The multibillion-dollar trading losses at JPMorgan Chase & Co. have thrust Wall Street banks into a defensive crouch on K Street, prompting financial services lobbyists to clam up, regroup and, in some cases, suspend lobbying altogether.
As federal investigators and lawmakers on Capitol Hill scrutinize what went wrong at JPMorgan, whose losses tied to complex corporate bond trades could soar well beyond $2 billion, banking lobbyists have adopted what one called a “bunker mentality.”
Banks and their associations are rejecting media requests and even staying away from Capitol Hill. Industry officials have concerns about a bill introduced by Democratic Sens. Barbara Boxer (Calif.) and Bob Menendez (N.J.) that would help homeowners refinance their mortgages, for example, but are staying mum.
“They have made a conscious decision that they can’t lobby against it, even though it could have a pretty significant impact on their balance sheets,” one financial services industry lobbyist said of the Responsible Homeowners Refinancing Act, which the Senate Banking Committee is scheduled to take up today.
It’s an abrupt about-face for an industry that has spent record sums on lobbying and campaign contributions in recent years. Commercial banks spent $61.8 million on lobbying last year, according to the Center for Responsive Politics, in a massive push to influence multiple federal agencies engaged in writing rules to implement the 2010 Dodd-Frank financial reform law. That’s even more than the $55.2 million the banks spent lobbying to block Dodd-Frank in 2010.
In this election cycle, commercial banks also have made more than $15 million in political contributions, including some $1.5 million to presumed GOP presidential nominee Mitt Romney, about three times what the banks have given to President Barack Obama.
Consumer advocates complain that Wall Street lobbyists have enjoyed one victory after another. Industry representatives and their allies on Capitol Hill have slowed down implementation of Dodd-Frank, won bipartisan support for more than a dozen bills on Capitol Hill that would rewrite aspects of the law and mounted three lawsuits — one of them successful — to challenge specific regulations.
Enacted in the wake of the 2008 financial crisis with an eye to protecting consumers and banks from complex derivatives trades and other risky practices, the law called for 398 rules to be written by federal agencies, including the Securities and Exchange Commission and the Commodity Futures Trading Commission. So far 108, or 27.1 percent, of those rules have been finalized, according to an analysis by the law firm Davis Polk.
In the meantime, financial services industry lobbyists have papered agencies with literally tens of thousands of public comments and engaged in hundreds of behind-the-scenes meetings with high level administration officials.
Big investment banks such as Goldman Sachs and Wells Fargo have weighed in, as have multiple associations representing all walks of the financial services industry — the International Swaps and Derivatives Association, the Futures Industry Association, the Financial Services Roundtable and others.
Their champion was JPMorgan CEO Jamie Dimon, who enjoyed personal access to high-level lawmakers and regulators and who openly criticized a key provision of Dodd-Frank known as the Volcker Rule, which would restrict speculative investments by banks. Now Dimon is gearing up to explain his bank’s losses before the Senate Banking panel, and House hearings will likely follow suit.
Visitors get their first look at the American Veterans Disabled for Life Memorial, which opened to the public on Monday, Oct. 6, 2014. The new memorial is located off Independence Ave. SW between the Rayburn House Office Building and HHS. Buy photo here.