"Wall Street Spending As Much To Undermine Dodd-Frank Regulations As It Spent Trying To Block Dodd-Frank"
Last year, as the Dodd-Frank financial reform law was being crafted and debated in Congress, banks and other financial firms threw millions of dollars into lobbying and campaign contributions. These dollars bought the banks some significant victories, including watering down key provisions aimed at reducing risky trading.
And President Obama signing Dodd-Frank into law did not stop the banks from spending. In fact, they’ve kept their lobbying expenditures fairly constant, in an effort to influence the regulators charged with implementing the law. According to an analysis by the Wall Street Journal, the banks’ spending on lobbying in the first quarter of 2011 was actually higher than it was in the first quarter of 2010, when Dodd-Frank was actively being debated:
Wall Street and the financial industry spent more to lobby Washington in the first quarter of this year than a year ago when Congress was writing sweeping financial-overhaul legislation, according to a Wall Street Journal review of lobbying reports released Thursday. [...]
The disclosures show that 26 of the financial firms and trade associations that spent the most in 2010 collectively spent $27 million in the three months ending March 31, a 2.7% increase from the $26.3 million spent in the comparable period in 2010.
When the height of the Dodd-Frank debate was going on last summer, the banks spent $27.3 million over three months, barely more than they spent in the first three months of this year.
One of the main knocks against Dodd-Frank is that it left too much discretion to the federal regulators, who work in a way that is much easier for special interests to influence. Rulemaking by federal agencies, which is slow and involves extensive open comment periods, is the perfect arena for lobbying shops to work their magic. The banks clearly realize this, and have been attending a host of meetings with the regulators, as well as submitting extensive comments on proposed rules.
The financial services industry is seeking to influence several issues when it comes to regulatory reform, including derivatives reform, consumer protection issues, and trying to do away with a rule capping the amount they can charge for debit card transactions. It’s clear that the banks think they can still blunt the effect of Dodd-Frank on their bottom lines.
Cross-posted on The Wonk Room.