Back in April, the Financial Accounting Standards Board (FASB) changed the mark to market accounting rule, which gave banks more leeway in assessing the value of securities that they hold on their books. As Floyd Norris reported at the time, “the change seems likely to allow banks to report higher profits by assuming that the securities are worth more than anyone is now willing to pay for them.”

Today, the Wall Street Journal revealed just how much the banks were willing to pay to bring the change about:

Marshalling a multimillion-dollar lobbying campaign, these firms persuaded key members of Congress to pressure the accounting industry to change the rule in April. The payoff is likely to be fatter bottom lines in the second quarter. [...]

Earlier this year, financial-services organizations put their lobbyists on the case. Thirty-one financial firms and trade groups formed a coalition and spent $27.6 million in the first quarter lobbying Washington about the rule and other issues, according to a Wall Street Journal analysis of public filings. They also directed campaign contributions totaling $286,000 to legislators on a key committee, many of whom pushed for the rule change, the filings indicate.

As Andrew Leonard put it, this “is as well documented a case of big-bucks lobbyists succeeding in getting the rules changed in favor of their clients as you will ever see.”

At the time, FASB was widely criticized for caving to political pressure by deciding to make the change. And in fact, according to the Journal’s report, following the change, “three [FASB] members threatened to resign in protest, concerned that FASB had jeopardized its credibility.”

With regard to both the General Motors and Chrysler bankruptcies, conservatives have been up in arms, claiming that the companies’ bondholders were being illegally shortchanged in favor of the United Auto Workers (UAW). For instance, Bloomberg’s David Reilly wrote today that, under the government’s approach, “bondholders are told to give up legal rights, and cash, as part of a government-mandated tradeoff that favors a politically connected special-interest group.”

Rep. Eric Cantor (R-VA) picked up on the meme today during an interview with CNBC:

This is really unfathomable, you’re right…So now what we’re seeing, as you suggest, is the White House coming in and favoring the UAW, basically making the rights of the bondholders inferior, outside any kind of legal framework whatsoever. There has been a downright suspension of the law.

Watch it:

Cantor and the others screaming about the legal rights of bondholders are off the mark. As the Washington Post noted, “there are a number of precedents for retiree health funds getting preferential treatment during bankruptcies, particularly in the steel industry in recent years when Bethlehem Steel and others were sold off.” And as Felix Salmon pointed out, an unsecured creditor like a bondholder “has no ‘legal right’ to get exactly the same outcome as any other creditor”:

The creditor does have the legal right to kvetch to a judge about fairness, that’s about it. And if the bondholders have a better idea of what’s fair, they’re more than welcome to provide tens of billions of dollars in debtor-in-possession financing in order to make that happen. But of course they’re not willing to put in so much as a nickel, which means that it’s not up to them, and the entity providing the financing — in this case, the US Treasury — gets to call the shots.

Even CNBC’s Carl Quintanilla wasn’t buying Cantor’s claims, saying “some might argue, Congressman, that that is sort of akin to having someone help you repair your house, but complaining about the color of paint they used…Don’t you think you’re almost nitpicking, given the amount of trouble the administration had to tackle?”