Wall Street Brings Out the Big Guns on Capitol Hill
According to three progressive groups, the six big banks -- Goldman Sachs Group (GS), Bank of America (BAC), JPMorgan Chase (JPM), Citigroup (C), Morgan Stanley (MS) and Wells Fargo (WFC) -- and their trade associations have spent $600 million on lobbying, trade association activity and political contributions since the fall of Bear Stearns in March 2008. The report says that there are 243 people lobbying Congress and the White House, including 54 former staffers from the House Financial Services Committee and the Senate Banking Committee. The lobbying spree follows $160 billion in bailouts from Congress and trillions in cheap loan guarantees from the Federal Reserve.
Citigroup, which received $25 billion in federal aid, has the largest lobbying staff at 55 according to the report, though the New York bank told Politico the figure is closer to 37. The government expects to make a profit of about $8 billion when it sells its stake in the company. Other companies with large lobbying staffs include Goldman Sachs (45), JP Morgan Chase (32), Morgan Stanley (19), Wells Fargo (14) and Bank of America (12).
The Revolving Door Is Spinning Fast
Among the political heavyweights working for the industry are former Rep. Richard Gephardt, the former leader of the Democrats in the House, and former Sen. Trent Lott (R-MS). Gephardt's one-time Chief of Staff Steve Elmendorf runs Elmendorf Strategies, which the report describes as the "top big-bank lobbying firm." Lott and Gephardt helped usher in the era of financial deregulation during the 1990s. With Wall Street reform at the top of Congress' agenda, they are no doubt busy. None of the lobbyists could be reached for immediate comment.
"The big banks have employed an unrivaled network of in-house lobbying teams, hired guns, industry associations, front groups and behind-the-scenes influence peddlers with deep connections to Congress and the Obama administration," according to the 23-page report issued by the Service Employees International Union, Campaign for America's Future and the Public Accountability Initiative. "While reformers have scored some victories in the financial reform debate, big banks have defeated a number of measures that would have curbed the power of big banks and cracked down on Wall Street's casinos."
According to the report, Wall Street lobbyists helped defeat the Kaufman-Brown amendment, named after Sens. Ted Kaufman (D-DE) and Sherrod Brown (D-OH), which sought to break up large banks and limit their ability to take risks. Progressive groups plan to hold a rally on May 17 in Washington to protest Wall Street's influence on Capital Hill. A similar rally was recently held in New York.
The Securities Industry and Financial Markets Association, Wall Street's main lobbyist association, and the Managed Funds Association, which represents hedge funds, declined to comment on the report. An official with the U.S. Chamber of Commerce told Politico that the report "shows either a shocking degree of naivete or a high level of political ignorance" by expressing shock at the close relationship between Wall Street and Washington, given the high amount of regulation the industry is under.
Indeed, the financial services industry and its backers such as New York Mayor Michael Bloomberg have cautioned members of Congress against demonizing Wall Street as they debate the financial reform bill. There continues to be debate over aspects of the bill such as forcing over-the-counter trading of derivatives onto exchanges, a move that JPMorgan CEO Jamie Dimon says would cost his bank billions in annual revenue.
Concerns like Dimon's fail to move Wall Street's critics.
"These banks won massive bailouts and those bailouts are now funding their lobbying," says Kevin Connor, the report's author, in an interview. "Average Americans are not doing as well. Really, there is a gulf between Wall Street and Main Street."