The images sketch the life of a small-town girl in Middle America. She rides a tractor. She shows her prize cow. Wearing a pink-and-white striped apron, she volunteers at the local hospital.
“Grew up on our family farm, working in the fields, showing cattle,” Kelly Loeffler, Georgia’s newly appointed U.S. senator, says as a campaign ad traces her girlhood. “I waited tables through school and spent Sundays in church. Through it all, I learned hard work and results really matter.”
But it is Loeffler’s big-city career in finance, mostly at the Atlanta-based owner of the New York Stock Exchange, that propelled her to the Senate – and into one of the trickiest ethical dilemmas in recent congressional history.
When she joined the Senate Agriculture Committee, Loeffler became an overseer of the overseers of the company that made her rich: Intercontinental Exchange, or ICE.
Founded in 2000 by Jeffrey Sprecher, now Loeffler’s husband and still the company’s chief executive and largest individual shareholder, ICE operates 12 exchanges and other subsidiaries that fall under the supervision of one or more federal financial regulatory agencies. Now, Loeffler will help write laws that govern those regulators, help approve appointments to their boards and vote on government policies that affect the company’s — and her own — bottom line.
In recent interviews, nearly a dozen ethics experts in Washington said the entanglement of Loeffler’s public and private interests has few, if any, recent precedents in Congress.
ICE deploys lobbyists to influence federal regulatory agencies and Congress, including committees on which Loeffler now sits. Loeffler’s husband and other ICE executives often testify at congressional hearings. And, when she was ICE’s senior vice president for corporate communications, Loeffler herself publicly criticized the company’s primary regulator, the Commodity Futures Trading Commission, for proposing “excess regulation” during the financial crisis of the late 2000s.
That commission answers directly to the Agriculture Committee’s commodities subcommittee, of which Loeffler is now a member.
“This gives Kelly Loeffler a direct position in overseeing her and her husband’s financial enterprises,” said Craig Holman, a lobbyist for the nonprofit watchdog group Public Citizen. “I find it utterly irresponsible the Senate would choose to put Loeffler on that committee, given her conflicts of interest.”
Marcus Stanley, policy director of Americans for Financial Reform, which lobbies for stricter market regulation, put it more simply.
Loeffler’s situation, he said, is “super-swampy.”
Loeffler, a Republican who had never held or sought elective office, was appointed by Georgia Gov. Brian Kemp to replace Sen. Johnny Isakson, who retired in December for health reasons. She faces four challengers in November’s election to complete Isakson’s term: U.S. Rep. Doug Collins of Gainesville; the Rev. Raphael Warnock, the pastor of Ebenezer Baptist Church in Atlanta; Matt Lieberman, an Atlanta educator; and Ed Tarver, a former federal prosecutor from Augusta. Collins is a Republican; the others, Democrats.
Using some of the $20 million of her personal fortune that she pledged to her campaign, Loeffler is introducing herself to voters through television and online ads that highlight her upbringing in rural Illinois, as well as her conservative political views.
The ads barely mention Loeffler’s years at ICE and say nothing about the potential conflicts of interest.
Loeffler declined a request for an interview for this story.
After a version of this story appeared online Saturday, Loeffler’s staff released a statement denouncing The Atlanta Journal-Constitution’s reporting and portraying critics quoted in the story as liberal partisans.
The statement also quoted Loeffler as saying: “I will never take a vote that directly benefits me. I will never take a vote that directly benefits my family.”
After holding executive positions in finance and in the automotive industry, Loeffler came to Atlanta for a job at ICE in 2002. Two years later, she married Sprecher, the CEO.
By the time Loeffler was appointed to the Senate, Sprecher had accumulated more than $550 million in ICE shares, according to the company’s public filings, while Loeffler controlled another $18 million in stock and stock options.
Sprecher, 64, and Loeffler, 49, own a $10.5 million home in Atlanta’s Buckhead neighborhood, along with houses in Florida and a condo in Chicago. Loeffler is co-owner of the Atlanta Dream, the city’s WNBA franchise. Sprecher’s compensation from ICE totaled $39.7 million from 2016 to 2018, and Loeffler earned $1 million in salary and bonuses each of the past two years, according to public filings.
Loeffler’s Senate financial disclosure — due in May — is likely to show that the couple’s holdings make her the wealthiest member of Congress.
They built their wealth through taking ICE public in 2005 and through a string of acquisitions, including of the New York Board of Trade in 2006 and the New York Stock Exchange in 2013.
Today, ICE operates exchanges in the United States, Canada, Europe and Asia, executing trades in energy futures, agricultural commodities like sugar and cocoa, and various complicated financial instruments. The company also sells market data to subscribers, owns a subsidiary that registers home mortgages, and runs a cryptocurrency trading platform called Bakkt. Loeffler was Bakkt’s top executive until December.
» MORE: Who is Kelly Loeffler?
In the 15 years since ICE’s shares began public trading, the company’s market value has grown from $1.4 billion to about $51.5 billion.
The company continues to pursue acquisitions. Last week, according to published reports, ICE floated an unsolicited offer to buy eBay, the online auction platform, for about $30 billion. In an earnings call with market analysts on Thursday, Sprecher said the company made no formal offer. “We were not able to move forward,” he said. “They’re not engaged with us.”
ICE’s success, its public filings show, depends to a large degree on federal regulators — a dependence that now poses ethical challenges for Loeffler.
The company’s most recent annual report, covering 2018, listed numerous “risk factors” from federal regulation and oversight, far more than in previous years.
“Our regulators have broad enforcement powers to censure, fine, issue cease-and-desist orders or prohibit us from engaging in some of our business,” the company told investors.
One example involves the Libor, the London Interbank Offered Rate, an interest-rate benchmark that ICE administers. The Libor is supposed to reflect rates that banks charge one another for short-term loans. But the Libor has a history of scandal, with large banks allegedly conspiring to underreport rates, allowing them to pay smaller returns to depositors. The Federal Reserve wants to replace the Libor with another benchmark, and ICE said in its annual report that such an action – “or any other changes or reforms” – would harm the company’s financial condition.
Other risks identified in the annual report involve increased capital requirements for exchanges, tighter controls over initial public offerings, and interest rate increases by the Federal Reserve.
Even “a prolonged government shutdown could negatively affect our business,” by slowing regulatory approvals, among other impacts, ICE said.
As a member of Congress, Loeffler is one of the very small number of people who decide whether such a shutdown occurs.
Loeffler ranks No. 100 of 100 in Senate seniority. Even so, ethics experts say, she can exert significant influence on behalf of ICE and its subsidiaries.
The Agriculture Committee — where Loeffler replaced Georgia Sen. David Perdue, who moved to Isakson's former position on the Foreign Relations Committee — is working on legislation that could determine how closely regulators control trading exchanges like ICE’s and whether they continue to oversee cryptocurrency trading markets like Bakkt’s.
Even in her first year in the Senate, Loeffler could be called on to vote on appointments to the commodity trading commission, as well as to the Securities and Exchange Commission, which oversees trading in public companies.
“But there are a lot of ways short of a vote on the floor or in committee where a single senator can have a tremendous impact on an industry or a particular company,” said Donald Sherman, deputy director of Citizens for Responsibility and Ethics in Washington, a nonprofit watchdog group.
When Loeffler calls or writes to a regulatory agency, even on matters that do not explicitly concern ICE, officials will know her industry connections and will respond accordingly, Sherman said. She can pressure regulators by asking pointed questions at committee hearings or by threatening to convene hearings to put them on the defense.
In some cases, Sherman said, regulators may try to avoid alienating her even if she hasn’t weighed in on a particular issue.
“It is power that should be used in the public interest and should be used judiciously,” Sherman said. “I think it’s fair to scrutinize how Senator Loeffler chooses to utilize the power she now has.”
Many wealthy lawmakers try to minimize conflicts by placing their assets into a blind trust, controlled by an independent administrator. But, unlike Loeffler, many of those lawmakers have a diverse array of investments, diminishing their ties to any specific market sector.
In the alternative, Loeffler could sell her shares in ICE. But with her husband’s holding such a large stake, her incentive to favor the company would remain. For his part, Sprecher has signaled no intention to step back from his role at ICE. On the earnings call Thursday, he described ICE as “a founder-led company.” He added: “The founder’s still here.”
Finally, Loeffler could recuse herself from votes on issues affecting ICE. But that may not be a practical solution, considering how much of her committee work will involve commodities trading, said Stanley, of Americans for Financial Reform.
ICE is “just too big a part of the trading system” for Loeffler to sit out debates and votes and still fulfill her duties as a lawmaker, Stanley said.
But people who have worked with Loeffler say she can navigate the uncertain ethical terrain.
“That conflict is built into our form of government,” said Chris Giancarlo, who was ICE’s top regulator as chairman of the Commodity Futures Trading Commission . “That’s the beauty of our system.
“The notion that because she’s had a successful business career should disqualify her, I think, is the opposite of what the Founding Fathers had in mind,” Giancarlo said. “We’ve got a billionaire for president. We’ve got a billionaire running for president.
“This is America. This is the way we roll.”
Support real journalism. Support local journalism. Subscribe to The Atlanta Journal-Constitution today. See offers.
Your subscription to the Atlanta Journal-Constitution funds in-depth reporting and investigations that keep you informed. Thank you for supporting real journalism.