On Sunday, Bloomberg News reported on an estimated $13 billion worth of income that banks gained by taking advantage of the Federal Reserve’s below-market interest rates, which were sometimes as low as 0.01 percent.

The six banks that benefited the most from this “subsidy” – Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, and Wells Fargo – reaped a combined $4.8 billion of estimated extra income from the below-market loans.

It’s worth pointing out that all six of these banks were major political players.

All six have also averaged at least $2.7 million in lobbying a year for the period 2008-2010. And all six have averaged at least $2 million in campaign contributions for the last two electoral cycles. Four of the six banks rank among the top 100 political contributor organizations for the last two cycles. Two of the six were in the top 100 political lobbying organizations for the period 2008-2010. (We focus on 2008-2010 because although the bulk of the lending took place in late 2008 and early 2009, continued lobbying by the banks may have contributed to keeping these deals undisclosed until now.)

 

Bank	Contributions 2007-008 & 2009-2010 (Average Per Cycle)	Lobbying 2008-2010 (Average Per Year)	In-house lobbyists 2008-2010 (Average Per Year)	Firms hired 2008-2010 (Average Per Year)
Bank of America	$3,233,745 (rank: 57)	$4,085,333 (rank: 160)	5.0	7.7
Citigroup	$3,746,536 (rank: 70)	$5,846,666 (rank:37)	9.0	13.7
Goldman Sachs	$5,315,836 (rank: 51)	$3,584,333 (rank: 179)	7.7	14.0
JP Morgan	$4,274,232 (rank: 56)	$6,323,333 (rank: 70)	9.3	12
Morgan Stanley	$3,072,767 (rank: 108)	$2,710,000 (rank: 237)	4.0	4.3
Wells Fargo	$2,000,573 (rank: 126)	$3,518,580 (rank: 197)	3.7	3.3

While it’s difficult to infer causality from these numbers, it is fair to say that these companies were no strangers to Washington. And this probably didn’t hurt them when it came to negotiating bail-out deals with the Federal Reserve and keeping these deals undisclosed.

On March 16, the House Financial Services Subcommittee on Capital Markets & Government Sponsored Enterprises held a hearing to discuss five pieces of legislation proposed by committee freshmen to increase investment and roll back aspects of the Dodd-Frank financial reform law enacted in 2010. This effort was part of the “identify and remedy” slow-motion assault on the financial reform law proposed by Financial Services Committee Chairman Spencer Bachus, R-Ala.

While Republicans have begun identifying Dodd-Frank provisions to repeal, the financial sector has identified committee freshmen as prime recipients for campaign contributions.

A review of first quarter campaign finance filings by Sunlight shows that seven of the ten freshmen Republicans appointed to the House Financial Services Committee have received 40 percent or more of their political action committee (PAC) contributions from the finance, insurance, and real estate sector. Five of these members—Robert Hurt, R-Va., Steve Stivers, R-Ohio, Sean Duffy R-Wis., Francisco Canseco, R-Texas, and Bill Huizenga, R-Mich.—received over 50 percent of their total PAC contributions from the sector their committee oversees.

The sector contributed a total of $592,578 to the ten Republican freshmen on the committee. More than half of that total has come since the Subcommittee hearing in mid-March.

The Financial Services Committee has long been known as a “cash committee,” a hotbed of fundraising for favored freshmen facing expensive sophomore elections. That’s because no sector gives more money to congressional elections than finance.

Since 1998, the finance, insurance, and real estate sector has given nearly $2 billion to federal candidates for office, more than $700 million more than the second biggest contributing sector.

The top financial sector contributors to committee freshmen were New York Life Insurance ($51,000), Pricewaterhouse Coopers ($31,500), the Independent Community Bankers Association ($31,000), the Investment Company Institute ($29,000), and the Mortgage Bankers Association ($25,000).

The freshmen with a disproportionate share of their campaign funds from the sector they are meant to oversee are just following the fundraising strategy employed by Chairman Bachus. No congressman is more reliant on finance sector contributions than Bachus, who has pulled in 84 percent of his PAC contributions from the finance sector and 70 percent of his total contributions during the first three months of 2011.

Under the new Republican majority, the committee has turned into the central force opposing new rules and regulations being written by federal agencies as a part of the Dodd-Frank implementation process. The committee freshmen have been put front-and-center as sponsors of legislation to repeal sections of the financial reform bill.

Rep. Nan Hayworth, R-N.Y., is sponsoring a bill to repeal a Dodd-Frank provision on CEO pay disclosure. A provision requiring certain private equity firm advisers to register with the SEC is the target of a bill by Rep. Robert Hurt, R-Va. Rep. Steve Stivers, R-Ohio, is looking to repeal a controversial provision making credit ratings agencies liable for the ratings they assign. Oversight of the Consumer Financial Protection Bureau’s decisions would increase under a bill pushed by Rep. Sean Duffy, R-Wis. Staten Island Rep. Michael Grimm, R-N.Y., introduced a bill to expand exemptions for commodity traders under the derivatives regulation currently being implemented by the Commodity Futures Trading Commission (CFTC).

Committee freshmen have also signed on as cosponsors to a couple of bills to reign in the Consumer Financial Protection Bureau, a noted target for banks and business groups created by Dodd-Frank. Eight committee freshmen signed on to a bill introduced by Chairman Bachus that would alter the structure of the Consumer Financial Protection Bureau (CFPB) by replacing the appointed director with a five-member commission.

Some of the big finance organizations contributing to committee freshmen are also backing bills that they've sponsored and cosponsored.

The Independent Community Bankers Association backs the Bachus bill to reign in the CFPB. In testimony before the committee a representative of the community bank trade group stated, “would help ensure that the actions of the CFPB are measured, non-partisan and result in balanced, high quality rules and effective consumer protection.” The ICBA PAC contributed $31,000 to committee freshmen in the first quarter.

The bill is also supported by the American Bankers Association, which gave $14,000 to committee freshmen. A representative for the Bankers Association also testified before the committee to explain their support for this measure, “The resulting practically boundless grant of agency discretion is exacerbated by giving the head of the Bureau sole authority to make decisions that could fundamentally alter the financial choices available to customers.”

Meanwhile, the American Benefits Council, a trade group for some of the biggest corporations in America, has been lobbying for Rep. Hayworth’s bill to repeal a CEO pay disclosure provision. Many members of the Benefits Council are contributors to the committee freshmen including Bank of America, Citigroup, Deloitte, Ernst & Young, the Investment Company Institute, JPMorgan Chase, New York Life Insurance, Pricewaterhouse Coopers, and Wells Fargo.

Another bill, cosponsored by freshmen Reps. Francisco Canseco, R-Texas, and James Renacci, R-Ohio, is at the center of one of the biggest lobbying battles of 2011. The Consumer Payments System Protection Act would delay the implementation of a Federal Reserve rule that would limit the amount that banks can charge retailers for every swipe of a debit card. These fees, known as interchange fees, account for billions in business for banks. The bill is supported by contributors to committee freshmen including the ICBA, the ABA, the Credit Union National Association, JPMorgan Chase, Bank of America, Citigroup, MasterCard, and Visa.

Merchants, retailers, and their trade associations have arrayed a team of former government officials turned lobbyists in one of 2011's biggest lobbying battles as banks and credit unions seek to overturn part of the Dodd-Frank financial reform bill. According to data compiled from the Senate Office of Public Records and the Center for Responsive Politics, merchants and retailers lobbying in support of debit interchange fees rules employed 124 lobbyists with previous government experience.

The Federal Reserve has proposed rules to set limits on the amount that banks can charge retailers every time a customer uses a debit card for a purchase, known as debit interchange fees. These fees, set by electronic networks, including VISA and MasterCard, provide big profits to banks and diminish returns for retailers, often leading to rising prices for consumers.

Retailers lobbied hard to get a limit on interchange fees included in the Dodd-Frank bill and succeeded when retail ally Sen. Dick Durbin, D-Ill., offered an amendment, which was adopted, to the bill requiring the Federal Reserve to write rules governing the fees. The Fed released their rule earlier this year. Much to the dismay of banks and electronic network operators the Fed rules capped interchange fees at 12 cents per swipe, or a more than 70 percent reduction in fees.

Banks and their allies--payment networks and credit unions--have swamped Capitol Hill with lobbyists and the retailers and merchants, including Wal-Mart, have done the same.

Major members of the Electronic Payments Coalition, the chief organizing vehicle for the banks opposed to the fee rules, have hired 118 former government officials to lobby and made at least $500,000 in political action committee (PAC) contributions to members of Congress.

Retailers and merchants have largely organized through the Merchant's Payments Coalition. Organizations listed as members of the Merchant's Payments Coalition, all of whom are trade associations, accounted for half of the 124 revolving door lobbyists hired by retailers and merchants. The other half come from supporting companies including Wal-Mart, Home Depot, 7-11, and Best Buy.

Below you'll find a table listing all the revolving door lobbyists affiliated with the retailers and merchants. These are all lobbyists who were specifically listed as lobbying on debit interchange fee rules on their lobbying disclosure forms for 2010 or 2011. Revolving door lobbyists affiliated with the Electronic Payments Coalition can be found here.

Last year House Financial Services Committee Chairman Spencer Bachus, R-Ala., stated his philosophy on how the relationship between Washington and Wall Street should proceed, "In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks." According to first quarter campaign contribution filings due today the financial sector generously supports Chairman Bachus' philosophy.

Bachus raised over seventy percent of his total first quarter campaign contributions from the finance, insurance, and real estate sector (FIRE). This totaled $212,335 out of Bachus' haul of $299,439.

The majority of this money, $122,506, came from FIRE sector political action committees. This accounted for eighty-four percent of the total political action committee contributions Bachus received. Another $89,835--fifty-eight percent of all individual contributions to Bachus--was contributed by individuals who work in the FIRE sector.

Bachus is leading the charge against the implementation of a host of rules mandated by the Dodd-Frank law passed last year including those governing derivatives, consumer protection, and debit swipe fees. At the end of last year, Bachus stated that he would go "page by page . . . to identify job-killing provisions or lending-killing provisions."

A previous Sunlight Foundation study found that Bachus was the most reliant on contributions from the FIRE sector in 2010 having raised sixty-three percent of all contributions from the sector.

Political action committees contributing to Bachus this year include big banks, credit unions, real estate companies, and electronic payment networks. Below is a full list of FIRE PACs giving to Bachus and the dates of their contributions:

PAC	Date	Amount
Affinity Federal Credit Union	03/04/11	2500
America Institute of Certified Public Accountants	02/10/11	1000
America Institute of Certified Public Accountants	03/31/11	4000
American Express	01/27/11	2500
American Financial Services Association	01/27/11	5000
Bank of America	01/18/11	1000
C.V. Starr & Company	03/31/11	2500
C.V. Starr & Company	03/31/11	2500
Capital One Financial Corp	03/24/11	5000
Chicago Board Options Exchange	03/04/11	5000
Coastal Federal Credit Union	02/25/11	1000
Community Financial Services Association	03/31/11	2000
Compass Banc	02/10/11	1000
Credit Union Legislative Action Council	03/12/11	5000
Crowe Horwath	03/31/11	4000
Credit Union National Association Mutual Group	03/04/11	1000
Deloitte & Touche	03/31/11	4000
Ernst & Young"	02/10/11	5000
Independent Community Bankers Association	01/27/11	1000
Independent Community Bankers Association	03/11/11	4000
Independent Community Bankers Association	03/11/11	5000
Independent Insurance Agents of America	03/24/11	1000
Insured Retirement Institute	03/24/11	1000
IntercontinentalExchange	02/03/11	1000
Investment Company Institute	02/10/11	2500
JPMorgan Chase	02/11/11	5000
JPMorgan Chase	02/11/11	5000
KeyCorp	01/27/11	1000
MetLife	03/11/11	2500
Mortgage Bankers Association	03/31/11	1000
National Association of Federal Credit Unions	01/27/11	5000
National Association of Insurance and Financial Advisors	02/03/11	1000
National Multi Housing Council	01/27/11	5000
National Venture Capital Association	01/07/11	2000
New York Life Insurance	03/24/11	5000
QC Holdings	03/04/11	4000
Security Service Federal Credity Union	03/12/11	1000
The Northern Trust Company	02/10/11	1000
Total System Services	03/12/11	2500
UBS Americas	03/08/11	5000
VISA	01/27/11	5000

A coalition of banks, credit unions, and electronic payment networks have hired a vast team of lobbyists that includes 118 former government officials as they aim to derail the implementation of rules governing the price charged to retail businesses by banks and credit unions every time a customer uses a debit card to pay.

The Electronic Payments Coalition is opposed to a new rule proposed by the Federal Reserve that would cap debit interchange fees, the cost per debit card swipe charged to retailers, at 12 cents per swipe. This would amount to a 70 percent reduction in the fee, a boon for retailers and cut in profits for banks.

The lobbying operation consists of some of the biggest names in Washington and keeps growing. Already this year coalition members have registered with five new lobbying firms to lobby on the interchange rules. FIRST Group, Hollier & Associates, and Cornerstone Government Relations are all registered as lobbying for Visa, Covington & Burling is registered with Wells Fargo, and SNR Denton is registered with the Independent Community Bankers Association.

A Sunlight Foundation report from earlier this week showed that the political action committees of coalition members have contributed $500,000 to lawmakers over the first two months of this year.

Below is a chart of all revolving door lobbyists for Electronic Payments Coalition members that were listed as registered to lobby on debit interchange fee rules in either 2010 or 2011:

Data comes from the Senate Office of Public Records and the Center for Responsive Politics.

In the first two months of 2011 groups associated with a coalition opposing the implementation of new rules for debit “interchange” fees that banks charge to businesses had already contributed over $500,000 in political action committee money to dozens of lawmakers, including backers of a bill that would delay the rules from going into effect.

The Electronic Payments Coalition is opposing a new rule proposed by the Federal Reserve as part of the Dodd-Frank financial reform bill that would cap debit “interchange” fees at 12 cents per transaction. This amounts to a more than seventy percent reduction in cost per transaction.

Interchange fees have become an increasing profit center for banks and credit network companies. In the past, credit networks like Visa and MasterCard have set the fees, while the banks issuing cards reaped the profits, which topped $45 billion in recent years. Electronic network operators like Visa and MasterCard gain business by setting higher fees, which then entice banks to issue more cards on their respective networks so that banks can profit from the fees.

It is no surprise then that the coalition opposing limits on interchange fees consists of the network providers, the biggest banks, and their trade groups. Credit unions and smaller community banks have also joined the coalition. These smaller, more locally focused banks fear that the rule may affect their much smaller profits and benefit the bigger banks that can weather a haircut over interchange fees. This is despite the fact that the rule applies only to fees paid to banks with profits of $10 billion or more.

The majority of the PAC contributions flowing to lawmakers in the early months of 2011 have come from the trade companies associated with the credit unions and community bankers. The Credit Union National Association (CUNA) contributed $146,500 and the Independent Community Bankers Association (ICBA) contributed $163,500 to lawmakers. This accounts for more than half of all the PAC contributions to lawmakers.

The Huffington Post’s Zach Carter explained that the ICBA has a direct stake in the interchange fee rules as the trade group issues its own debit card and rakes in profits from the interchange fees charged to merchants.

In March Sen. Jon Tester, D-Mont., introduced the Debit Interchange Fee Study Act, a bill to delay the implementation of the new rules for one year while the Fed conducts a further study of their impact. In the two months preceding the introduction of the bill Tester received $9,500 in PAC contributions from five of the twenty biggest members of the coalition. Tester is the fourth highest recipient of Electronic Payments Coalition PAC money among senators.

Sen. Tom Carper, D-Del., is the top recipient of money from top coalition members in the Senate. Carper, an original cosponsor of Tester’s bill, received $13,000 over January and February. Carper is known as a bank friendly Democrat as his home state of Delaware is home to many banks taking advantage of the state’s low tax rates.

Rep. Shelley Moore Capito, R-W. Va., introduced an identical bill in the House of Representatives. Capito, the Chair of the Subcommittee on Financial Institutions and Consumer Credit, received $5,000 from coalition members in the first two months of the year. The top recipient of PAC money from coalition members was House Financial Services Committee Chairman Spencer Bachus, R-Ala. Bachus, an opponent of the Dodd-Frank law, received $71,000 in contributions from coalition members in January and February. Bachus explained his opposition to the fee rules in a letter to Federal Reserve Chairman Ben Bernanke, "Hastily written rules may end up doing more harm than good to consumers and have negative effects on competition in the marketplace." A previous Sunlight Foundation report showed that Bachus received more than sixty percent of his campaign contributions from the finance, insurance, and real estate sector.

The other top recipients include party leaders like Speaker John Boehner, Majority Leader Eric Cantor, and Majority Whip Kevin McCarthy; key committee members such as, Ways & Means Committee Chairman Dave Camp and Financial Services Committee members Patrick McHenry and Steve Stivers.

Already in 2011 coalition members are increasing their lobbying presence as the campaign against the debit fee rules ramps up. The major coalition partners hired twenty-four lobbying firms in 2010 that listed lobbying on the interchange fee rule in their disclosure forms. Eighteen of those firms were registered with the two major credit network companies, MasterCard and Visa.

These firms include some of the biggest in Washington including Akin Gump, Ogilvy Government Relations, Quinn Gillespie, Sidley Austin, and Williams and Jensen.

Sixty-eight of the seventy-nine lobbyists for these eighteen firms registered with Visa or MasterCard previously worked in government, according to data obtained from the Center for Responsive Politics.

Former Reps. Dick Gephardt, Donald Sundquist, and Robert Walker are all registered with Visa. MasterCard retains the law firm of Clark Lytle & Geduldig, which is also registered to lobby for the Electronic Payments Association, the American Bankers Association, and the Financial Services Roundtable. One of the firm’s partners, Sam Geduldig, is a former senior staffer on the House Financial Services Committee.

Visa has continued to beef up their lobbying practice with two new registrations this year. The company hired FIRST Group in January and Hollier & Associates on the first of April.

The Federal Reserve stated recently that it will fail to meet the April 21 deadline to issue the new rules due to the 11,000 comments from the public on the rules.

This week the Obama administration released three different plans to end or vastly shrink the role of the government in the mortgage market through the government sponsored enterprises Fannie Mae and Freddie Mac. One can only imagine these plans being proposed under the current circumstances where the two mortgage giants have had their lobbying and campaign contribution operations suspended by the government after they were taken over in 2008.

Since 1998 Fannie and Freddie combined to spend over $172 million on lobbying in Washington and $16.6 million in campaign contributions to lawmakers and presidential candidates, according to data from the Center for Responsive Politics. These numbers, when combined, would make the duo the seventh biggest spender on lobbying and near the top fifty in campaign contributions over this period.

Repeated attempts to reform Fannie and Freddie were beaten back during this period as Fannie and Freddie poured campaign contributions into the coffers of members of the House Financial Services Committee and other relevant lawmakers while hiring key political figures as board members and lobbyists.

The policies proposed now by both the Obama administration and the House Republicans to end Fannie and Freddie are not just an outgrowth of the financial situation of the two companies that were put into government conservatorship. They are a product of the lack of lobbying from the former mortgage giants along with the total collapse of other mortgage companies like Countrywide Financial.

Last week, Barry Ritholtz questioned why the bailed-out banks were allowed to continue their lobbying and campaign contributions despite their continued survival made possible thanks to the government money injected into and loaned to them from both Treasury and the Federal Reserve. Ritholtz' post makes it clear that the decision on whether or not to eliminate the lobbying operations of bailed out organizations, banks of GSEs, determines the outcome of the ensuing reforms:

When the GSEs were put into conservatorship by Hank Paulson, several steps were immediately effected: The CEOs and much of the senior management were fired. One of the very next steps put into place was a total ban on all political activities, including — most especially — lobbying. Common stockholders were placed last in line for any claims, with preferred shareholders right behind them.

Compare that to the rescues of Citigroup, Bank of America, Merrill Lynch, and the rest of the bankers wrecking crew. The vast majority of senior management and board members who created and oversaw their own implosions are still in place. A report on Corporate Governance by Professor Emma Coleman Jordan of the Georgetown University Law found that 92% of senior bank execs were still working in their same jobs.

But worse of all, at any insolvent banking institution not named Fannie or Freddie,  none of the POLITICAL ACTIVITIES, CAMPAIGN DONATIONS OR LOBBYING ACTIVITIES were halted. It was business as usual on capital hill, for the bankrupt banks and their highly paid shills.

When we look at the shortcomings of Dodd-Frank, or the weaknesses of the FCIC (Underfunded, short on time, lacking prosecutorial zeal), it traces back to this decision.

In the post below I noted that the selection of William Daley as chief of staff to the President (now official) would be a terrible idea not only for the message it sends to the public, the banks are more important than you, but that Daley's role would be to stovepipe information to the President, all the while with an eye towards his future employment.

Felix Salmon points out that a similar problem is unfolding in the appointment of a new chairman of the National Economic Council. With the selection of Gene Sperling, a Goldman Sachs executive who makes an ungodly sum writing a column for Bloomberg, the Wall Street to Washington pipeline is not just alive, but fully institutionalized.

Salmon wrote a few days ago:

The problem, of course, is that Wall Street became so big and so pervasive over the course of the boom that it’s hard to find people to run the NEC who haven’t been paid large sums by banks at some point. And even if they are relatively pure on that front, there’s every reason to expect that they’ll pull an Orszag and start taking millions of Wall Street dollars the minute they leave. Obama can try to distance himself from Wall Street, but it isn’t easy.

The examples of the Wall Street to Washington expressway can be seen all across town. The amount of influence that the finance sector has in Washington is crushing and provides for the circumstances that help feed this constant revolving door.

Last month I wrote about this influence and showed that the finance sector is far and away the biggest influencer in Washington. The sector spent over $6 billion on lobbying and campaign contributions over the past 12 years--about a billion more than any other sector. According to the Center for Responsive Politics, they employed 1,390 former government employees as lobbyists in 2010. That doesn't even count those who aren't registered lobbyists.

The problem with this trend isn't that lawmakers are being bribed under the table, but rather that connections and contacts create closed communities of thought. Lawmakers talk to lobbyists because lobbyists have information. That information is invariably skewed to fit their client's interest, even if it isn't factually inaccurate. This creates a situation where lawmakers are influenced by this professionalized community, disregarding other streams of information.

President Obama is likely to select former Commerce Secretary and current JPMorgan Chase executive William Daley as his next chief of staff. A Daley selection, which has been hailed by banks, would plant an official emissary from Wall Street into one of the most important jobs in Washington.

The President once told a meeting of bankers that he was "the only thing standing between you and the pitchforks." That apparently wasn't good enough. Picking Daley would send the message that the pitchforks--normal people--matter less than the continued flow of campaign donations from the uber-wealthy. Barack Obama raised $39 million from the finance, insurance and real estate sector in his 2008 bid for President, the most raised from this sector by anyone in one cycle seeking political office in the United States ever.

Even more problematic than the need to corral donors for 2012 is that Daley's presence would allow him to control the time of the President. Daley could choose who the President sees and what information gets to the President. Based on the praise the financial sector has for the Daley selection, it is clear who those people are and what that information would be. In essence, Daley would act as a stovepipe for the interests of Wall Street, as if bankers didn't have enough influence already.

Daley, the son and brother of two extremely famous mayors of Chicago, began his government career in 1993 as a special adviser to President Bill Clinton. Daley had come to the Clinton administration from an earlier career in both the banking sector and in law. After Daley's work as a special adviser the President appointed him to the board of Fannie Mae. In 1997 Daley was appointed the Secretary of Commerce. In 2000 Daley left the administration to work on the Gore campaign.

After the 2000 election debacle Daley moved into the corporate world. Daley briefly worked as vice chairman of Evercore Capital Partners and then took a job as President of the telecommunications giant SBC Communications.

In 2004 Daley took a job with J.P. Morgan as the head of their Midwest division, located in his hometown of Chicago. Daley was brought on not just for his extensive experience, but his extensive ties to officials in Chicago, including his brother the mayor, and in Washington. In 2007 Daley was elevated to serve on J.P. Morgan's operating committee and was put in charge of government affairs and public policy.

At the same time, Daley did side work, including a stint on a Chamber of Commerce committee on financial regulation. The “Commission on the Regulation of Capital Markets in the 21st Century” ultimately became the Chamber’s Center for Capital Markets Competitiveness, which played a major role in opposing the regulation of derivatives that was a focal point of the financial reform bill pushed by the president and congressional leadership.

The question finally isn't just whether the country needs a chief of staff to the President who can speed dial Jamie Dimon, but rather what considerations does Daley make as chief of staff that could affect his prior commitments and friendships and his future prospects. People criticized Rahm Emanuel for being in too close contact with lobbyists and corporate leaders, but Rahm's future considerations always appeared to be in the political realm. (Yes, I'm aware that Rahm was on the board of Freddie Mac, but what Democrat didn't get some plum seat on Fannie or Freddie back then. Fannie and Freddie were like the Woodstock of the nineties, everyone was there.) What is more disconcerting is that Daley's future prospects likely lie back in the world of finance.

The chief of staff position is a burnout position. No chief of staff lasts very long and then they're off into the world again. The country doesn't need someone so close to the very industry that brought us all to the brink involved in the day-to-day decision-making and deal-making that the chief of staff position entails.

If the President is concerned about the influence of lobbyists in his administration he should also be concerned about the influence that people like Daley, who have already used the revolving door once, could have on policy outcomes. Choosing Daley would not be a wise choice if the President wants to keep his promises on reducing influence in government.

ed--This post was edited to reflect that Daley was appointed to the Fannie Mae board in 1993, not in 2000 as previously suggested.

Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, recently penned an op-ed in the New York Times questioning how the biggest financial firms that survived the financial crisis had grown 20 percent larger than they were prior. How could Washington, in its financial reforms, allow too big to fail to continue?

Hoenig answered this himself:

How is it possible that post-crisis legislation leaves large financial institutions still in control of our country’s economic destiny? One answer is that they have even greater political influence than they had before the crisis. During the past decade, the four largest financial firms spent tens of millions of dollars on lobbying. A member of Congress from the Midwest reluctantly confirmed for me that any candidate who runs for national office must go to New York City, home of the big banks, to raise money.

There is no bigger contributor to political campaigns than the financial sector. Since 1999 the financial sector has contributed more than $1.8 billion to federal candidates for election. As Hoenig notes, much of that sector is located in New York City.

Overall, over the past six election cycles, New York state residents employed in the finance, insurance and real estate sector have sent more than $50 million to congressional candidates running for office in a state other than New York, according to data from the Center for Responsive Politics. This is a crucial source of money for congressional candidates, particularly those in high-cost Senate races. (The animated map linked in the image below shows where those contributions went over time.)

Out of state Democrats accounted for over half of the money contributed by individuals in the New York State financial sector. Democrats received over $30 million to the slightly more than $16 million received by Republicans. The Independent candidacy of Connecticut Sen. Joe Lieberman pulled in more than $11 million.

The Sunlight Foundation's Party Time database of political fundraisers shows a total of 37 fundraisers held in New York City for congressmen and senators who do not represent New York State. (These numbers are incomplete and the number of fundraisers is almost certainly higher.)

There are 12 fundraisers listed in 2010, including a recent one for Rep. Charlie Dent (R-PA). In October Rep.-elect Mike Fizpatrick (R-PA) held a fundraiser with incoming Financial Services Committee chairman Spencer Bachus (R-AL). (Bachus raised nearly 63% of his 2010 contributions from the finance sector.) Other fundraisers are for lawmakers from California, Oklahoma, Kentucky and various other states spanning the country. (View all 37 of these Party Time fundraisers here.)

Hoenig's example of fundraising in New York is just one anecdote in the larger story of the financial sector's influence in Washington. Since the 1998 election cycle the finance sector has spent nearly $2 billion on campaign contributions to federal political candidates. Over the same period of time the sector has spent more than $4.2 billion on lobbying in Washington.

This leads to a total of more than $6.2 billion spent by the finance sector over a thirteen year period to influence outcomes in Washington. The finance sector has spent almost $1 billion more than any other economic sector on federal campaign contributions and lobbying combined. (The motion chart on the right shows the accumulation of contributions and lobbying over time. The green dot is the finance, insurance and real estate sector.)

Former IMF economist Simon Johnson in an article for The Atlantic last year explained that Wall Street "gained political power by amassing a kind of cultural capital--a belief system." People in Washington believed that those in Wall Street knew what they were doing and believed that the accumulation of wealth in the financial sector was a national good, Johnson argues.

That belief system was aided by the $6.2 billion investment that Wall Street made in Washington. The sector invested in staffing agencies and congressional committees and in financing the increasingly costly campaigns. Those investments were then cashed out as staffers and lawmakers flocked to lobbying firms and cushy Wall Street gigs.

The New York Times wrote in April that “more than 125 former Congressional aides and lawmakers are now working for financial firms as part of a multibillion-dollar effort to shape, and often scale back, federal regulatory power, data shows.” These included former Rep. Michael Oxley, the most recent former chairman of the Financial Services Committee, and former Rep. Richard Baker, who previously chaired the Financial Services Subcommittee on Capital Markets.

Other powerful former lawmakers recently registered to lobby for the financial sector include Senate Majority Leaders Trent Lott and Bob Dole, House Majority Leaders Dick Gephardt and Dick Armey and Speaker of the House Dennis Hastert.

The particular target of Hoenig's ire in his above quoted NYT op-ed is the 1999 passage of the Gramm-Leach-Bliley Act, which tore down the wall between investment and commercial banking. The bill was named after its three main cosponsors: Sen. Phil Gramm, Rep. Jim Leach and Rep. Thomas Bliley. Since retiring from Congress, Gramm went on to become the president of the Swiss bank UBS AG and Bliley works as a registered lobbyist, often for financial interests. (Leach serves under President Obama as the Chairman of the National Endowment for the Humanities.)

Now, recently departed Office of Management and Budget head Peter Orszag is jumping ship to Wall Street. Orszag, following in the footsteps of former Treasury Secretary Bob Rubin, is slated to join Citigroup as a high level executive with a multimillion dollar salary. Recently, President Obama's counsel Greg Craig left the White House and joined Goldman Sachs. It is unclear if either of them will register as a lobbyist.

Even without Orszag and Craig registering to lobby, the industry has more than enough clout. The Center Responsive Politics reports 1,390 former government employees working as lobbyists for the financial sector.

Another prime spot for investment by the financial sector has been the House Financial Services Committee.

The majority party in the House of Representatives often puts favored freshmen and sophomore lawmakers on the House Financial Services Committee, the committee that oversees the financial sector, so that they can raise piles of money from Wall Street.

The Huffington Post's Ryan Grim and Arthur Delaney explained how this worked under the outgoing Democratic majority:

The banking committee is the second-largest in Congress -- the Transportation and Infrastructure Committee has three more members -- and is known as a "money committee" because joining it makes fundraising, especially from donors with financial interests litigated by the panel, significantly easier.

The Democratic leadership chose to embrace this concept, setting up the committee as an ATM for vulnerable rookies. Eleven freshman representatives from conservative-leaning districts, designated as "frontline" members, have been given precious spots on the committee. They have individually raised an average of $1.09 million for their 2010 campaigns, according to the Center for Responsive Politics; by contrast, the average House member has raised less than half of that amount.

Meanwhile lawmakers and staffers keep cycling in between the financial sector and Washington. Delaney and Grim showed that, as of the end of 2009, “almost half of the 126 people who [left the Financial Services Committee] registered as lobbyists, mostly for the financial services industry.” Also, “[s]ixteen of the committee's 86 current staffers -- including a good chunk of the senior staff -- worked as lobbyists before coming to the committee.”

The committee will soon be headed by a lawmaker, Rep. Spencer Bachus, who received nearly 63 percent of his campaign and political action committee contributions from the finance sector. Bachus recently stated his philosophy for governing the committee, "In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks."

The freshmen congressmen appointed to the committee include the largest recipient of finance sector contributions among freshmen and a former bank lobbyist.

Meanwhile, the Senate Banking Committee is set to be chaired by Sen. Tim Johnson, whose state of South Dakota is home to the credit card industry. Johnson recently hired Dwight Fettig, a lobbyist for the American Bankers Association, JPMorgan Chase and Freddie Mac, as a senior adviser. Fettig will likely become the next staff director for the Banking Committee.

The entirety of this enterprise—the doling out of campaign contributions, revolving in between the public and private sector, spending money to influence policy-makers—is entirely legal. That system, however legal it is, is structurally unjust and unsound. As James Fallows notes in a post bemoaning Orszag's revolving door spin, "When we notice similar patterns in other countries -- for instance, how many offspring and in-laws of senior Chinese Communist officials have become very, very rich -- we are quick to draw conclusions about structural injustices."

The intense amount of organized money and human capital has succeeded in making Washington captive to the financial sector. All of this at a low cost when compared to the soaring profits they enjoyed at the height of the boom and the trillions of dollars in aid they received when the bottom fell out.

Ultimately, the $6 billion investment in Washington was the least risky one that the financial sector made over the past twelve years. The firms that survived the storm are bigger than ever and ready to spend billions more to keep their investment afloat.