Archive for the ‘Compliance’ Category

Campaign Finance Regulation Needs a Home

Posted on:


The Federal Election Commission can no longer be considered the sole federal agency tasked with regulating federal campaign activity.  As a recent New York Times article suggests, the Securities and Exchange Commission may soon require publicly traded corporations to disclose the names of individuals who contribute to various so-called Super PACs.  Not surprisingly, the measure is strongly opposed by business organizations such as the Chamber of Commerce, which argue that such measures would infringe on the group’s right to free speech. The Internal Revenue Service has also been highlighted recently for its alleged overreach in targeting tax-exempt 501(c)(4) organizations associated with the conservative Tea Party.

These latest events highlight just how thorny of an issue campaign finance regulation has become.  Agencies that are not normally tasked with any kind of campaign regulation have found themselves forced to overcompensate for a seemingly ineffectual FEC.

In international relations, the term “proxy war” is used to describe a situation in which two opposing parties utilize a substitute, or a third party, as an alternative to fighting each other directly.  What Citizens United seems to have engendered, is a proxy war between liberals and conservatives in which government agencies are being used as reluctant battlegrounds.   As we have witnessed this past week, the results are at best messy, and at worst, damaging to the overall legitimacy of the federal government.

The longer both sides continue to battle one another over procedural matters in multiple agency arenas, the more distant they become from their purported fundamental purpose for being, which is to engage in political advocacy.  Not to mention, of course, the more contributor money they waste in the process. But is there any alternative?

These organizations might benefit from looking back to 2004 and the similar issues brought forth by so-called “527” organizations and their apparent exemption from the recently passed Bipartisan Campaign Reform Act of 2002 (also known as McCain-Feingold).  The crucial similarity between the battles being waged today, and those of the past, boil down to one thing: the definition of a “political committee” as defined in the FEC Act.

The difference between the strategies implemented today versus 2004, is that in the latter, watchdog groups and political parties funneled all their complaints and fought all their battles in one arena – the FEC.  Both sides filed complaints and the FEC came down hard on 527’s, primarily for failing to register as political committees.  As a result, America Coming Together was fined $775,000, the Media Fund was fined $580,000 and the Swift Boat Vets and POWs for Truth were fined $299,500.

A strategy that devotes resources to one specific arena (namely, the FEC) could be particularly beneficial for liberals and other proponents of increased disclosure.  The Supreme Court unambiguously upheld disclosure laws as constitutional.  If disclosure is the bottom line, then liberals and supporters need to bring the fight back to the FEC where they maintain a home turf advantage. Otherwise, they risk undermining their cause by fighting procedural battles in agencies that have little interest in regulating campaign activity and little incentive to become enmeshed in a political battle as contentious as campaign finance.

 By Erinn Larkin, Compliance Director, PACs and Parties


Payday Lenders Moving From the Storefront to the Internet

Posted on:

Screen Shot 2013-05-22 at 2.14.50 PM

For the past year, CFO Consulting Group has been pushing for tighter regulation of the Payday Loan industry within the state of Rhode Island.  Nationally, storefront payday lenders are facing tighter regulations across the country. Twenty-five states currently have pending legislation that pertain to payday lending regulation.

As storefront payday lenders are coming under intense scrutiny in some states, another form of usury is flying under the radar.  Faced with the prospect of storefront payday businesses becoming unprofitable under new regulations, many payday lenders are moving their operations to the shadowy, unregulated world of the internet.  A growing number of the lenders have set up online operations in less regulated states in the U.S. or foreign countries like Belize, Malta, and the West Indies in order to avoid statewide caps on interest rates.  There are a few differences between the traditional storefront payday loan system and the payday loans available online.  Via the internet, there is an immediate approval system, which enables customers to get in touch with numerous “expert” lenders and receive cash deposited directly into their accounts.  This allows lenders to have direct access to borrowers’ bank accounts.

Sadly, major banks have become enablers of internet-based payday lenders.  A recent New York Times article states that while large banks  – including Bank of America, and Wells Fargo among others –  do not make the loans, they are a critical link for the lenders. They enable the lenders to withdraw payments automatically from borrowers’ bank accounts, even in states where the loans are banned entirely. This is a practice that has been flourishing on the internet for years.  However, there has been some movement within the United States Congress and some of the major banks to help combat this issue.

JPMorgan, the nation’s largest bank by assets, will give customers whose bank accounts can be accessed by the online payday lenders more power to halt withdrawals and close their accounts.  Within the United States Congress, Senator Jeff Merkley of Oregon introduced a bill in January to further rein in payday lending.  The bill, S. 172, or better known as the SAFE Lending Act, would crack down on the worst practices of the online payday lending industry and give states more power to protect consumers from predatory loans.  As of March, the bill is sitting in committee.

CFO Consulting Group is looking forward to seeing the United States Senate & House of Representatives vote in favor of the SAFE Lending Act to successfully bring to an end the predatory practice of payday lending in internet and storefront locations nationally.

By Brett Smiley, co-founder of  CFO Consulting Group

Why is the Senate Electronic Filing Bill Deemed Unlikely to be Enacted Despite Near Consensus?

Posted on:

Few issues or policy realms have the power to bring together alliances like those witnessed in the now infamous Citizens United case, which pinned the ACLU, NRA, AFL-CIO, and Chamber of Commerce against an alliance that included the American Independent Business Alliance, the DNC, and Senator John McCain (among others).  Even fewer have the ability to kindle bipartisanship and consensus in a political landscape characterized by polarization and gridlock. Yet the Senate Campaign Disclosure Parity Act introduced by Senator Jon Tester earlier this year has indeed managed to receive bipartisan support.   The bill would compel Senate candidates to electronically file campaign finance reports along with the other federally registered committees that have been doing so since 2001 (PACs, Parties, and House Members). The bill would save time, tax dollars, and improve disclosure and transparency.

So why do organizations like, which track the statistical probability of legislation being enacted, give the bill a 10% chance of success?

In 1971 when the FEC Act was originally enacted, the law dictated that Senate candidates file their reports with the Secretary of the Senate who would then forward them to the FEC. All other committees were to report directly to the FEC. In 2001 when the FEC required that almost all committees file their reports electronically, the Senate was exempted from the law and has continued to file on paper ever since.

Why shouldn’t the Senate be allowed to continue filing on paper?  There are several reasons why compelling the Senate to file electronically is a common sense law. First, the current procedure is inefficient. The candidate sends their report to the Secretary of the Senate, who then forwards the report to the FEC. The FEC then sends it to a third party firm that re-types the reports, enters them into a database, and sends the information back the FEC. Only then is the information available to the public.  By contrast, reports thatare uploaded electronically are instantly available to the public.

Second, the current procedure is costly.  The FEC estimates that having the Senate file electronically would save tax-payers just under $500,000 per year. It would undoubtedly save candidates the expense of printing and sending hundreds of pages worth of reports at-least four times a year.  It also unnecessarily wastes the time of government employees.  Because the Senate reports need to be re-typed, every time a campaign finance analyst finds a potential violation, they must then locate the paper image to ensure it corroborates with the re-typed data.  Such a time-consuming, redundant process is obviated by electronically filed reports.

Lastly, it would provide greater transparency.  While the FEC pays for the service of re-typing the data, it is entirely for their own review purposes. The formatted data is never made available to the public. Therefore, individuals interested in reviewing Senate reports must scroll through hundreds of pages of text-unsearchable PDF images.  For all these reasons, the measure to compel the Senate to file electronically has received widespread support and near consensus among all parties involved.

Why might the bill fail regardless of such widespread support? Those interested in the passage of the Senate Campaign Disclosure Parity Act of 2013 should pay attention to the behavior of Senator Mitch McConnell and his role in the failed Senate Campaign Disclosure Parity Act of 2007.  Senator McConnell first placed an anonymous hold on the bill (when pushed, he later revealed his identity).  He then attempted to attach an amendment that would loosen coordinated expenditure laws between parties and candidates.  In short, he sought to negotiate for policy reform when the matter at hand concerned procedural reform, which to many, was simply too unreasonable and unequal of an exchange.  Observing McConnell’s disposition toward the current bill may provide insight into its chances of ever getting past committee and on to the floor for a vote.

 By Erinn Larkin, Compliance Director, PACs and Parties

The latest challenge to McCain-Feingold: McCutcheon v. FEC

Posted on:

A recent article by in the Huffington Post by Jay Pinho alludes to the thorny spot that progressives have found themselves in vis-a-vis campaign finance rules, ever since the Supreme Court decided the Citizens United case in 2010.  He discusses the recent victory of Robin Kelly the IL-2 special primary election, and the instrumental role that Michael Bloomberg played in Kelly’s electoral success.  Bloomberg flooded the race with money in order to make good on his promise to support gun control advocates.  The point he makes is this: how do Democrats celebrate these progressive victories, while at the same time, work to reverse the rules the allowed them the power to get their message out in the first place?

Pinho also mentions the frustration felt among progressives in knowing that the Supreme Court has the potential to further roll back campaign spending rules when it hears the McCutcheon vs. FEC case in October.  He states, “in conjunction with the Court’s notorious Citizens United v. Federal Election Commission decision from 2010, which lifted the ban on corporate expenditures and led to an explosion of outside spending during last year’s election campaigns, such a ruling in McCutcheon would augur a decisive transformation of American electoral norms — from “one person, one vote” to something approaching ‘one dollar, one vote’.”

The McCutcheon case challenges the constitutionality of individual aggregation limits, which refer to the maximum amount that one individual can contribute to parties, PACs, and candidates during any two year election cycle.  For the 2013-2014 election cycle, this amount is $123,200.  Of this amount, no more than $48,600 can go to candidates; the remainder must go to either PACs or party committees.  This limit should not be confused with the maximum amount that candidates are allowed to receive for their campaigns, which remains unchallenged, and at $2600 per election.  If the Supreme Court sides with McCutcheon, then this limit will be abolished, and individuals will be free to contribute the maximum allowable amount to as many candidates as they choose.   Thus, the case can perhaps be better  understood as an attempt to abolish the limit on the number of candidates individuals can support, rather than the amount of money they can spend per se.

There are several reasons that progressives should take pause before automatically lambasting all individuals, organizations, or proposals to alter extant campaign finance regulation.  First, the practical effects of eliminating individual aggregation amounts is likely to be minimal.  At the current limit, individuals can “max-out,” in other words, contribute the maximum amount of $2600 to both the primary and general elections of a particular candidate, to no more than nine congressional contenders during a two year period.   Of the very small percentage of Americans that contribute to congressional elections at all, an even smaller amount max-out to any one candidate.  The number of individuals who max-out to nine candidates, and exhaust their $48,600 allowance, is minuscule in proportion.

Second, if candidates are to become less reliant on Super PACs and other outside groups, then measures that make it easier to raise money in a transparent way, and in accordance with contribution limits, could be a beneficial thing.  It is impossible for one organization, party, or even Congress, to control the political messages that make it to the airwaves.  What these organizations can control is who is accountable for the messages that are made, and their level of transparency.   Unlike ad hoc organizations like Super PACs, elected officials and candidates are accountable for the statements they make and their legitimacy is dependent upon it.  Therefore measures that empower candidates relative to outside organizations perhaps deserve a second look by progressives that desire an improved campaign finance system.


Helping Rhode Island Crack Down on a National Problem

Posted on:

For many of us, Payday Loans are an unknown financial instrument. While many have a general understanding of what pawn shops and check cashers are, payday lenders are a different animal.

Rhode Island’s population is barely over a million and yet nearly 200,000 of these loans are taken out yearly. Payday loans are short term, high interest loans. They are capped at $500, due in two weeks and carry an APR of 260%. For many, these loans are the not the solution to a short term financial crises but rather cover ordinary living experiences. In fact, the average borrower takes out 8 loans per year.

CFO Consulting Group is proud to be the public affairs team fighting for the Rhode Island Payday Loan Reform Coalition. A great coalition is fighting back against predatory lending in Rhode Island, but there are similar efforts underway across the country. Additionally, there is an effort to crack down on the enabling role the big banks are playing for the industry.

Recently the New York Times covered how the nation’s biggest banks, including Bank of America and Wells Fargo have proved to be willing partners allowing the payday lenders to continuously debit accounts, racking up big overdraft fees along the way. In response to this coverage JP Morgan pledged to change its practice. CFO is looking forward to seeing that change, and change in Rhode Island.

CFO Consulting Group Expands, Adds Public Affairs Practice

Posted on:

For Immediate Release:
Wednesday, February 13, 2013                                                                                                 

CFO Consulting Group Expands, Adds Public Affairs Practice

Campaign Fundraising and Compliance Experts Announce New Public Affairs Practice, Clients

WASHINGTON, DC – Today, CFO Consulting Group announced a major expansion of services in the form of a new Public Affairs practice. The enhanced offering expands on the development/fundraising and compliance services for which CFO has become well known and regarded within the Democratic campaign, non-profit, and issue advocacy space. CFO Public Affairs also announced its first clients including the Greater Providence Board of Realtors and the City of Providence, Rhode Island. During the 2012 election cycle CFO Consulting Group assisted the successful $25 million affordable housing bond campaign in Rhode Island.

After 5 years of intense focus building our compliance and development practices, we’re excited and ready to expand once again,” said CFO Consulting Group founding partner Brett Smiley. He continued, “CFO remains committed to providing our clients with the attention they deserve and results they need to be successful. We look forward to helping them meet the challenges ahead.”

With deep roots in electoral politics and issue advocacy campaigns, CFO Public Affairs offers clients an array of results driven services needed to exceed even the most challenging objectives. Having held leadership roles in races from California to Chicago to New England, founder Brett Smiley has mastered effective and creative messaging, harnessing the power of coalitions, and developing winning strategies.

The practice is anchored in Southern New England and builds on nearly a decade of work with the region’s biggest Mayors, statewide elected officials, and members of Congress. Its hands-on team of political professionals gives every project the careful consideration and intense focus it deserves.

With its particular expertise in local government, CFO Public Affairs is uniquely suited to assist developers and those working with municipalities. Additionally, as the prevalence of ballot initiatives continues to grow, the practice’s unparalleled electoral experience is an invaluable asset for those seeking to win at the ballot box.

Few can match the experience, innovation, and expertise that CFO Public Affairs leverages on behalf of clients.

Selected CFO Consulting Group Past and Present Clients

Over the years, CFO has assisted dozens of clients with development/fundraising and compliance services, including:

Melissa Bean for Congress (IL), Robin Carnahan for U.S. Senate (MO), David Cicilline for Congress (RI), Matt Dunlap for U.S. Senate (ME), Elaine Marshall for U.S. Senate (NC), Jim Neal for U.S. Senate (NC), Steve Pagliuca for U.S. Senate (MA), Dennis Anderson for Congress (IL), Russ Carnahan for Congress (MO), John Carney for Congress (DE), Leslie Coolidge for Congress (IL), Susan Davis for Congress (CA), Val Demings for Congress (FL), Tammy Duckworth for Congress (IL), Bill Foster for Congress (IL), Eric Griego for Congress (NM), Debbie Halvorson for Congress (IL), Janice Hahn for Congress (CA), Scott Harper for Congress (IL), DK Hirner for Congress (IL), Anne Kuster for Congress (WI), Rob Miller for Congress (SC), Walt Minnick for Congress (ID), Natalie Mosher for Congress (MI), Mark Pocan for Congress (WI), Mike Quigley for Congress (IL), Maureen Reed for Congress (MN), Heath Shuler for Congress (NC), Diane Smith for Congress (MT), Syed Taj for Congress (MI), John Tree for Congress (IL), Frederica Wilson for Congress (FL), Charlie Fogarty for Governor (RI), Phil Angelides for Governor (CA), Peter Kilmartin for Attorney General (RI), Patrick Lynch for Governor (RI), Ralph Mollis for Secretary of State (RI), Angel Taveras for Mayor (RI), Asian Political Leadership Fund, Hartford Humanities Fund, Illinois Democratic County Chairman’s Association, Vanguard Healthcare PAC (IL), Tom O’Donnell for Alderman (IL), Friends of Ric Munoz (IL), Linda Holmes for State Senate (IL), Dave Koehler for State Senate (IL), Mike Noland for State Senate (IL), Celia Gamrath for Cook County Judge (IL), Tim O’Brien for Mayor (New Britain, CT), Pedro Segarra for Mayor (Hartford, CT), Hartford Humanities Fund, Ocean State Tall Ships, Providence Tourism Fund.

About CFO Founding Partner Brett Smiley

Brett Smiley is the founding partner of CFO Consulting Group offering clients results driven services meeting all of their public affairs, development, and compliance needs. After beginning his career as an accountant, Smiley fell into electoral politics in his hometown of Chicago. From 2002 to 2006, he traveled the nation as a professional campaign manager and fundraiser for candidates on the state and national level. In 2007, Smiley founded CFO and over the past five years, his team has helped dozens of candidates, Democratic parties, political action committees, issue advocacy organizations, and charities meet and exceed their fundraising, accounting, and compliance goals. His background in managing everything from a hundred thousand dollar county board campaign to a multimillion-dollar gubernatorial bid provides him with the perspective and expertise needed to assist clients at all levels. Rare for a campaign professional, Smiley holds an M.B.A. and Finance degree from DePaul University in Chicago. He resides in Providence, Rhode Island with his husband James DeRentis and is active with a variety of charitable and political causes including the Victory Fund.

Contact: Karl Frisch

202-681-5275 phone


Procedure and Participation: How the Rules Affect the Game

Posted on:

A study analyzes how specific rules, in this case New York City’s “matching funds” program, affects the demographic and socioeconomic diversity of what groups choose to participate and contribute to campaigns.

The Supreme Court’s decision in the Citizens United case was largely predicated on theoretical concerns about free speech and First Amendment rights.  One of the key criticisms of the ruling was its failure to account for how the rules affect other important components of the electoral process, such as voter participation. New York City’s public financing matching program, in which contributions up to $150 are matched 6-1, is one example of how regulatory policy can have a positive effect on desirable outcomes; in this case, by increasing participation and expanding the diversity of the voter base.

A recent study conducted by the Campaign Finance Center and New York University compared the state’s campaign finance system to the city’s system in order to see which appeared better suited to encourage (rather than suppress) participation among all demographic and socioeconomic groups.  It determined that by encouraging small dollar donations, the city’s matching program provided candidates a greater incentive to reach out to a greater variety of voters, which had a positive impact on participation rates of diverse groups.

The report’s co-authors conclude: “the city’s public financing system appears to have achieved one of its key goals — strengthening the connections between public officials and their constituents.”  The apparent success of the program has led to discussion of extending the policy to statewide elections in New York.

To be sure, reconciling the abstract nature of First Amendment concerns, with the realistic effect of how rules impact the behavior of both candidates and voters, is no easy task. However, it is perhaps our role as practitioners that lead us to conclude that the methods of one over the other seem more appealing and  beneficial to promoting a free and fair democratic electoral process.

Article Link: Study: Public Financing Contributes to Greater Diversity of Participation in NYC Elections


The Interaction of Personality and Procedure in Citizens United Decision

Posted on:

One New Yorker piece by Jeffrey Toobin that we found particularly interesting discusses the role that Chief Justice John Roberts played in “orchestrating” the Citizens United decision.  In “Money Unlimited,” Toobin provides a comprehensive background of the events leading up to the now infamous decision that struck down the ban on corporate spending in elections. He examines the personality and individual motivations of the Justices, and explains how these crucial yet often neglected factors fundamentally shaped the landmark Citizens United ruling. Specifically, Toobin focuses on the impact that Chief Justice Roberts had on the ultimate outcome, and went so far as to state, “as American politics assumes its new form in the post-Citizens United era, the credit or the blame goes mostly to him.”

How did the Chief Justice accomplish such a feat? According to Toobin, John Roberts orchestrated the decision by manipulating the scope of the case, in other words, what legal question was being presented to the Court.  If Justice Roberts had maintained the narrow scope, then the decision would have been specific to the one case and would have had minimal impact beyond it. Instead, he shifted away from the specific facts of this one case and began focusing on more general and theoretical ones including the relationship between money, free speech, and First Amendment rights.  He also notes that Roberts also made use of tactical strategic choices. In assigning Justice Kennedy, both a noted First Amendment champion as well as the swing vote on the Court, the primary author of the Majority’s Opinion meant there would be no ambiguity in the final ruling.

As Toobin notes, “these rhetorical fights were a long way from the gritty business of raising and spending campaign money.”  Indeed, it is difficult to overlook the practical effect of the ruling now two and a half years later.  Speech may not be stifled, yet it is also certain that not all voices are being heard.


Article Link: Money Unlimited: How Chief Justice Roberts orchestrated the Citizens United Decision