A Citi Lobbies the Hill

Whither One Bank’s Government Affairs Team?

Posted March 3, 2009 at 6:34pm

Will Citigroup’s heavyweight lobbying team soon go the way of its counterparts at Freddie Mac, Fannie Mae and American International Group?

Not according to the banking giant’s chief lobbyist, Nicholas Calio, who says despite the recent cash infusions of government money, it’s business as usual for his lobby team.

The government does not have a controlling interest in Citigroup — not yet anyway — but it does own up to 36 percent of the company’s common shares, according to the latest agreement. This comes after the Treasury Department has already invested $45 billion in the firm.

“As far as the company and New York is concerned, the answer is yes,’— Calio said of Citigroup’s determination to maintain its Washington presence. “We still have a lot of issues at the state and local level not related to— the Troubled Assets Relief Program.

“At the end of the day for all parties involved, for all of our shareholders and the taxpayers, Citi needs to become profitable again,— he added.

Whether Citigroup will be able to keep its lobbying team in place is still unclear, especially if the government continues to increase its stake in the company. And with some members of the House and Senate leadership signaling that they will no longer take political action committee money from companies that received federal bailout funds, there is another tool taken away from Citi lobbyists as well.

During the 2008 cycle, Citigroup’s PAC doled out $688,000 to federal candidates, according to the Center for Responsive Politics.

So far, nearly all of Calio’s team has remained at the embattled company. But that could soon change.

Members of Calio’s public affairs team, particularly on the Democratic side, have been contacted and are in the process of negotiating with lobbying firms and companies, according to lobbyists familiar with the Citigroup team.

Other banking lobbyists suggest that with such a large chunk of public money, it will become more and more difficult for Citigroup to differentiate itself from the government in the future.

“It’s also hard to say in the current environment how to measure one’s assessment in a GR situation,— said one banking lobbyist, using the abbreviation for “government relations.— “There has not really been a lot to lobby as the company has deteriorated around them.—

Citigroup’s Citibank, which traces its roots to City Bank of New York, a merchant bank chartered in 1812, has long had close ties with the government.

It picked former Clinton Treasury Secretary Robert Rubin as a board member and senior counselor.

More recently, Citi executive Jacob Lew, who served until late 2008 as chief financial officer of Citigroup Alternative Investments, was named deputy secretary of State. Michael Froman, another former chief financial officer at Citigroup, joined the White House as deputy assistant to the president and deputy national security adviser for international economic affairs.

The rise of Citigroup’s mammoth lobbying presence dates back to 2002 when then-Chief Executive Officer Sandy Weill was looking to increase the company’s Washington footprint.

For years, the office had relied on an in-house federal lobbying team of about half a dozen, then-headed by Roger Levy.

But Weill, who helped engineer the 1998 merger of Citi and Travelers Insurance, wanted the company to become more proactive in Washington and take a more aggressive approach.

He looked no further then Calio, then-head of legislative affairs in the George W. Bush administration. Calio was doing his second stint as head of White House legislative affairs. His first was for George H.W. Bush, and he was a well-known commodity in Washington.

Besides working in the White House, Calio had earned a reputation on K Street as a savvy businessman. In 1993, he teamed with Democrat Lawrence O’Brien III to form O’Brien Calio.

After spending two years helping George W. Bush in the White House, Calio jumped to Citi at the end of 2002. As senior vice president for global government affairs, Calio spent the next several months doing a thorough review of the company’s state, federal and international lobbying operations.

If real estate is any measure, the company was clearly invested in keeping a high profile in D.C. Calio’s office, atop the old Evening Star Building, is ostentatious even by Washington standards, according to lobbyists who have been to the office.

With a wall of windows overlooking Pennsylvania Avenue, Calio’s office and the company’s deck were marquee spots for fundraisers.

Calio took that view of the power center of Washington to heart, looking to model his in-house team on that of a boutique lobby shop.

“I wanted a corporate office that, if it were a lobby shop, other corporations would hire,— Calio said of his approach to building up the practice.

With that in mind, Calio went on a hiring spree, largely looking to increase the financial giant’s Republican stripes. His first two hires out of the box were from the George W. Bush administration, Mike Conway and Heather Wingate. Later came Bush White House vet Christine Burgeson.

After bulking up on GOPers, Calio also looked to hire Democrats with leadership experience such as Jimmy Ryan, the former floor director for Senate Majority Leader Harry Reid (D-Nev.); Robert Getzoff, formerly with then-Rep. Rahm Emanuel (D-Ill.); and Paul Thornell, who had been in the Clinton administration.

Calio’s even temperament and management style, along with his aggressive approach to politics, was appealing to his hires.

“I didn’t come here to basically have some cushy job where I sit on my fat Irish a– and write memos to New York,— Ryan said. “I came here because of people like Bob Rubin and Nick Calio and because of the issues.—

While adding in-house, Calio slashed the more than a dozen outside lobbying firms that Citi retained.

The company now uses Capitol Hill Strategies, Barnett Sivon & Natter, Cypress Advocacy, Washington Council Ernst & Young, and Elmendorf Strategies as its outside lobbyists, according to Senate disclosure reports.

Besides building out the federal team, Calio was tasked with retooling the company’s state and international practices. And he moved the state and local lobbyists in Washington underneath the government relations umbrella.

Calio also worked to add people on the ground internationally; lobbyists who knew a particular culture and political environment and could work more deftly on issues.

The company has spent millions of dollars in Washington. Last year alone, Citi spent $5.52 million on federal lobbying, according to Senate disclosure reports.

And there are plenty of non-TARP-related issues left to lobby, Calio said, adding: “They matter to the bottom line of the company very much.—