Yesterday, Bloomberg News reported that seven Wall Street lobbyists “trooped to Capitol Hill,” in an attempt to talk Rep. Paul Kanjorski (D-PA) out of proposing legislation that would allow the government to break up any financial firm deemed systemically risky. According to Bloomberg, the lobbyists left with the “sobering conclusion” that Kanjorski isn’t backing down.
Of course, that setback won’t end the banks’ effort to stop such legislation from going forward. In fact, next week they will be calling on some of their friends from around the business world to try to convince New York’s congressional delegation that such legislation “would undermine the Big Apple’s economy and its reputation as a world financial hub”:
Among roughly 20 business leaders slated to come to a meeting called by Rep. Charles Rangel (D-N.Y.) are: Rupert Murdoch, CEO of News Corp.; Lloyd Blankfein, CEO of Goldman Sachs; Larry Fink, CEO of BlackRock; and William Lauder, CEO of The Estee Lauder Companies Inc.…“If the U.S. dismantles our leading institutions, then it will destroy the American financial center, which is largely anchored in New York,” said Kathryn Wylde, president and CEO of the [Partnership for New York City]. “It’s just frightening.”
This isn’t the first time that large corporations have gone to bat for the banks when it comes to regulatory reform. When the House Financial Services Committee was working on a bill reforming the derivatives market, a coalition of business groups came in to pressure lawmakers, despite the fact that 97 percent of derivatives are held by just five large financial firms.
The details of these provisions — particularly what constitutes an undue amount of risk and who gets to ultimately pull the trigger to break up a firm — have yet to be ironed out, and I would hope that Rupert Murdoch and William Lauder don’t have enough sway over regulatory policy to make much of a difference. (Since they’re joining with Goldman Sachs CEO Lloyd Blankfein, are they also doing “god’s work”?)
As Kanjorski said, this could be “one of our potentially last chances to get control, particularly of financial institutions in their mega-forms, before they take over the world.” It’d be a shame if News Corp. took that chance away.