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.

Last week Sen. Tim Johnson, the incoming chairman of the Senate Banking Committee, hired Dwight Fettig, a lobbyist with numerous financial sector clients, as a "senior adviser" and it is rumored that he will become the committee's staff director. Fettig, who is a partner at Porterfield, Lowenthal & Fettig, previously worked for Johnson as a legislative director from 1996-2003.

Fettig's most recent clients include financial heavy hitters such as the American Bankers Association, JPMorgan Chase and the National Association of Mortgage Bankers.

Prior to joining up with Porterfield and Lowenthal, both of whom are former Senate Banking Committee staffers turned lobbyists, Fettig was the chief lobbyist for Freddie Mac.

It is no surprise that Sen. Johnson would hire a financial industry lobbyist to head the Banking Committee. Johnson has long been one of the most friendly Democrats to the financial industry. This largely stems from his home state of South Dakota being the home of the credit card industry.

From 2005-2010 Johnson's campaign and political action committees raised a combined $1,763,325 from the finance, insurance and real estate sector, according to the Center for Responsive Politics. That accounted for approximately one-quarter of all contributions made to Johnson during that time.

Johnson's political action committee, South Dakota First, which doles out money to Senate candidates, is almost entirely dependent on financial sector money. South Dakota First raised 75 percent of its contributions from the finance sector in 2009-2010, according to data collected from TransparencyData.com.

When the Senate considered a bill to reign in credit card abuses last year Johnson was the only Democrat to oppose it. In a 2009 blog post Open Congress' Donny Shaw looked at Johnson's voting history on credit card issues.

While Fettig is rejoining Johnson in the Senate another former Johnson staffer will remain in the private sector as a lobbyist. Naomi Camper left Johnson's office in 2005 to become co-head of Federal Government Relations at JPMorgan Chase, one the biggest banks in the United States.

Senators selected to work to combine the House and Senate financial regulation bills in a conference committee are some of the top recipients of campaign contributions from the finance, insurance and real estate sector (FIRE). In total, these twelve senators have received over $57 million from the FIRE sector over the course of their careers, according to data obtained from Center for Responsive Politics.

Senator	Career FIRE Contributions
Schumer, Charles E (D-NY)	$16,708,236.00
Dodd, Chris (D-CT)	$14,067,712.00
Shelby, Richard C (R-AL)	$5,635,030.00
Chambliss, Saxby (R-GA)	$3,507,960.00
Corker, Bob (R-TN)	$3,188,550.00
Johnson, Tim (D-SD)	$3,150,865.00
Reed, Jack (D-RI)	$2,918,732.00
Lincoln, Blanche (D-AR)	$2,612,159.00
Harkin, Tom (D-IA)	$2,534,445.00
Crapo, Mike (R-ID)	$1,809,715.00
Gregg, Judd (R-NH)	$1,070,249.00
Leahy, Patrick (D-VT)	$637,282.00

New York's Charles Schumer, D-N.Y., is the leading recipient among the Senate conferees with $16.7 million in contributions over his career. Schumer has long been an ally of the New York-based financial industry, but has been remarkably quiet as Congress has focused on reforming Wall Street. Schumer remains in support of the bill despite hometown pressure from industry friends, campaign contributors and Mayor Michael Bloomberg.

His support for the financial reform bill goes against a long history of supporting deregulatory actions for Wall Street. In the late 1990s and 2000 Schumer enthusiastically supported measures that ended the Glass-Steagall separation between commercial and investment banks and the enforced deregulation of derivatives trading.

The new rules for derivatives trading included in the Senate bill remain a serious sticking point in the coming conference committee. Senate Banking Committee chairman Chris Dodd, D-Conn., has already attempted once to eliminate a provision in the bill, penned by conference committee member Sen. Blanche Lincoln, D-Ark., ($2.61 million), requiring banks to spin off their derivatives trading portofolios. Dodd is the second largest recipient of FIRE campaiagn contributions on the conference committee with $14 million for his career.

Dodd is also connected to Wall Street with seven of his former staffers currently lobbying for financial organizations. Organizations represented by Dodd's former staffers include Goldman Sachs, Genworth Financial, MBIA, National Association of Mortgage Brokers and New York Bankers Association.

One former Dodd staffer turned financial industry lobbyist runs a financial lobbying firm with the former senior advisor to Dodd's Republican counterpart on the Banking Committee, Sen. Richard Shelby, R-Ala., the third highest recipient of contributions from the FIRE sector on the conference committee ($5.63 million).

Andrew Lowenthal and Lendell Porterfield run a bipartisan lobby shop providing clients with instant access to the Senate Banking Committee and, with both of their former bosses on the financial reform conference committee, the final chance to change the sweeping regulatory bill.

Recently joining Lowenthal and Porterfield as a partner in their firm is Dwight Fettig, a former Legislative Director to Sen. Tim Johnson, D-S.D., the sixth highest recipient of FIRE contributions appointed to the conference committee ($3.15 million). Johnson stands to become the next chairman of the Banking Committee after Dodd retires this year. The credit card industry, largely based in his state, has always counted on the support of the senior South Dakota senator.

Johnson, a career recipient of $391,400 in campaign contributions from the credit card industry, was one of ten Democrats to vote against an amendment to the financial reform bill capping “swipe fees” for debit card transactions. “Swipe fees” are charges to merchants for purchases made by customers using debit cards and often drive up retail prices for consumers. Credit card companies and banks are still lobbying hard to remove this provision from the bill. Johnson, however, is only one of four conference committees members to vote against the amendment making it unlikely the provision will be removed.

The conference committee will have to decide which portions of the House and Senate bills will be placed into a final version to be voted on and signed by the President. The House and Senate must pass bills with identical language. To do so, conference committees including members from both chambers meet to craft a compromise between the House and the Senate. The House has yet to name conferees.

The remaining members on the conference committee include Democrats Jack Reed, D-R.I., ($2.92 million), Tom Harkin, D-Iowa, ($2.53 million) and Patrick Leahy, D-Vt., ($637,282) and Republicans Saxby Chambliss, R-Ga., ($3.51 million), Bob Corker, R-Tenn., ($3.19 million), Mike Crapo, R-Wyo. ($1.81 million) and Judd Gregg, R-N.H., ($1.07 million).

Note: I wrote this over the summer when the possibility existed that Sen. Chris Dodd would be moving from the Banking Committee to the Health, Education, Labor and Pensions Committee. With Dodd's retirement announcement, I figured it would be useful to revisit. I have removed some of the introductory text as it is now irrelevant, but can be viewed at the original posting here.

Sen. Tim Johnson of South Dakota is next in line to replace Sen. Dodd and has similarly close ties to the financial sector.

According to Open Secrets from 2003-2008, Sen. Johnson has pulled in $1,407,958 from the finance, insurance and real estate sector. While this pales in comparison to Sen. Dodd's $9,097,107 over the same period of time, it accounts for 20% of the South Dakota senator's campaign haul. Sen. Johnson's finance contributions are aided by the importance of South Dakota to the finance and credit industries. These companies only need to abide by the regulations of the state within which they are incorporated and South Dakota has some of loosest regulations for bank holding and credit card companies. This has led to a large number of credit and banks companies locating in the small plains state, providing for tens of thousands of jobs.

The support Sen. Johnson receives from the industry, and their importance to his state, is reflected in the senator's recent voting record. Donny Shaw at Open Congress (Friend of Sunlight) looked at Sen. Johnson's recent votes and showed that he stands out among Democrats in his support for the credit card industry. The senator was the only Democrat to oppose a recent law, sponsored by Sen. Dodd, to "restrict unfair credit card rate increases, penalties and fees, and bans deceptive and predatory practices." He was also one of a handful of Democrats to oppose a series of amendments meant to impose tougher regulations on credit card companies.

Sen. Johnson isn't just connected to the finance sector through his campaign contributions and his votes, but also by his former staffers turned lobbyists. Two of Sen. Johnson's former staffers currently work for firms representing financial clients or companies in the financial world. In 2005, Naomi Camper left her position as staff director for Sen. Johnson on the Senate Financial Institutions Subcommittee to become co-head of Federal Government Relations at JPMorgan Chase, one the biggest banks in the United States. Dwight Fettig, a former staff director of Sen. Johnson, became a partner in the almost exclusively finance-related lobbying shop, Porterfield, Lowenthal & Fettig. Clients at Fettig's firm include the American Bankers Association, the Coalition of Private Investment Companies, NASDAQ and the National Association of Mortgage Brokers.

These connections and contributions should be of concern to anyone who is already alarmed by the relationship that Sen. Dodd has with the financial sector. As the government continues to determine it's role in the financial sector, through bailouts and Federal Reserve lending, it may be better to reserve committee chairs for those without the conflicts that Sen. Johnson may bring with him.

With the passing of Sen. Ted Kennedy, the gavel he wielded as chair of the Senate Health, Labor, Education & Pensions Committee must pass as well. The senator next in line to chair the committee is an old Kennedy friend, Sen. Chris Dodd. Sen. Dodd, however, currently chairs the Senate Banking Committee and would have to relinquish that gavel if he were to replace Kennedy and shepherd through the health care reform bill championed by his departed friend. A switch in committees may be just what the Connecticut senator needs right now. As negative feelings have increased about bank bailouts, Sen. Dodd has come under withering criticism for his close ties, and large campaign contributions from, the financial sector. Unfortunately, he may be replaced by another senator with similar conflicts. Sen. Tim Johnson of South Dakota is next in line to replace Sen. Dodd and has similarly close ties to the financial sector.

According to Open Secrets from 2003-2008, Sen. Johnson has pulled in $1,407,958 from the finance, insurance and real estate sector. While this pales in comparison to Sen. Dodd's $9,097,107 over the same period of time, it accounts for 20% of the South Dakota senator's campaign haul. Sen. Johnson's finance contributions are aided by the importance of South Dakota to the finance and credit industries. These companies only need to abide by the regulations of the state within which they are incorporated and South Dakota has some of loosest regulations for bank holding and credit card companies. This has led to a large number of credit and banks companies locating in the small plains state, providing for tens of thousands of jobs.

The support Sen. Johnson receives from the industry, and their importance to his state, is reflected in the senator's recent voting record. Donny Shaw at Open Congress (Friend of Sunlight) looked at Sen. Johnson's recent votes and showed that he stands out among Democrats in his support for the credit card industry. The senator was the only Democrat to oppose a recent law, sponsored by Sen. Dodd, to "restrict unfair credit card rate increases, penalties and fees, and bans deceptive and predatory practices." He was also one of a handful of Democrats to oppose a series of amendments meant to impose tougher regulations on credit card companies.

Sen. Johnson isn't just connected to the finance sector through his campaign contributions and his votes, but also by his former staffers turned lobbyists. Two of Sen. Johnson's former staffers currently work for firms representing financial clients or companies in the financial world. In 2005, Naomi Camper left her position as staff director for Sen. Johnson on the Senate Financial Institutions Subcommittee to become co-head of Federal Government Relations at JPMorgan Chase, one the biggest banks in the United States. Dwight Fettig, a former staff director of Sen. Johnson, became a partner in the almost exclusively finance-related lobbying shop, Porterfield, Lowenthal & Fettig. Clients at Fettig's firm include the American Bankers Association, the Coalition of Private Investment Companies, NASDAQ and the National Association of Mortgage Brokers.

These connections and contributions should be of concern to anyone who is already alarmed by the relationship that Sen. Dodd has with the financial sector. As the government continues to determine it's role in the financial sector, through bailouts and Federal Reserve lending, it may be better to reserve committee chairs for those without the conflicts that Sen. Johnson may bring with him.

It's a tough day for the credit card industry. In spite of all the lobbying spending ($9,170,573 in 2009) and all those campaign contributions ($7,367,066 in 2008), they couldn't prevent a landslide loss in Washington. Today, the Senate approved a bill to place regulations on the credit card industry for the first time in decades by a vote of 90-5. The House approved the bill last week by a lopsided 357-70 margin.

There are very few measures in influence when looking at such a lopsided victory, particularly on what would once have been an uphill battle against the credit lobby. All three lawmakers representing Delaware, that little slice of bank heaven, voted for final passage of the bill. The only ones staying true to their contributors and constituents were the three South Dakotans in Congress.

South Dakota is a special case. What peaches are to Georgia, credit cards are to South Dakota. (Watch this PBS Frontline report for the full history.) Rep. Stephanie Herseth Sandlin and Sen. Tim Johnson, both of South Dakota, were the only two Democrats to oppose the bill. Johnson received $349,800 from finance and credit companies over the course of his career, with nearly half of that ($154,350) coming from 2007-2008. Herseth Sandlin has not received a significant amount of money from the credit card companies. I'm sure she received enough phone calls from credit card employees in her state to convince her though.

Despite the epic loss for the industry, the credit cards did have a few important victories. According to CBS News, "the American Financial Services Association urged all U.S. senators to oppose all rate caps and so far they have been successful." So, there's that.

All in all, a tough day for a big time lobbying player. As a holder credit card debt myself, I can assure that Americans don't share their grief. When credit card lobbyist Bill Himpler says, "To our critics? You know, I’m not going to say anything," it's because he knows better than to say anything at all.