Bush Aide Pushed Gambling Ban

11/8/08 - Politico - View Source

By Patrick O'Connor

A Tennessee Democrat is charging a top Bush adviser with exerting “considerable political pressure” to benefit one of his former lobbying clients.

Rep. Steve Cohen asked White House Counsel Fred Fielding to investigate whether William Wichterman, a top political aide to the president, disclosed his “potential conflict of interest” in pushing the administration to enact new requirements to enforce an Internet gambling ban, according to a letter the congressman sent Friday.

As late as March, Wichterman was a registered lobbyist with Covington & Burling, where he represented the National Football League, according to the Senate lobbying disclosure database. In that role, he worked on the Internet gaming laws, one of the league's top legislative priorities.

The Cohen letter marks the latest turn in a long-running fight over Internet gambling regulations. The online poker industry has partnered with a wide range of financial institutions to slow the administration from implementing rules Congress passed in 2006 as part of an unrelated bill.

Wichterman and other White House officials are trying to rush these rules changes through the administration’s normal approval process during the final months of the Bush presidency.
The new rules would require banks, credit card companies and other financial institutions to block all financial transactions with Internet gambling sites. Online gambling is illegal in this country. Supporters of the new requirements argue this update would allow the federal government to enforce the pre-existing ban.

Opponents, who include House Financial Services Chairman Barney Frank (D-Mass.), argue the law is too vague and places onerous requirements on these financial institutions—at a time when many are struggling to rebound from the slumping economy.

Wichterman and others backers of the bill, like Sen. Jon Kyl (R-Ariz.), have been pushing the administration to enact these changes before Nov. 17, in the narrow window before the new administration could make any changes, according to people familiar with these deliberations.
The Department of the Treasury and the Federal Reserve must sign off on the language of the law before the administration can implement these new rules. There is a 60-day review process, so current administration officials want their recommended language to take effect before the next administration takes over.

In his letter to the White House, Cohen suggests Wichterman “has been a source of considerable political pressure to speed this regulation through finalization.”

The former lobbyist with Covington & Burling represented the NFL, which, says the letter, “has been among the most vocal advocates for the proposed rule and the underlying law.”

Opponents fear OMB will push these rules changes through, even though administration officials testified before the Financial Services panel earlier this year that the law is overly vague.

OMB needs the Federal Reserve to sign off on the new rules before the administration can implement them as law, according to people familiar with the implementation process.

The financial services industry has opposed the Internet gaming law since former Senate Majority Leader Bill Frist (R-Tenn.) inserted it in a port security bill during his final days in office. Administration officials and industry representatives have since criticized the rules during congressional testimony.

“The way to get a better reg[ulation] is to get a better law,” said Andy Barbour, who oversees Internet issues for the Financial Services Roundtable. “We’re interested in pursuing that cause, as is the chairman of the House Financial Services Committee.”

Religious organizations, on the other hand, are steadfast in their support of the measure. Critics argued that Frist moved the legislation to bolster his bona fides with religious conservatives in anticipation of a potential White House bid, though he never did launch a bid.

Cohen asks Fielding whether Wichterman — who worked for Frist before heading to K Street —disclosed “to you or your office his potential conflict of interest on this matter.”

“If so, was he nonetheless allowed by the White House to work on this issue?” the congressman asks.

In the letter, Cohen asks the White House counsel to spell out for him the Bush administration’s policy on aides working in issue areas they covered as paid lobbyists.

The congressman wants to know if “there is a defined period during which employees who served as lawyers or lobbyists in the private sector must recuse themselves from matters affecting their former clients.”

The Tennessee Democrat also wants to know whether Wichterman plans to return to the lobbying firm. He further asks for a catalogue of contact between the White House office of Public Liaison with Treasury, OMB and the Federal Reserve.

The White House did not respond to a request for comment on the Cohen letter. On Thursday, spokesman Tony Fratto said his office does not comment on administrative rules that remain under consideration.