It’s the one year anniversary of the fall of the house of Lehman. Unlike AIG, Citigroup, Bank of America, General Motors and Goldman Sachs–top donors all–Lehman Brothers (not a top donor) was deemed small enough to fail (though “deem” is probably too strong a word). The Lehman collapse led to a panic on Wall Street and a panic in Congress to shovel money to Wall Street firms.
The fall of Lehman’s also created new business opportunities for financial firms. The Washington Post notes that Wall Street is coming to Washington seeking profits:
In the year since the investment bank Lehman Brothers collapsed, paralyzing global markets and triggering one of the biggest government forays into the economy in U.S. history, Wall Street has looked south to forge new business strategies, hew to new federal policies and find new talent.
“In the old days, Washington was refereeing from the sideline,” said Mohamed A. el-Erian, chief executive officer of Pimco. “In the new world we’re going toward, not only is Washington refereeing from the field, but it is also in some respects a player as well. . . . And that changes the dynamics significantly.”
Washington has become a dominant player. Over the past year, the Federal Reserve and the Treasury have injected trillions of dollars into frozen financial markets, snapping up unwanted bonds, extending guarantees to banks and slashing interest rates.
Those new dynamics mean the old pathways for influence (hence the talent scouting). While spending on lobbying is slightly off from last year, the securities and investment industry still spends heftily on K Street influence, data from our friends at the Center for Responsive Politcs show. And while financial firms look for talent in Washington, a former Lehman executive (as a rule, most seem to have landed on their feet) is spinning through the revolving door in the opposite direction, working as the official lobbyist of the Treasury Dept.
Meanwhile, Lehman Brothers–what is left of it–has been divided up. Some portions are still in bankruptcy; Lehman Brothers North America was bought out by Barclays Capital, a division of Barclays Bank, an institution that’s had an ever greater lobbying footprint in Washington. Maybe some day soon, they too will be too big to fail–or at least, too well-connected.