Banks Hire Insiders as Senators Press for Reform
As Senate Democrats target the biggest banks with sweeping financial regulatory reforms, Wall Street is attempting a bank-shot attack, relying on third-party lobbyists not blamed for causing the economic crisis to make its case to Congress.The move comes as Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.) pledged Tuesday on the Senate floor to bring up the financial legislation that would target the “same large financial firms that got us in the mess in the first place” in the next few days.
The banks have faced diminished credibility since the collapse of the financial system more than two years ago, but the news of the Securities and Exchange Commission filing civil charges against Goldman Sachs last week reinforced just how difficult it is to regain their footing on Capitol Hill.
While the banks continue to send their in-house foot soldiers to the Hill, they have intensified an effort in recent weeks to hire former lawmakers to work inside their lobbying associations and to use smaller banks to try to gain political advantage.
However, the small banks aren’t looking kindly at the strategy of their bigger brethren.
Community banks are tired of carrying water for the big banks on regulatory reform, said Steve Verdier, executive vice president at the Independent Community Bankers of America.
“One of the things that’s really bugging us is everybody and their brother are saying community banks want this and community banks want that,” Verdier said.
While Verdier acknowledged that the ICBA is willing to work with the big banks when they are in agreement on particular provisions in the bill, he said his group is invested in the financial regulatory reform bill moving forward. The ICBA has been lobbying for non-bank retailers to be covered by a proposed consumer protection agency, making sure prudential regulators have more input in consumer rule-writing, among other matters.
“One thing we are not doing is trying to stop the bill or hold it up indefinitely so that Wall Street can make further weakening changes,” Verdier said.
Big banks aren’t relying solely on small banks and credit unions to be their face on Capitol Hill. Wall Street also is on a hiring spree for contract lobbyists, particularly high-profile former lawmakers.
Citigroup, one of the banks hardest hit by the financial crisis, recently did just that. The bank retained former Senate Majority Leader Trent Lott (R-Miss.) and his partner, former Sen. John Breaux (D-La.), to lobby on financial regulatory reform and tax issues.
The increased firepower comes after the bank worked with the former Senators through the Financial Services Roundtable, which also has the Breaux Lott Leadership Group on retainer.
The Financial Service Centers of America, a trade group of payday lenders and currency exchanges, also recently upped the ante in Washington, D.C., bringing on former Sen. Don Nickles (R-Okla.), founder of the Nickles Group.
The FSCA is fighting its inclusion in the proposed Consumer Financial Protection Agency, according to Ed D’Alessio, deputy general counsel for the group.
“Our industry had nothing to do with the financial meltdown, and CFPA will simply add another level of bureaucracy with no corresponding benefit to either consumers or industry,” D’Alessio said. “We retained the Nickles Group to help us convey that message on Capitol Hill.”
