Members of Congress who submitted comments advocating the weakening of the already watered-down Volcker Rule — which is meant to rein in banks’ risky trading — have received more than four times as much in campaign contributions from the financial sector as members who demanded stricter regulations, a report released today by Public Citizen reveals:
Those seeking to weaken the rule have received $66.7 million from the financial services industry since the 2010 election cycle compared to only $1.9 million in contributions received by those asking for a more robust rule. Those seeking to weaken the rule have received an average of $388,010 from the industry, more than four times as much as the average of $96,897 received by those asking for a stronger rule.
“Members of Congress should not serve as megaphones for industry’s claims,” said the report’s co-author, Negah Mouzoon, a researcher for Public Citizen’s Congress Watch division. “They should amplify the public’s call to prohibit banks from engaging in the same risky financial activities that contributed to the financial meltdown of 2008.”
The Securities and Exchange Commission received more than 18,000 comments before the public comment window for the Volcker rule closed on Feb. 13. Of the 20 separate letters submitted by U.S. legislators, 17 were signed by 172 members demanding changes that would weaken the rule, while just three letters signed by 20 members recommended steps to strengthen it.
The report’s findings come after a coordinated four-month lobbying blitz headed up by finance behemoths like Goldman Sachs, JPMorgan Chase, and Credit Suisse Group. And those lawmakers in favor of weakening the rule seem to have swallowed the financial industry’s doomsday predictions about its effect hook, line, and sinker. The banks’ general aim was to pressure federal agencies into delaying and weakening the Dodd-Frank Wall Street reform law, and on that score, their campaign was relatively successful, as lawmakers have signaled they are prepared to revise the rule.