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Blog Post | November 17, 2021

Revolver Spotlight: Charles Yi

BigLawFinancial RegulationHousingIndependent AgenciesRevolving Door
Revolver Spotlight: Charles Yi

Earlier this month, the Federal Housing Finance Agency (FHFA) announced that Arnold & Porter partner and former FDIC General Counsel Charles Yi would be joining the agency as its senior advisor for legal affairs and policy. In his new role, Yi is tasked with advising acting FHFA Director Sandra L. Thompson and “providing expertise, guidance, and coordination in recommending actions to ensure the Agency’s goals and obligations are met.”

As a revolver between BigLaw and government, Yi has a record of working on Wall Street-friendly financial regulations and sharing his government insight with corporate clients. From his time as an aide to Wall Street ally Senator Tim Johnson to his more recent work at Arnold & Porter’s Financial Services and Public Policy practices, Yi has displayed a tendency to put the interests of corporate America over the interests of the public.

Here are some of the most concerning parts of Yi’s record:

As a Senate Banking Committee staffer under Wall Street-aligned Chairman Tim Johnson, Yi helped advance housing finance legislation that would have given Wall Street even more power over the mortgage market. 

  • Yi served as Chief Counsel and Deputy (later lead) Staff Director for the Senate Banking Committee from 2011 to 2015, during which time the Committee was chaired by South Dakota Senator Tim Johnson, a longtime ally of the financial services industry. Johnson, as the Huffington Post’s Ryan Grim reported in 2010, had a long track record of opposing consumer protections and voted against “cram-down” efforts to extend bankruptcy protections to struggling homeowners in 2009. 
  • One of the main items on the Senate Banking Committee’s agenda during Yi’s tenure as Chief Counsel was housing finance reform, which Chairman Johnson and Republican Ranking Member Mike Crapo sought to address through the Housing Finance Reform and Taxpayer Protection Act of 2014 (“Johnson-Crapo”). Then-Director of the National Economic Council Gene Sperling singled out Yi in a 2014 Politico interview as instrumental in crafting the Johnson-Crapo bill. 
  • By eliminating Fannie Mae and Freddie Mac, the Johnson-Crapo housing finance bill would have expanded the banking industry’s role in issuing mortgage-backed securities — the very same industry whose reckless gambling with subprime mortgages caused the 2008 financial crisis. Salon’s David Dayen likened the bill’s deregulatory ambitions in the aftermath of the Great Recession to a “collective bout of amnesia,” arguing that all it would do “is eliminate Wall Street’s competition, allowing them to corner a lucrative market while only carrying a sliver of the risk.”
  • Over 300 community groups and civil rights organizations — including the National Community Reinvestment Coalition (NCRC), National Fair Housing Alliance, National Urban League, and NAACP — opposed the Johnson-Crapo bill for “needlessly making mortgages more expensive and less available” to people of color. In an April 2014 letter to the Senate Banking Committee, the groups cited the bill’s failure to protect support for affordable housing, ensure the enforcement of anti-discrimination laws, or identify communities of color as traditionally underserved market segments as some of its many shortcomings. 

Yi led the Senate Banking Committee’s reauthorization of the Terrorism Risk Insurance Act (TRIA), a massive giveaway for corporate insurers.

  • While serving on the Senate Banking Committee’s staff, Yi led the Committee’s unanimous reauthorization of the Terrorism Risk Insurance Act (TRIA), a post-9/11 law that requires private insurers to offer terrorism coverage and promises to bail them out if a future terrorist attack causes losses above a certain threshold. 
  • The real estate, financial services, and private insurance industries all heavily lobbied the Senate in support of TRIA’s reauthorization through a nonprofit group called the Coalition to Insure Against Terrorism (CIAT), which was represented at the time by Yi’s future employer Arnold & Porter. Members of CIAT include the American Bankers Association, Citigroup, the National Association of Realtors, and the U.S. Chamber of Commerce. Senator Chuck Schumer, the primary sponsor of TRIA’s 2014 reauthorization, also received a $1,000 campaign donation from CIAT lobbyist Charles Landgraf. 

Yi led the Senate Banking Committee’s reauthorization of the National Flood Insurance Program (NFIP), an inefficient program that has enriched corporate insurers and failed to address climate risks. 

  • While serving on the Senate Banking Committee’s staff, Yi led the Committee’s 2011 reauthorization of the National Flood Insurance Program (NFIP), which provides government-subsidized insurance protection against flooding-related losses to areas designated by FEMA as a flood risk. 
  • Environmental groups have likewise blasted the program for underestimating the true cost of flood insurance, which has created perverse incentives to expand construction on flood-prone coastlines. In a 2017 article for The New Republic, David Dayen pointed to outdated FEMA maps that were “not commensurate with current climate risks” as the cause of these incentives, noting low NFIP premiums had also resulted in the subsidizing of wealthy homeowners and properties that had been flooded multiple times. 

Yi led the Senate Banking Committee’s reauthorization of the Export-Import Bank (EIB), despite longstanding progressive criticism of the Bank’s doling out of corporate welfare and financing of fossil fuel projects.

  • EIB critics like David Dayen have argued that the bank has often been used as “a slush fund that allows the government to fund a series of nasty activities”, including selling nuclear reactors to Philippines dictator Ferdinand Marcos in 1981 and funneling loans to Saddam Hussein during the Iran-Iraq War. The bank also gave over $675 million in loans to Enron in the decade preceding its collapse. 
  • Vermont Senator Bernie Sanders has repeatedly spoken out and voted against the EIB’s reauthorization over its “[provision] of corporate welfare to some of the biggest job outsourcers in this country.” In 2002, he noted the bank gave an $18 million loan to a Chinese steel mill that was later accused of dumping steel into U.S. markets and criticized an Ex-Im financed sale of Boeing aircraft that moved jobs “from Wichita to China”.  In a 2004 House hearing, he grilled the EIB’s head over the bank’s sizable loans to corporate behemoth General Electric amid record profits for the company and its outsourcing operations. In a 2016 presidential debate, Sanders referred to the EIB as “the Bank of Boeing”, noting that the aerospace manufacturer received more financial assistance from the EIB than any other single firm. 
  • The EIB has a long history of financing dirty energy projects around the world, funding more than 160 fossil fuel infrastructure projects since 2007. In 2011 — the same year that the Senate Banking Committee held hearings on the EIB’s reauthorization — the bank approved an $805 million loan to South African state-owned utility Eskom to build one of the world’s largest coal-fired power plants. 

Yi leveraged his years of government experience into landing a lucrative job at Arnold & Porter, a BigLaw firm that lobbies on behalf of the real estate, pharmaceutical, insurance, and fossil fuel industries. 

  • Yi resigned as general counsel for the Federal Deposit Insurance Corporation (FDIC) in 2019 to join corporate law firm Arnold & Porter (A&P), ending a 12-year span of government service to return to BigLaw. Upon his hiring, Yi called A&P a “storied law firm with a strong legal practice [and] sterling reputation” and said he hoped to “draw on my experience both on the Hill as well as with the FDIC to […] advise a broad range of financial service clients”. He was a partner at the firm’s Financial Services and Legislative and Public Policy practices from May 2019 to November 2021
  • While Yi has yet to disclose his A&P clients, known clients of the firm’s Financial Services practice (which boasts of helping “multiple domestic and foreign banks” with anti-money laundering enforcement matters and FinTech investments) include financial giants like JP MorganChase, Visa, and Charles Schwab. 
  • A&Ps Legislative and Public Policy Practice lobbied against key drug pricing legislation (including the Elijah E. Cummings Lower Drug Costs Now Act) on behalf of several Big Pharma companies and Pharmaceutical Research & Manufacturers of America (PhRMA) during Yi’s time at the firm. PhRMA, one of A&P’s top clients during Yi’s tenure, has spearheaded Big Pharma’s recent efforts to kill legislation that would allow Medicare to negotiate prescription drug prices. 
  • A&P received $680,000 in 2019, $460,000 in 2020, and $330,000 in 2021 to lobby on behalf of insurance giant Lloyd’s of London, making it one of the firm’s top lobbying clients. Yi had previously met with two of the firm’s top executives while working for the Senate Banking Committee to discuss “lender-placed insurance and implementation of the Dodd-Frank Act”. 
  • Law Students for Climate Accountability, an environmental watchdog group, gave A&P an “F” rating in August 2021 due to its litigation and lobbying efforts on behalf of the fossil fuel industry. Among the firm’s clients are oil giant BP America, which actively lobbies against climate regulations.

IMAGE: “Office of Arnold & Porter, Washington D.C. by cranberries is licensed under CC BY-NC-ND 2.0.

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