislators from lobbyists during the session, and double the time retired legislators have to wait to become paid lobbyists.

“No business wants to come to a place where the government can’t be trusted,” according to his plan, which you can read here.

Ferri, a state representative from Warwick running for lt. governor against Ralph Mollis and Dan McKee, said:

“The system is broken, and to make matters worse, those tasked with oversight and compliance responsibility have not done their jobs. It’s no wonder Rhode Islanders have lost trust in government. Public service should be about advancing and protecting the interests of a legislator’s constituents, not building relationships that the legislator can use later to pad his or her wallet.”

Ferri’s proposal would double the amount of time – from one year to two – that a former legislator would have to wait to become a lobbyist. A committee chair would have to wait for years under the proposal and the House speaker and Senate president would have to wait six years. It would also ban lobbyists from loaning legislators money.

It would also prohibit lobbyists and political action committees from donating to legislators during the session. In explaining why, he lifts the veil a bit on how the sausage is actually made on Smith Hill.

“In a practice that has become so ingrained within our state’s political culture, legislators typically hold fundraisers every week during the legislative session,” according to the proposal. “It is so commonplace, that committee hearings are often scheduled around these events.

These social hours are, on the surface, harmless opportunities for legislators to mingle with constituents and each other. However, for professional lobbyists, they provide unmatched hours of special access to Assembly leadership and committee chairs – access that the average constituent can’t afford. These fundraisers have replaced the smoke-filled back rooms of years past to become the modern day place where legislation is really won and lost.”

The plan would also make available online the names of lobbyists who testify on legislation.

“The committees already collect this information in the form of sign-in sheets. Instead of these sheets being quietly filed away, they should be posted online so that the public can see for themselves who is speaking for or against a particular bill. The House and Senate could adopt this policy immediately, and Ferri has written to the House Speaker and the Senate President to ask them to adopt the policy in their respective 2015 rules.”

When does the right to petition become lobbying?


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Candidate for Democratic nominee for Secretary of State Guillaume de Ramel in The Providence Journal 5/26/14 (emphasis added):

Rhode Island’s special distinction for “limited activity” lobbyists has created A gray area in the law prone to causing confusion or even unintentional noncompliance. Anyone who lobbies state government should be registered with the secretary of state’s office, regardless of how little he or she does so.

Article I, Section 21 of the Rhode Island State Constitution (emphasis added):

Section 21. Right to assembly — Redress of grievances — Freedom of speech. — The citizens have a right in a peaceable manner to assembly for their common good, and to apply to those invested with the powers of government, for redress of grievances, or for other purposes, by petition, address, or remonstrance. No law abridging the freedom of speech shall be enacted.

de ramelPlenty of organizations make calls to action to legislators’ constituents, asking them to write or call or meet with their representatives to request action on a specific issue. By definition, that’s lobbying. Change.org has even made it as simple as simply putting your name, email, and address in a form and hitting “submit” – no more action is required from the person doing the lobbying. So, are these people supposed to register as lobbyists?

To be fair to de Ramel, even the current Secretary of State’s “Am I a Lobbyist” page is pretty unclear on such people – which of the five exemptions do they fall under? Some will probably argue that there’s a precedent for dealing with those people, and in practice they’re never going to be effected by lobbying laws. But if such a grey area exists (in practice), that highlights the problems with the current system; and what de Ramel’s proposing.

The simpler and more elegant solution that I’ve heard proposed is to simply required state officials to keep lists of everyone they meet with or are contacted by and make those public. That would probably inconvenience officials to some extent (which is probably why such a proposal has zero chance of passing the legislature), but transparency is kind of inconvenient, isn’t it? And it’s probably a bit better than hunting down constituents for requesting their legislator vote this way or that on a gun control bill.

The Influence Trap


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State House Dome from North Main Street
State House Dome from North Main Street
The State House dome from North Main Street. (Photo by Bob Plain)

Whenever a government makes a decision to spend money, or designs a regulation to right a wrong, it creates a business opportunity. If you reject, as I do, the Tea Party trend toward “all government taxation and spending are bad,” then you are left with a few questions.

  1. How do you protect the system from corruption and undue influence?
  2. How do you maximize value for taxpayers?

Over the past few years (decades?), Rhode Island’s legislature has done a poor job on both counts. In this article, I’ll focus on the first question.

Don’t re-elect corrupt officials

Every day new fingers are pointed about improprieties and influence on everything from auto body regulation to contract steering. Some legislators appear to profit directly. Others direct state dollars to their partners and acquaintances. Others win friends and get financial contributions and other forms of support from vested interests in exchange for line items, sweetheart contracts and back room deals.

It’s revolting.

On a Federal level, much of this institutionalized corruption is legal. Peter Schweitzer, in his disturbing book, Throw Them All Out, outlines the methods that the so-called, “The Permanent Political Class” use to generate personal wealth for themselves and their friends. According to Schweitzer, there are no solid rules against United States senators, representatives, and even the president, from using their advance and insider knowledge of federal government legislation and regulations. Schweitzer goes into detail about deals made by Democrats and Republicans alike that include advanced IPO purchases, land buys relating to federal funding and so on. It’s pretty horrifying stuff.

Schweitzer also talks about how businesses leverage their profits based on advance knowledge, insider knowledge and the simple massive power of Federal spending to “earn” billions of dollars. The equation is simple. Businesses with ties and links and lobbyists earn a better return than those who operate on a “level” playing field.

Here in Rhode Island, we seem particularly inept and vulnerable to these sorts of machinations. We are a small state, so it’s almost a certainty that a legislator proposing a bill will hear from the constituency who will benefit from it. Indeed, where else ought a legislator turn to learn about a particular regulation?

It’s almost inescapable. For example, when I was discussing the challenge the state faces dealing with the decades of politicians granting union benefits in exchange for union support, my wife, who is a teacher and a union member said, “Don’t touch my pension!”

I think that constitutes “influence”, don’t you?

Subversive “Support”

But other forms are more insidious. As a newly declared candidate, I began to receive “questionnaires” from organizations asking if I wanted their support. The first two that came in,  Planned Parenthood and the Sierra Club, were fairly easy to answer.

I’ve always been a 100% supporter of a woman’s right to choose, a proponent of education, and an opponent to government imposition of will on a person’s body. I’ve always been a believer that one of the jobs of government is to protect, nurture and restore the environment.

But I noticed that these letters were lobbying me before I was even elected. I learned, for example, that Rhode Island law requires notification of a husband, if a wife wants an abortion. Planned Parenthood asked if I would try to change that. I said I wasn’t sure, yet. I later learned that how the organization avoided that situation was to not ask women if they were married.

A few days later, the Right to Life questionnaire came in, and I pitched it in the trash.

I’ve gotten a few Union questionnaires, too. In general, I’m a huge supporter of trade unions. I believe that workers have the right to organize and bargain collectively. But my opinion on some issues is nuanced. One political adviser suggested that I avoid using these questionnaires to address subtle issues, but I had already sent in one:

5)    Would you support standards that would link public economic development assistance to companies that create good jobs, pay fair wages, provide decent benefits and comply with environmental, labor and other laws?  (Development Assistance is defined as abatements, loans, grants, contracts, tax breaks, etc).

COMMENTS: YES. However, as the 38 Studios and so many other failed initiatives show, I am wary of providing economic development assistance to companies who are only moving here because of that assistance.

More and more questionnaires. One lured with the promise that all of the people they supported won their elections. Another flat out threatened…

The day after the recent massacre in Colorado, I got a flier from the NRA asking me to support their agenda and warning me that, “If you choose not to return a questionnaire, you may be assigned a ‘?’ rating, which can be interpreted by our membership as indifference, if not outright hostility toward Second Ammendment-related issues. (boldface theirs!)

My position? Guns do kill people. I oppose assault weapons in the hands of insane people. The culture of handguns in this country is killing people in Providence every month. Is there anything good about this? I don’t think so. (Although I have to admit that in the darkest days of the Bush administration, I could understand the idea of buying a gun to protect yourself against the government.) If I’m elected, I’ll consider increasing gun regulation and limiting the purchase of devastating weapons. Make of that what you will, NRA, I will not be returning your form.

Vigilance, Integrity and Mindfulness

I am not running for office to make a buck. I want to make our state better, and one of the most powerful ways is to get the corruption out of government.

When that legislator makes (or protects) a buck for himself or his family or his business, or receives a campaign contribution – or the promise of votes, volunteers and support at the polls – the vote is plainly unethical.

The next question people ask is, “How will you avoid that yourself?”

It’s a challenge. Any vote for a tax cut could benefit me. A tax break for the arts would benefit my friends. Any vote for increased funding for education will benefit my family — and certainly benefit my children, who are in the public schools.

I can only promise that I will pay attention and always ask, “Who profits? Who loses?”

And be very very very public about the process.

Payday Lenders Hire Power Broker Bill Murphy


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Former Speaker of the House Bill Murphy (photo by Ryan T. Conaty: ryantconaty.com)

One of the most interesting battles going on in the state house this year is over the fate of the “payday lending” industry. Payday loans are short-term loans, typically arranged something like this: I loan you $100 now in return for $110 taken from your next paycheck in a couple of weeks.

This sounds good, unless you do the math and notice that this works out to about a 260% annual interest rate.  If you don’t, it’s likely enough that in two weeks you’ll ask for an extension, and it only takes a couple of dozen like you and suddenly my business is booming.  And there are a lot more customers than that around here.

It wasn’t legal to charge interest rates that high until an exception to usury laws was carved out for check-cashing businesses in 2001. According to Margaux Morisseau, who is spearheading the effort to repeal this exception, payday lenders in Rhode Island now write over 140,000 of these loans each year, totaling $50 million, the bulk of which are written by Advance America, based in South Carolina, and Check ‘n Go, nominally based in Ohio, though it might be controlled by partners based in Texas or London. You can admire the process at rhodeislandpaydayloans.com. My favorite quote:

“When it is due date of your RI payday loan, the loan amount and the service charge will be automatically debited against your pay check. An extension of your RI cash advance is also possible by paying an extension fee.”

There are a couple of interesting points to the story (beside the lack of proofreaders for web content). First, it is consistently astonishing to me both how profitable it can be to exploit poor people — and how many financiers are eager to do so. After all, a huge amount of the financial carnage of the 2008 meltdown was built on liar loans and various kinds of mortgage fraud aimed at sucking wealth from low-income families who hoped to afford a home. (And no, the Community Reinvestment Act had nothing to do with this, as you’ll doubtless read in uninformed comments.)

Obviously there is a risk associated with these kinds of loans, but even assuming a generous loan loss provision, we’re talking about more than doubling one’s investment each year. These are returns investors in more, um, traditional businesses can only dream of.

There’s a bill in the Assembly that would repeal this exception and limit interest to 36% — still awfully high, but in the range that banks charge on some credit cards.  Morisseau has put together an impressive coalition to push it, and Representative Frank Ferri and Senator Juan Pichardo have been very energetic sponsors. Morisseau and Ferri found 50 co-sponsors out of 75 members for the House Version, and she and Pichardo got 25 out of 50 in the Senate. Sounds like a slam-dunk, right?

Wrong. On the other side, Advance America has retained Bill Murphy, the recently retired Speaker of the House.

So what can a retired Speaker do in the face of 50 house members who oppose him?  Sure he knows where a lot of bodies are buried, but what can he possibly hold over so many people?  How is this a fair fight?

Here’s how it works. Murphy’s services are not provided gratis to Advance America. They are paying him $50,000 this year, according to the Secretary of State’s web site. How much work will that entail?  A bunch of phone calls and a handful of meetings. Nice work if you can get it.

And you can get it if you try — so long as you’re a current member of the House or Senate leadership. If Bill Murphy can prove to Advance America that he’s worth $50,000 a year for almost no work, then Speaker Gordon Fox or Majority Leader Nick Mattiello or even Corporations Committee Chair Brian Patrick Kennedy can justifiably claim to be worth the same amount to lobbying clients who happen along after they retire from the House. In other words, killing a bill like this on Bill Murphy’s say-so is key to a big payday for them down the road. Preserving a system that benefits Murphy is the way to keep the trough full at which they might hope someday to feed.

Of course, there are lobbyists who do real work for their money — arranging testimony, doing research, preparing press campaigns — and some of those are even ex-legislators. But the real money is in having a name that can make things happen despite how many are on the other side.

Now in fairness, I have no idea whether Fox, Mattiello, or Kennedy hopes to cash in on their service in this way, and in all likelihood, neither do you. But a very compelling indicator of whether they do is if this bill — sponsored by two-thirds of the House — gets out of committee and onto the House floor for an actual vote. Are the people who control the agendae of the House and Senate interested in a democratically run General Assembly, or is their interest in preserving the system by which ex-legislators profit handsomely from what was, in theory, public service?

Appendix:

For comparison,

Dan Connors, former Senate Majority Leader

George Caruolo, former House Majority Leader

Stephen Alves, former Senate Finance Chair