This piece was prepared in collaboration with Drew Vogel
In the two years since the mammoth Dodd–Frank Wall Street Reform and Consumer Protection Act became law, federal regulators have heard overwhelmingly from the biggest banks, according to a new Sunlight Foundation analysis of financial regulatory agency meeting logs. The voices of reform-oriented groups have been much quieter – particularly in the past 12 months.
Since July 21, 2010 (when the president signed Dodd-Frank), regulators at the three major banking regulatory agencies – Treasury, the Fed and the Commodities Futures Trading Commission (CFTC) – have reported meeting with 20 big banks and banking associations on average a combined 12.5 times per week – as compared to on average just 2.3 meetings with reform-oriented groups. The top 20 banks show up 1,298 times in meeting logs at the three agencies, while groups favoring tighter regulations of the financial markets show up just 242 times.
The Dodd-Frank law, passed in response to the financial crisis of 2008, set in place the guidelines for a new regulatory infrastructure. But the agencies tasked with implementing the more than 350 rulemakings mandated by the bill have since lagged behind deadlines, struggling with precise definitions while navigating the persistent concerns of the banks that will be most affected.
Not surprisingly, the big Wall Street banks dominate the meetings logs. Goldman Sachs appears 181 times. That’s almost two meetings per week. JP Morgan Chase is close behind with 175 total meetings, followed by Morgan Stanley with 150, and Bank of America with 122.
By contrast, the Consumer Federation of America had the most meetings of groups on the other side of the debate – 34 – followed closely by Americans for Financial Reform, a coalition of consumer and labor groups, with 32 meetings. That’s about one meeting per month for the most active reform-oriented groups.
Goldman Sachs (181 meetings) and JPMorgan Chase (175 meetings) alone combine for 356 meetings – 114 more than all the reform groups combined.
Figure 1. Combined meetings with Fed/Treasury/CFTC
The gap has widened further in the second year of Dodd-Frank implementation, now that rulemaking around the establishment of the Consumer Financial Protection Bureau – which pulled in many reform-oriented groups – is complete.
With regulators increasingly focused on more technical rules (e.g. swap exchange facilities, position limits, proprietary trading), regulators have met 560 times with the big banks, but just 81 times with reform groups over the last 12 months. During the first year of rulemaking, regulators met 738 times with the big banks as compared to 161 meetings with the reform groups.
Figure 2. Cumulative meetings with Fed/Treasury/CFTC
To be sure, more meetings do not prove influence. This analysis does not look at the details of specific asks or specific rules, nor does it measure how much different organizations have gotten what they’ve asked for.
But as an overview of meeting activity, it does call attention to the intensity of resources that big banks are devoting to Dodd-Frank rulemaking, especially when compared to the consumer and labor organizations advocating tighter regulation.
Still, meetings are likely to be influential for a simple reason. Most of these rulemakings deal with highly complex subjects. Regulators are overburdened. To the extent that regulators are relying on bank representatives to understand the technical side of these rules, they are likely to see the world from the banks’ perspective. This is bound to have at least some impact on how the final rules turn out.
The data and their limits
This analysis is based on agency meeting logs data pulled from Sunlight’s redesigned Dodd-Frank tracker, which will be released soon. The raw, uncorrected data is available on ScraperWIki. We’ve done our best to clean it up, though it is possible that we missed certain meetings because of the many ways in which different organizations are listed in the records.
Unfortunately, our analysis here is limited to just three agencies. While five agencies agreed to post data online about meetings that involve outside groups regarding Dodd-Frank implementation, these reports vary in timeliness and format. Due to concerns about data quality and comprehensiveness, we excluded both the Securities and Exchange Commission (SEC) and Federal Deposit Insurance Corporation (FDIC). In the case of the SEC, the meetings are not organized in such a way that the Dodd-Frank meetings can be clearly delineated. In the case of the FDIC, only 123 meetings were disclosed over two years.
The other three agencies - in the Treasury, Fed and CFTC – do post data online, but none of the three do so in a machine-readable, downloadable format. While we are reasonably confident that their reports represent a mostly accurate picture of meetings activity, they may also contain some shortcomings.
To conduct this analysis, we first gathered a list of the 20 banks and banking associations that spent the most money on federal lobbying between 2009 and 2011. Of these 20 banks and associations, 18 had at least one meeting with one of the three regulators we examined.
As one might expect, the biggest banks show up the most often, with Goldman Sachs topping the list at 181 meetings, followed closely by JPMorgan Chase (175 meetings). (Both groups also topped the meetings list after the first year of rulemaking as well, as the Sunlight Foundation Reporting Group noted then.)
This would suggest that the individual banks are particularly concerned about how the rules would apply to them specifically. If the reforms affected all banks equally, we’d expect to see the associations accounting for a greater share of the meetings. Instead, industry associations, led by the Securities Industry and Financial Market Association (64 meetings, primarily with the CFTC) show up less often. (See Table 1)
Table 1. Banks and banking association meetings with regulators
|Bank of America||122||35||54||33|
|Securities Industry and Financial Markets Association||79||9||6||64|
|Managed Funds Association||47||2||5||40|
|American Bankers Association||44||12||23||9|
|Independent Community Bankers of America||16||11||4||1|
|Investment Company Institute||12||2||3||7|
We also took a very broad sample of reform-oriented groups. We counted meetings for every national group that was a member of the Americans for Financial Reform coalition, plus the reform group Better Markets, in an attempt to be as comprehensive as possible. Table 2 below shows meetings with reform groups across the three agencies.
There are 28 groups that show up here, led by the Consumer Federation of America (34 meetings), Americans for Financial Reform (32 meetings) and Better Markets (30 meetings). We can also see that labor unions have been somewhat active in the reform coalition. AFL-CIO (18 meetings) and SEIU (6 meetings) are both members of the Americans for Financial Reform coalition.
Table 2. Reform group meetings with regulators
|Consumer Federation of America||34||13||1||20|
|Americans for Financial Reform||32||11||5||16|
|Center for Responsible Lending||14||13||1||0|
|National Fair Housing Alliance||11||11||0||0|
|National Community Reinvestment Coalition||10||8||2||0|
|National Council of La Raza||8||8||0||0|
|Center for American Progress||6||5||1||0|
|International Brotherhood of Teamsters||3||2||0||1|
|National Urban League||3||3||0||0|
|National Consumers League||2||0||1||1|
|Corporation for Enterprise Development||2||2||0||0|
|National Association of Consumer Advocates||2||2||0||0|
|Change to Win||1||1||0||0|
|Opportunity Finance Network||1||1||0||0|
We can also dig down more deeply at the agency level, as there are some telling differences in meetings activities across the different agencies.
The Federal Reserve has been the most bank-dominated agency, with officials there meeting bank representatives 393 times, as compared just 17 meetings with the groups advocating tighter regulation – and just three meetings with reform groups in the last 12 months. (see Figure 3)
Figure 3. Cumulative meetings with the Fed
Figure 4 shows the issues that have shown up most frequently in meetings with Fed. The first year was dominated by the issue of interchange fees, which directed the Fed to cap the fees that debit card issuers could charge to retailers for each swipe of the card. The Fed issued its final rule in June 2011.
The year since has seen an uptick in meetings on the subject of derivatives regulation and the controversial Volcker rule, which would prohibit banks from engaging in “proprietary trading” -- a term whose precise meaning has been the subject of thousands and thousands of pages of argument. What began as a 10-page section of the bill became 298 pages when it first emerged for public comment last fall, bringing with it 1,300 questions covering 400 topics.
Figure 4. Fed meetings on Dodd-Frank, by topic
JPMorgan Chase has registered the most meetings with the Fed at 70, followed by Bank of America at 54, Goldman Sachs at 45 and Morgan Stanley at 44. (See Figure 5)
Figure 5. Organizations meeting most with the Fed on Dodd-Frank
Of the three departments, Treasury has reported meeting with reform-oriented groups the most by far: 145 times. Still, they’ve reported more than twice as many meetings with the 20 big banks and associations: 302.
That’s also changed quite a bit in the last year. For the first year, the 20 banks out-met all reform-oriented groups by 186-to-124. Since then, they’ve out-met the reform-oriented groups 116-to-21.
Figure 6. Cumulative meetings with the Treasury
The most likely reason why reform groups show up so much in the first year is the Consumer Financial Protection Bureau, which is now up and running as an independent agency with the Treasury after much discussion.
Our analysis found that reform-oriented groups had 113 discussions* with Treasury about the CFPB, while the top 20 banks and banking associations had only 78. (*discussions are a different measure than meetings. Since meetings can cover multiple topics, there may be multiple discussions in a meeting.)
The high count of CFPB meetings may also due to Elizabeth Warren (who was charged with setting up the agency) being particularly proactive in reporting meetings. As Sunlight reported last year, Warren reported meeting with 204 different individuals, and averaged more meetings – 18 per month – than any other regulator during the first year after the passage of Dodd-Frank.
More recently, Treasury meetings have shifted to the Office of Financial Research (OFR) and the Volcker Rule, issues on which it appears reform-oriented groups have less to say. The 20 banks and banking associations have had 57 conversations on the Volcker rule, as compared to just 10 for reform-oriented groups.
Figure 7. Treasury meetings on Dodd-Frank, by topic
Like at the Fed, JPMorgan Chase representatives met with the Treasury the most, logging 52 meetings, followed by Morgan Stanley at 36 meetings, Bank of America at 35 meetings and Goldman Sachs at 31 meetings. As the Sunlight Foundation Reporting Group highlighted recently, JPMorgan Chase CEO Jamie Dimon met privately with Treasury Secretary Timothy Geithner back in March, shortly before JPMorgan came under scrutiny for reckless trading that lost the firm $5.8 billion.
Figure 8. Organizations meeting most with the Treasury on Dodd-Frank
Commodities Futures Trading Commission (CFTC)
The third agency we examined, the CFTC, has similarly been dominated by the big banks and associations: 603 meetings for the top 20 banks and banking associations, as compared to 80 for all reform-oriented groups. Though interestingly, reform-oriented groups have been more active in the second year (57 meetings) than the first year (23 meetings) at the CFTC, whereas the banks have slowed down their meetings slightly (361 in the first year, 242 in the second year).
Figure 9. Cumulative meetings with the CFTC
The most common CFTC topics have been SEF (Swap Execution Facilities) registration (231 meetings) and position limits (210 meetings). After many months of discussion, the CFTC recently defined a “swap,” a key step in moving forward to establishing rules for exchanges to trade the complicated financial instruments. The CFTC is also considering easing the position limits it imposed on speculation in commodities markets.
Figure 10. CFTC meetings on Dodd-Frank, by topic
Unlike at the Fed and the Treasury where JPMorgan Chase had the most reported meetings, at the CFTC, Goldman Sachs met most often with officials – 105 times. Following behind are Morgan Stanley (70 meetings), the Securities Industry and Financial Markets Association (64 meetings), and the CME Group (57 meetings). JPMorgan Chase comes in at 53.
Figure 11. Organizations meeting most with the CFTC on Dodd-Frank
Big banks have billions of dollars riding on the ways in which regulators set up the new financial regulatory infrastructure mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. It’s no wonder, then, that they have not been shy in seeking meetings as banking regulators struggle with how to write the new rules.
Our analysis finds the top 20 banks and banking associations meeting with the Treasury, Fed and CFTC on average a combined 12.5 times per week for the last two years, for a total of 1,298 meetings – compared to 242 meetings (about 2.5 per week), with a wide range of reform groups. Goldman Sachs (181 meetings) and JPMorgan Chase (175 meetings) alone combine for 356 meetings – 114 more than all the reform groups.
While the meetings do not prove influence, they do highlight both the intensity and resources the big banks are devoting to rulemaking around Dodd-Frank. If there’s one thing that this analysis shows, it’s that the banks are doing everything they can to make sure that their voice is being heard – much more so than groups that want tighter regulations.
Full disclosure: Lee Drutman worked as a banking and housing policy staffer to a Democratic Senator from December 2009 through August 2010, handling Dodd-Frank issues.