Members of Congress were pressed hard Monday by financial industry lobbyists and consumer advocates alike seeking favorable language in the massive bailout bill expected to come for a vote this week.
Through conference calls, e-mail and personal emissaries, lenders and other business groups sought to block language that would allow struggling homeowners to have mortgage debt forgiven in bankruptcy cases.
On the other side, labor unions and advocacy groups for low-income people said the bankruptcy provision and other measures to help homeowners were needed to prevent the rescue package from being simply a bailout for Wall Street banks that made bad investment bets.
The sense of urgency facing Congress was heightened by a sharp sell-off in stocks, suggesting the fragility of financial markets anxious for government action. Yet another factor in the mix was money: The securities, banking and mortgage industries are among the biggest campaign contributors to both parties.
Since 2002, the sector has contributed more than $1.1 billion to congressional candidates, with Republicans getting an edge during that period, according to federal lobbying records. The figure does not include millions more donated to the favored charities of prominent politicians and the hundreds of millions spent on lobbying. The sector is among the biggest donors overall; by comparison, another major category, lawyers and lobbyists, gave $646 million during the same period.
In the 2008 election cycle, the list of the top recipients of donations from the financial services, insurance and real estate sectors (all likely to be affected in varying degrees by the legislation) included the leading presidential candidates.
Democratic nominee Sen. Barack Obama took in $22.5 million, followed by New York Sen. Hillary Rodham Clinton with $21.5 million. Arizona Sen. John McCain, the Republican nominee, was close behind with $19.6 million.
Money rained down also on the top members of Congress who are steering the legislation. Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.), a candidate for president during the primaries, received $6 million. His counterpart in the House, Rep. Barney Frank (D-Mass.), received $720,000 this year.
The No. 2-ranking Democrat on Frank's House Financial Services Committee, Rep. Paul E. Kanjorski of Pennsylvania, collected $755,000, and ranking Republican Spencer Bachus of Alabama took in $704,000.
"If you trace the movement of Wall Street money through Washington, it pretty well tells the story behind this and any other piece of legislation," said Lynn Turner, former chief accountant for the Securities and Exchange Commission. "The way Washington works, it is the lobbyists and the executives who hire them that get what they want. And it is the taxpayer who usually ends up getting fleeced."
Turner, who cites long experience in Washington and as an industry consultant, has become well known as a critic of U.S. financial regulation. But his position was echoed by research that is to be unveiled this week by the Center for Responsive Politics.
The nonpartisan research organization studied votes in 1999 on a piece of legislation, the Financial Services Modernization Act, that deregulated the banking sector, allowing commercial banks to compete with brokerage firms in buying and selling stocks.
Those who supported lifting restrictions on how commercial banks, investment banks and insurance companies could go about their business received more than twice as much money in campaign contributions from those interests as did those who opposed the measure, the study found.
The 195 Democrats who supported the legislation received an average of $179,920 in the nearly three years leading up to its passage, the study found. The 59 Democrats who opposed it received an average of just $83,475.
In addition to campaign contributions, the industries also invested heavily in lobbying. During 2008 alone, securities and investment firms spent $46,477,562 trying to influence members of Congress.
The fact that the bailout legislation is being rushed through -- spearheaded by a small group of congressional leaders -- makes it harder for outsiders to have an effect, said banking lobbyist Rick Hohlt, an active Republican.
"This vote is driven by the fear of uncertainty. There is not much you can play with," said Hohlt, adding that members will be asked this week to vote on a leap of faith.
The U.S. Chamber of Commerce, perhaps the most powerful lobby in Washington, dispatched its lobbyists to Capitol Hill and met with allied organizations in hopes of presenting a unified front from business.
"Based on what we have been told, preventing a systemic collapse of the capital markets has got to be the No. 1 priority," said R. Bruce Josten, the chamber's vice president for governmental affairs. "This is not the time to add all kinds of extraneous stuff" to the legislation. "This is not the time to make sure it is 100% correct. This is the time to act."
Still, the chamber has advocated for changes in drafts of the legislation. For example, it pushed to get foreign-owned banks included in the bill and fought the most extreme proposals to limit executive pay.
The chamber has also joined with other business groups to oppose language that would let people filing for bankruptcy protection add their home loans to the mix.
Home loans are among the few debts that can't be escaped through bankruptcy, and some in Congress have advocated opening up the bankruptcy rules to include mortgages.
But banks would have an even harder time selling mortgages to investors if there was concern that someone could stop paying on a loan and then hide behind a bankruptcy filing, according to a letter sent Monday to members of Congress by Floyd E. Stoner, an American Bankers Assn. executive.
In addition, the banks are urging Congress to reverse a 25-year-old accounting practice that they think has kept their stock prices low. Companies now must regularly provide investors with a market value for loans and mortgage-backed securities on their books. It's called "mark to market" accounting.
Trouble is, in a down market with few buyers, that value can be elusive. Investors say that if nobody's buying, those values should be marked down, and the share price should suffer. The banks have been pushing to change the rule for decades and now are hoping that Congress will do the work for them.
They also are hoping that the federal government will get out its checkbook for all types of loans, not just those tied up in mortgage-backed securities, and that it will buy loans from small banks as well as large.
This would make sure that massive banks like Bank of America Corp. and Wells Fargo & Co. aren't the only ones that benefit and that struggling regional banks like Downey Financial Corp. are able to clear some bad debt off their books.
The bankers group declined to comment on its lobbying.
To Turner, the former regulator, the proposed legislation is worrisome because so much is decided behind closed doors and transparency is not sufficiently mandated.
"It was the lack of transparency that got us into this mess," he said. "In this proposal, there's not one iota of transparency."
Hamburger reported from Washington, Heisel from Los Angeles.