Nancy Pelosi Enriched By VISA Lobbyists Big Time

Discussion in 'Politics' started by pspr, Nov 15, 2011.

  1. pspr


    By Daniel Stone & John Soloman

    The tale begins in 2007, when the credit-card industry became concerned that the new Democrats who took charge of Congress after the 2006 elections were intent on passing legislation to curtail credit-card swipe fees to vendors, which were worth billions of dollars in revenues in the industry, and to create new protections for consumers.

    Visa had never been particularly close to Pelosi, a frequent critic of the financial industry, even though the credit-card giant’s headquarters were in her hometown of San Francisco.

    But the army of lobbyists Visa assembled—it had a total of 14 lobbying firms at its disposal—set out to try to woo Pelosi with a strategic campaign, hoping to forestall action on any credit-card legislation until after the 2008 presidential election.

    “Was there a concerted effort to press Pelosi? Yes. It was partly that she was speaker. But also that Visa’s based out [in her district], where she’s from. They were under attack. It was the confluence between her position and when she engaged she would be intense,” says a lobbyist directly familiar with the effort who spoke on the condition of anonymity because he wasn’t authorized to talk to the press about internal strategy. “We were sitting around the table and decided we needed a concerted effort related to Pelosi. We needed a full-court press.”


    Separately, Pelosi’s husband, Paul, a major investor in California, got a lucrative phone call—a pre-screen invite in March 2008 to take part in Visa’s $17.9 billion public stock offering, at the time one of the hottest stock offerings in an otherwise soft market. The initial-public-offering price was $44 per share and was limited to institutional investors and a group of specially selected individuals. Almost $18 billion was made available in public stock to preselected investors. Paul Pelosi made the cut.

    The top financial institution to handle the sale was Wells Fargo Shareholder Services, a bank where Paul Pelosi, a seasoned investor, held an account. Before the IPO, Pelosi received a call from his financial adviser at Wells Fargo alerting him that he had been approved to purchase Visa stock and, considering the public buzz around the stock, recommending he buy, according to Pelosi’s office.

    Paul Pelosi initially bought 5,000 shares at the $44 initial price. Within a couple of days, the shares' value soared to $64. Paul Pelosi purchased 15,000 more shares over the next three months, at much higher prices. The total quantity was valued as high as $5 million, according to the then-speaker’s financial-disclosure form. In late 2008, when the stock market soured, Pelosi sold 1,000 of the first IPO shares for a meager profit of $2,500 to $5,000, records show. He has kept the other 19,000 shares, which now are valued at $95 each.

    Pelosi’s office says she chose not to bring up the swipe-fee bills in 2008 because she did not believe President George W. Bush would sign them into law.

    Pelosi tried for consumer protections in 2008, but the next year she put more muscle behind the Credit Cardholders' Bill of Rights, a bill that gave new protections to consumers and was opposed by the credit-card industry. The bill was entirely devoted to preventing consumer exploitation, and swipe fees were not included, a victory of sorts for the industry.

    Only after Senate Democratic Whip Dick Durbin of Illinois caught momentum with a bill that would crack down on credit-card companies’ fees in 2009 did the provision eventually make it into law as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

    When confronted earlier this month at a press conference about the delay in swipe fees, Pelosi said the House waited to act on the swipe fees until “we had a president that could sign the bill.” Her spokesman Hammill says it is preposterous to think Visa’s lobbying or the stock purchases had any influence on the speaker’s legislative actions.