Chamber of Commerce Flies In Executives to Front For Derivative-Dealing Banks

Ever since Barack Obama’s inauguration, there’s been an effort out there to counterintuitively argue that the administration is a mere pawn of big business and the folks out there fighting his agenda are heroic populists with their eyes on the little guy. This was a secondary chord in the opposition to health reform even though it was actually quite accurate to say that the administration’s bill reflected the interests of at least some key stakeholders. But it’s become the primary theme of Republican opposition to efforts to regulate Wall Street, a context in which the argument is completely bogus. Take, for example, Noam Scheiber’s reporting on today’s “fly-in” organized by the Chamber of Commerce to lobby against regulations that would force most standardized derivative transactions to be centrally “cleared” with posted collateral:

But, on another level, the pilgrimage by the so-called corporate “end-users” is a little mystifying. That’s because the legislation that’s piqued the executives’ interest—a derivatives bill that Senate Agriculture Committee Chairman Blanche Lincoln unveiled last week—explicitly exempts derivatives used in commercial activity, as in the jet-fuel example. What the Lincoln bill would regulate is the use of derivatives for more speculative purposes, like a straight-up bet between two Wall Street firms on the future price of oil.

Which suggests another explanation for today’s fly-in: Big financial firms like Goldman Sachs and JP Morgan generate billions of dollars each year as derivatives dealers. But, over the past several weeks, as Democrats’ have escalated their rhetoric and explicitly targeted Wall Street, the big banks have had trouble getting their message out on Capitol Hill. All the more so thanks to Friday’s SEC complaint accusing Goldman of fraud. “The banks’ credibility, their ability to influence this, is limited,” says one derivatives industry lawyer.

It’s another example of the tremendous solidarity that the corporate executive class in America displays. It’s not absolutely uniform, of course, but to a tremendous extent Big Finance & Big Pollution can count on their corporate brethren and nearly everyone is united by their passion for union-busting and lower taxes on rich people.