Concerned about seeing their huge profits cut, six big banks are leading the charge to weaken or block new financial regulations being considered in the United States Senate. To push their cause these banks have hired 145 former government officials--congressmen, staffers and executive branch officials--to lobby on Capitol Hill and in the executive branch.
The top six bank holding companies engaged in lobbying on financial regulation include Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley. According to the Center for Responsive Politics, these banks spent a combined total of $23.8 million lobbying Washington in 2009.
Former government officials accounted for seventy-one percent of all lobbyists hired in 2009 by these six banking companies. The company with the highest percentage of former government officials working as lobbyists is Goldman Sachs. Eighty-two percent of the lobbyists hired by Goldman Sachs previously worked in government.
Fifty-five of the 145 former government employees previously worked in the Senate, the current point of lobbying in the financial regulation debate. Fourteen of these former staffers turned lobbyists previously worked for the Senate Committee on Banking, Housing and Urban Affairs or members of the committee. The senator with the most former staffers working as lobbyists for these big banks is Sen. Max Baucus with four former staffers who have gone through the revolving door.
One chief concern of the major bank holding companies is the derivatives language introduced by Sen. Blanche Lincoln and passed out of the Senate Agriculture Committee. Lincoln's legislation would require these banks to spin off their derivatives trading desks into separate entities. This would slash the profits that these companies currently make from derivatives trading.
According to the Office of the Comptroller or the Currency, five of these big banks -- JPMorgan, Bank of America, Citigroup, Merrill Lynch and Goldman Sachs -- account for 97% of the derivatives holdings of United States commercial banks. The investment of millions of dollars in lobbying could save the companies billions of dollars in lost revenue.
Jamie Dimon, JPMorgan's chief executive, stated earlier that derivatives reform could cost his company "$700 million or a couple billion dollars," depending on how tough the regulations were. This calculation likely excludes the possibility that banks would spin off their derivatives trading desks, which could, according to some analysts, lead to the banks getting out of derivatives trading entirely.
The former staffers turned big bank lobbyists worked in other parts of government aside from the Senate. Sixty-five of the 145 previously worked in the House of Representatives. Forty-two worked previously in the executive branch in some capacity and of those with executive experience eight previously worked for either the Treasury Department or the Securities and Exchange Commission.