Good for Wall Street AND K Street

K Street cashes in on bill
By: M.B. Pell - Center for Public Integrity and Joe Eaton
May 21, 2010

The Democrats’ regulatory reform bill may not be a hit with Wall Street, but it’s been very, very good to K Street.

According to an analysis by the Center for Public Integrity, 850 businesses, trade groups and other corporate interests have hired more than 3,000 lobbyists to shape the bill — roughly five lobbyists for each member of Congress.

And if their efforts haven’t paid off, it’s not for a lack of trying.

Lobbying disclosure data for all of 2009 and the first quarter of 2010 show that all the big players in American business lobbying were active as regulatory reform proposals worked their way through Congress.

The U.S. Chamber of Commerce deployed 85 lobbyists, including 49 hired from outside lobbying firms. The Securities Industry and Financial Markets Association employed 54 lobbyists, including 37 from outside firms.

The American Bankers Association deployed 53 lobbyists; the Business Roundtable, 42; and the Mortgage Bankers Association, 29, according to CPI data.

In the financial services industry, some 175 companies and groups — ranging from Goldman Sachs Group Inc. to CME Group Inc. to the Private Equity Council — hired lobbyists to try to weaken or eliminate reform proposals aimed at banks and the capital markets. A distant second was the energy and utilities sector, with 91 companies and organizations, followed by manufacturing, with 66 firms.

The companies and groups that lobbied on financial reform spent a total of $1.3 billion in 2009 and the first quarter of 2010 on their overall lobbying efforts, the data show. The exact dollar amount they devoted to financial regulation reform remains unclear because lobbyists are not required to itemize how much money in a given contract is spent on a specific issue. But if only 10 percent of that spending was targeted at financial regulation bills, lobbyists would have received $133 million.

In this debate, however, public perception of big U.S. banks as freewheeling gamblers relying on taxpayer-funded safety nets trumped Wall Street’s lobbying, some experts said.

Anger over bailouts, lavish bonus payments to top executives and the Securities and Exchange Commission’s fraud lawsuit against Goldman galvanized public opinion against Wall Street.

“Political backlash overwhelmed lobbying,” said Arthur Wilmarth Jr., a banking law expert at The George Washington University.

“When you see the tsunami of money flowing into Capitol Hill from these big financial players and their customers, it’s hard to imagine that the broader public interest will be taken into account,” Wilmarth said. “Earlier this year, there was a sense that we’ve gotten past the worst of it, so let’s not overreact. Now, the fact that all of these [European] governments have taken on all this debt — I think people now realize the crisis isn’t over yet and don’t really want the financial industry going back to taking risks.”



Banks and the financial industry spared little expense in lobbying. Citigroup Inc. deployed 38 lobbyists; Moody’s Corp., 13; and Bank of America, 11 — all dedicated to the financial reform legislation, according to disclosure documents.

Although the bill seems to be on the road to passage, corporate interests have had their victories along the way.

Peter Garuccio, a spokesman for the American Bankers Association, said the industry’s accomplishments, at least up to now, include preserving the Federal Reserve’s oversight of state member banks and eliminating a proposal for a $50 billion fund to help pay for dismantling large banks considered too big to fail.

“Some of the concerns we’ve raised have been addressed, others have not, and others have been partially addressed,” Garuccio said. “It’s still an ongoing process.”

No lawmaker wants to support a provision that could be responsible for the next financial crisis, said Bill Himpler, executive vice president of the American Financial Services Association.

The challenge for lobbyists that represent banking and finance organizations — which generally support some form of reform, Himpler said — is to demonstrate how various popular provisions do more harm than good for consumers and the financial industry. “I think we’ve got our work cut out for us,” he said.

Reform advocates have their own victories to point to in the legislation’s current form. They include the creation of a federal consumer financial protection agency, fee limits on debit card transactions and a one-time audit of the Federal Reserve’s role in the financial bailout.

What happens as the House and Senate reconcile separate versions of reform legislation remains to be seen, but Amaya Tune, a spokeswoman for the AFL-CIO, which supports reform measures, feels confident that consumers, not Wall Street, will come out on top.

“I think the chances of this staying a strong bill and not getting watered down are pretty good,” Tune said. “That being said, we’ll cross our fingers.”