Big Bank Takeover

Breaking Up The Banks: I Did It!

Eric Lotke — Tue, 22 Mar 2011 08:14:29 -0400

As the debate heats up over Elizabeth Warren to head the Consumer Financial Protection Bureau, I took a step out on my own. I got a divorce. I am no longer a wholly owned subsidiary of Wells Fargo Bank.

First Wells Fargo acquired the bank I’d been banking in. Then Wells Fargo acquired my mortgage. The roof over my head and the little savings accounts where my kids manage their newspaper money were just parts of Wells Fargo’s diversified portfolio. So we left.

I opened a new account at a community bank near me. It has exactly the same tools for online banking, check cards and so forth that I’ve come to expect, and better interest rates on every product from checking to CDs to my kids' little savings accounts. I’m even better off with ATMs. I feared I’d be limited, but my community bank solves the problem by picking up the fees for me to use any ATM at any bank anywhere in the world.

The staff was friendlier, too. Many of them previously worked for banks like Citi and Wells Fargo, and they appreciated the cultural change even more than I did. They stayed open a little late to accommodate my work schedule, and we finished up by telephone and email.

I learned a bunch in the process, too. I learned that the Huffington Post was way ahead of me. They recommended that people make this move last year, and they even created a site to help find your local bank and tell your story.

Last year my bank was one of the four that held half of the nation's mortgages, two-thirds of its credit cards and controlled about 40 percent of the nation's deposits. My bank was one of the six that had assets valued at 64 percent of America’s GDP. That’s too big. I took no pride in it, and got nothing out of it. As Senator Bernie Sanders (I-Vt.) says, a bank that’s too big to fail is "too big to exist". We need to control these banks and restore the New Deal Glass-Steagall reforms that created a division between investment brokers and traditional banks. We also need Elizabeth Warren at the CFPB.

I can’t do much about any of that – but I still control my own money. Wells Fargo no longer does. One small blow against Big Brother Inc.

Taking It To K Street

Terrance Heath — Mon, 17 May 2010 16:33:43 -0400

It's a wet, rainy day in Washington D.C. Enough to soak anyone who stands outside long enough. But it wasn't enough to put out the fiery anger of hundreds of activists who took to the streets of the capitol today, to deliver a message to Wall Street's K Street lobbyists: Stop standing in the way of financial reform, and start taking responsibility for your failure.

The "Main Street lobbyists," as AFL-CIO Secretary-Treasurer Liz Schuler dubbed them, crowded Franklin Square in numbers greater than the Wall Street lobbyists who are the focus of the new Campaign for America's Future report "Big Bank Takover: How Too-Big-Too-Fail's Army of Lobbyists Has Captured Washington." The report's findings include:

243 lobbyists for six big banks and their trade associations used to work in the federal government — 202 in Congress, the rest in the White House, Treasury, or at a relevant federal government agency. That’s equivalent to 40 revolving-door lobbyists per bank.

33 chiefs of staff, 54 staffers to the House Financial Services Committee and Senate Banking Committee

Financial Services Modernization (Gramm-Leach-Bliley) Act of 1999

Commodity Futures Modernization Act

The six big banks and their trade associations have spent close to $600 million since the first major federal bailout of Bear Stearns in March 2008 on lobbying, trade association activity and political contributions.

But as the numbers of Wall Street lobbyists have increased, so has the number of Americans incensed by they accountability-free Wall Street Casino, the bankers whose bad bets we cover, the lobbyists they buy with their winnings, and members of Congress who continue to enable them. Today's protest is part of the growing wave of American's anger at an out-of-control financial sector, and politicians who lack the will to bring Wall Street to heel in the midst of a financial crisis that continues to cost Americans the livelihoods and homes, and threatens our children's future.

Before today's rally and march, more than 700 activists took their message and their demands to the doorstep of Bank of America general counsel Gregory Baer, whose response to the protest summarizes Wall Street's response to Americans' anger and demands for accountability.

Baer himself apparently tried to blend in with the crowd until a neighbor outed him. The mob booed loudly as he walked into his house. "I don't have time for you," he said, according to Trenda Kennedy of Springfield, Ill. who used a bullhorn to tell the crowd about her trouble getting a mortgage modification from Baer's bank.

Kennedy told HuffPost she'd been making reduced monthly payments thanks to a trial modification via the Home Affordable Modification Program. She said that when the bank turned her down for a permanent mod, she was told she still owed all the money she'd been paying during the trial. She said she's been notified of several sheriff's sale dates but has somehow managed to keep her home.

"Every time I'm inches away from losing my house, by some miracle it's been pushed off," said Kennedy, who is a member of Illinois People's Action.

The protest at Baer's home is reminiscent of the significantly smaller, but far more widely reported protests at the homes of AIG executives, after reports of AIG bonuses and lavish retreats sparked a bus tour/protest with stops at some AIG employee homes.

A year ago, it took one bus to carry 50 activists to demonstrate outside AIG headquarters. At another AID protest, last year 40 protesters were outnumbered 2-1 by reporters.

Typifying the preoccupation with AIG payouts, a busload of activists — outnumbered 2-to-1 by reporters and photographers — protested outside the homes of AIG executives in Connecticut Saturday.

About 40 protesters parked at a cul-de-sac Saturday afternoon and walked to the Fairfield home of Douglas Poling. They were met on the curb by two security guards, and one activist read a letter detailing the financial struggles that many Connecticut residents have faced. The group then left the note in Poling's mailbox.

Polling already agreed to forfeit his bonus, but the protesters want AIG executives to do more to help working families.

Not so today, on K Street, where protesters outnumbered the media by far more than 2-1, and outnumbered tea party representatives by hundreds to none. Typifying the preoccupation with Tea Party activists and their anger over health care reform, it remains to be seen whether these most recent protests against Wall Street's K Street lobbying arm will get the amount kind of press as far smaller protests on the right. But it's hard to deny or ignore what seems to be a growing trend.

And it's not just today's protest either. The cumulative effect of Wall Street corruption and cronyism, coupled with decades of conservative failure is making Wall Street "politically radioactive."

The tide has dramatically turned in favor of financial reform. As the Dodd bill has worked its way through the Senate, many Republicans joined Democrats to approve strengthening amendments that were politically unthinkable just a few weeks ago. Several more will be considered this week, prior to final passage.

This fight is not over, either short term or long term. There are several weakening amendments as well as more toughening amendments still to come next week. The financial lobby is fiercely fighting derivatives reform, and wants to weaken the right of states to go beyond federal regulatory minimums. Nor will the cleanup be complete with this bill.

But for the first time since the meltdown began, drastic reform has serious momentum. And Republicans are usefully on the defensive, embarrassed to vote with Wall Street. The long sought grail of bipartisanship is finally with us -- and it is an emerging bipartisan consensus to cleanse the evils of high finance.

It's not that the Republicans and corporate wing of the Democratic Party have come to Jesus -- only that Wall Street has become an albatross to the right. When Republican Senator Bob Bennett of Utah came in third at the party nominating convention last week, losing his right for a place on the primary ballot (and his three-term seat) critics held his vote for the TARP bailout against him

It's that more and more Americans are waking up — and waking their representatives up — to the nightmare Wall Street made of the economy, and the results are beginning to show in financial reform.

The Wall Street reform bill is taking that rarest of paths through the Senate — actually gaining tougher provisions against the industry as it proceeds, not being watered down to win votes as health care reform was.

And that’s put Republicans in a difficult spot. They like the bill less with each passing day but know they risk looking like they’re siding with Wall Street if they vote no.

...Democrats know public opinion is on their side and keep pressing their advantage. The latest example came Thursday, when the Senate voted, 64-33, to pass an amendment by Sen. Dick Durbin (D-Ill.) that would allow the government to oversee debit card transaction fees.

Consumer advocates loved it. The industry hated it, because the small fees on millions of card swipes add up to big revenue for ailing banks.

“It’s getting worse,” one Wall Street official said. “And it was made much worse by the Durbin vote.”

That means Wall Street may finally have to wake to reality "it's been getting worse" for millions of Americans even as bailout and bonus checks are printed, signed and deposited. And it will be "made much worse" if Wall Street continues it's lobbying efforts against reform, and continues to say "I don't have any time for you," as more and more Americans literally show up on Wall Street's doorstep declaring that it's time for real change.

The Lobbyists Behind Tom Carper's Attack on Consumers

Kevin Connor — Thu, 13 May 2010 15:52:18 -0400

Sen. Tom Carper, D-Del., has proposed an amendment to the financial reform bill that would severely weaken consumer protections to the point where it is understood to be one of the more destructive changes to the bill. Yesterday, Zach Carter wrote an excellent piece analyzing its potential consequences for financial reform:

There are two consumer protection amendments getting serious attention on the Senate floor this week, one of them positive, one of them incredibly destructive. Both revolve around the concept of “preemption”—the ability of federal regulators to block states from enforcing laws aginst banks that operate within their borders. Over the past decade, state regulators tried to crack down on subprime outrages, but federal regulators stepped in to protect the megabanks. If we want to establish a fair financial system, we have to empower states to take action against abusive banks.

That’s what makes a new amendment from Sen. Tom Carper, D-Del., so dangerous.

At OpenLeft, Chris Bowers has called the amendment "the most dangerous to Wall Street reform."

Yesterday, I noted that the data we compiled for Big Bank Takeover helps shed light on Carper's motivation: the same lobbying firm that pushed for similar changes to the House bill is home to Carper's former chief of staff, Jonathon Jones. When Rep. Melissa Bean stripped consumer protections out of the House bill, she appears to have been acting at the behest of her ex-chief of staff, John Michael Gonzalez, who now lobbies for the firm Peck, Madigan. Gonzalez had lobbied on behalf of the Chamber of Commerce around the "Bean preemption amendment."

The Chamber, of course, is acting on behalf of big banks. JPMorgan Chase, for instance, has worked closely with the Chamber of Commerce on financial reform issues for the past several years. The bank is a top career donor to both Carper (#2) and Bean (#4). It isn't alone among big banks in giving big to Carper; Bank of America (MBNA) is number one, and Citigroup is number three. After Bean spoke at a JPMorgan board meeting last June, executives there showered her with cash.

These are the sorts of relationships that position Bean and Carper as the big banks' chosen representatives in Congress, and they're the sort of relationships which position them to lead the fight against the banks.

The extent to which Carper's actions in the Senate are dictated by Jones (and the big business interests he lobbies for) has been especially evident in recent weeks.

The Hill reported last week that Carper wanted to "strike legislation in the Wall Street overhaul bill designed to give shareholders greater power to name corporate board of directors." The article quotes Business Roundtable president John Castellani saying that his group would oppose the bill if the provision were included, because it "allows small shareholders with an agenda to disrupt the governance process." (The quote also sums up the problems Big Business has with democracy itself: too much power for the little guy).

The Business Roundtable, of course, is a client of Carper's eternal chief of staff. Here's what he lobbied around in the first quarter of 2010 (according to disclosure filings):

Issues relating to executive compensation, shareholder votes and proxy access. S. 1074, The Shareholder Bill of Rights Act of 2009; H.R. 2861, The Shareholder Empowerment Act of 2009. Legislation and regulation pertaining to derivatives. S. 1691, The Comprehensive Derivatives Regulation Act of 2009; H.R. 3269, Corporate and Financial Institution Compensation Fairness Act of 2009. (emphasis mine)

Jones appears to have Carper's ear like no one else in Washington. Here Carper is in Politico, gushing about his former aide:

The senator seemed to relish the chance to talk about Jones, calling a reporter back between votes in the cloakroom to gush over his longtime aide.

"Jonathon is the most unrelentingly positive person I've worked with," Carper said. "The glass can be bone dry, and he sees it as half full."

(Of course, doing political dirty work for big business usually pays well enough to keep the glass more than half full.)

While Jones himself isn't lobbying for the Chamber of Commerce, fellow lobbyists at Peck Madigan are lobbying on behalf of the Chamber around financial reform, including Bean's ex-chief of staff, Gonzalez. Gonzalez is also working with Jones to lobby for the Business Roundtable.

What's disturbing about Jones and the rest of the staffers on our list of 240 revolving door lobbyists is that while they were working inside the federal government, they were likely preparing themselves to work on behalf of big business interests in the future. Why take a bribe while still serving in government when you can leave your job after two years and make five times as much working for big banks?

Here is Jones preparing for his role as a corporate lobbyist (also from Politico):

In 2003, Jones played an instrumental role in organizing a regular meeting of Democratic lobbyists and Senate staffers. Every other Monday during the congressional session, 80 to 100 lobbyists and top staffers for Democratic members plotted strategy in a conference room at the Hall of the States near the Capitol.

The inside-outside government dichotomy breaks down when you consider how these kinds of backroom meetings between lobbyists and staffers actually drive our politics.

That's why the Showdown on K Street is so critically important. These lobbyists deserve much more scrutiny for the work they do to corrupt our democratic process as Washington insiders, and next week, they're going to get it.

Shining a Light on the Shadow Bank Lobby

Kevin Connor — Wed, 12 May 2010 14:33:44 -0400

In 2008, economist Nouriel Roubini popularized the term "shadow banking system" to describe the non-bank financial institutions that eventually helped spur the collapse of the financial system: highly-leveraged hedge funds, investment banks, and the like. This shadow system fueled Wall Street profits for years before eventually necessitating massive bailouts of the financial sector.

These days, a "shadow bank lobby," has played a prominent role in shaping the financial reform process, pushing amendments that will weaken consumer protections, water down regulation of the Wall Street casino, and increase the likelihood of continuing fraud and future bailouts. I discuss this "shadow bank lobby" in Big Bank Takeover, the report on the big banks' army of lobbyists released yesterday by the Campaign for America's Future.

Just as the shadow banking system threatens the integrity of financial markets, the shadow bank lobby threatens the integrity of the financial reform process). Both are designed to help Wall Street avoid oversight and accountability for its actions.

Two of the principal players in the shadow bank lobby are large business associations: the US Chamber of Commerce and the Business Roundtable. As Big Bank Takeover details, each institution has morphed into an aggressive financial industry lobby over the bailout period of the past two years. During the bailout period of the past two years, as Wall Street influence has come to be seen as toxic, big banks appear to have directed significant portions of their political budget to these institutions, rather than hiring more lobbyists to lobby directly on their behalf.

Last year, the Chamber, the Business Roundtable, and several other groups partnered to set up the Coalition for Derivatives End Users. The group is supposed to be representing businesses that use derivatives to hedge against risk. But yesterday, a hedge fund manager working with Americans for Financial Reform called on businesses to leave the "sham coalition," which he said was a creation of the big banks:

“Today, there is no legitimate reason that non-financial businesses should be lobbying to weaken legislation that would prevent the next AIG collapse and taxpayer bailout,” said hedge fund manager Michael Masters. “The only explanation is that these companies are being duped by the big banks, who are desperate to escape accountability for the reckless gambling that crashed the economy and know they are not politically popular these days. It’s time for these companies to wake up to the fact they are being used.

The Coalition claims that it hasn't coordinated with the big banks, but a closer look at the team of financial reform lobbyists working for the Business Roundtable and the Chamber reveals some evidence that it was created as a front group to push Wall Street's policy agenda.

Rep. Melissa Bean and the ex-chief of staff that still seems to run her office, shadow bank lobbyist John Michael Gonzalez.

There was only one lobbying firm working for both the Chamber and the Business Roundtable on financial reform issues during 2009: Peck, Madigan, Jones & Stewart, a firm with rich connections to centrist Democrats. Peck, Madigan has lobbied for each Coalition parent around derivatives reform. At the same time, the firm has also lobbied for Deutsche Bank and the International Swaps and Derivatives Association -- in other words, for big banks with a healthy appetite for derivatives trading.

Since derivatives lobbyists for the Chamber and the Business Roundtable have so much in common with big bank lobbyists -- in fact, they're the same people -- it's not a giant leap to suspect that this "derivatives end-users" coalition has actually just been set up by big bank executives who are afraid of their own toxicity.

Then there's the fact that Bill Daley, JPMorgan's in-house Democratic rainmaker, was a recent chair of the Chamber's Center on Capital Markets Competitiveness, a big bank-driven effort to shape the financial reform debate. Peck Madigan also lobbied for that group. ThinkProgress has also exposed how the Chamber is working with big banks to kill reform. And JPMorgan CEO Jamie Dimon is on the board of the Business Roundtable, which has hired a number of Goldman Sachs lobbyists.

Unfortunately, the shadow bank lobby is a force to be reckoned with, and has won substantial victories for big banks throughout the financial reform process. In December, for instance, Representative Melissa Bean forced a negotiation with House leadership over federal preemption language in the financial reform bill. Bean succeeded in winning a major concession for the big banks, behind closed doors.

Bean was taking her cues from the shadow bank lobby. Her former chief of staff, John Michael Gonzalez, went through the revolving door in 2009 to become a bank lobbyist. Gonzalez works at the Chamber's favorite lobbying firm on financial reform issues: Peck, Madigan. Here's one issue his team was lobbying around on behalf of the Chamber, according to a recent disclosure filing:

H.R. 4173, the Wall Street Reform and Consumer Protection Act; Preemption provisions; Rep. Bean preemption amendment. (emphasis mine)

(While levels of disclosure are typically woefully lacking in lobbying disclosure filings -- and Peck, Madigan has had issues in this area surrounding its work for the Chamber -- I applaud the firm for their unusual openness here.)

The new Melissa Bean: Tom Carper with his ex-chief of staff Jonathon Jones (no picture available) -- now a shadow bank lobbyist at Peck, Madigan.

These days, Democratic Senator Tom Carper is the new Melissa Bean. He is sponsoring a preemption amendment that will keep states from being able to implement stronger consumer protections than the federal government. The amendment is clearly big bank-driven. But why Carper? Plenty of other Senators could have gone to bat for the big banks on this issue.

The answer is once again found in the revolving door data we compiled for Big Bank Takeover: Carper's former chief of staff, Jonathon Jones, is a partner at Peck, Madigan -- the same firm that lobbied for the Bean preemption amendment, and the same firm where John Michael Gonzalez, Bean's ex-chief of staff, now works. Carper and Jones are extremely close, to the point where the Senator has "gushed" to Politico about how much he likes his former chief of staff.

This is how the seeds of financial destruction are sown: with real people leveraging real relationships to win major policy concessions for big banks.

If final negotiations around financial reform happen behind closed doors, as they did when Bean won her preemption fight with House leadership in December, the big bank lobby and its army of well-connected insiders will continue to win on the Hill. Today's Congress will once again facilitate reckless gambling and predatory behavior by too-big-to-fail banks.

Transparency and openness are the only antidote to a big bank lobby that prefers to operate in the shadows; will Congressional leaders embrace these principles, and negotiate the final elements of the bill out in the open?

Eye on the Big Bank Lobby

Kevin Connor — Tue, 11 May 2010 15:29:05 -0400

Over the course of the financial reform process, the six biggest banks and their trade associations have waged an historic assault on democracy, hiring hundreds of revolving door lobbyists and spending hundreds of millions of dollars to push their legislative agenda according to a report released today by the Campaign for America's Future.

PODCAST

Hear Bob Borosage, Co-Director, Campaign for America’s Future; Stephen Lerner, Director, Service Employees International Union’s Banking and Finance Campaign; Kevin Connor, Co-Director, Public Accountability Initiative, and George Goehl, Executive Director, National People’s Action, discuss the revolving door of government officials and lobbyists used by the financial sector to stymie reform and the "Showdown on K Street" planned to counter the financial sector's influence.

The report, Big Bank Takeover: How Too-Big-To-Fail's Army of Lobbyists Has Captured Washington, shows how the six too-big-to-fail banks have hired 243 lobbyists who once worked in the federal government, including 202 who used to work in Congress, with others having worked at the Treasury, the White House, or a relevant federal agency like the SEC. (I authored the report, with assistance from researchers at LittleSis.org).

This translates into an average of 40 revolving door lobbyists per big bank.

Previous studies, including one by Public Citizen, have shown that the finance industry is spending $1 million dollars a day to fight financial reform and employing 940 former federal government employees. The report shows that the six biggest banks -- JPMorgan Chase, Goldman Sachs, Citigroup, Bank of America, and Wells Fargo -- account for a disproportionate share of this activity.

The revolving door lobbyist number includes 54 former staffers to the Senate Banking Committee and the House Financial Services committee (or a current member of that committee), 33 former chiefs of staff, and 28 former legislative directors. Citigroup leads the big banks with 55 revolving door lobbyists, though the federal government was its largest shareholder for much of this period (2009-2010).

These lobbyists left their old jobs for a simple reason: there is a fortune to be made working the halls of Congress on behalf of too-big-to-fail banks. Steve Bartlett, a former member of the House Banking Committee (now the Financial Services Committee), brought home $1.6 million in 2008 as head of the Financial Services Roundtable. SIFMA, another lobby, paid its top official, Timothy Ryan, $2 million in 2008. Ryan is a former JPMorgan executive and former director of the Office of Thrift Supervision.

SIFMA recently hired former Representative Ken Bentsen as head of its DC lobbying operation. Bentsen keeps a framed photograph of a landmark deregulatory bill, Gramm-Leach-Bliley, on the desk of his office, and for good reason: that bill helped spur the growth of megabanks like Citigroup, JPMorgan Chase, and Bank of America that fund SIFMA and pay his salary.

Bentsen was on the other side of the revolving door when that bill was passed, in 1999 -- as a member of the House Financial Services Committee. He has a lot of company in that respect: Big Bank Takeover shows that many of these lobbyists worked in government during the 1990s when the too-big-to-fail banking sector got a big boost from bipartisan efforts to deregulate the financial sector.

Former House minority leader Dick Gephardt and Senate majority leader Trent Lott have a combined 16 former staffers who are now working for big banks, including Citigroup and Goldman Sachs. Lott and Gephardt are also lobbying for the banks.

Senator Chris Dodd leads current members of Congress with five former staffers now working as big bank lobbyists. One big bank lobbying firm, Porterfield, Lowenthal & Fettig has ties to the Banking committee chair, Chris Dodd, the ranking member, Richard Shelby, and Dodd's rumored successor as chair, Tim Johnson.

Big money buys this kind of mercenary army. Between campaign contributions, lobbying spending, and trade association activity at SIFMA, the ABA, and elsewhere, the big banks and their main lobbies have spent close to $600 million since the first major federal bailout of the financial sector happened with Bear Stearns in March 2008.

Of course, that's a drop in the bucket compared to the $160 billion these banks have received from the US Treasury, and the trillions in free money they've received from the Federal Reserve. But these investments are more than enough to buy their way in Washington.

And Wall Street's lobbying operation is actually much more concentrated than the healthcare lobby. For the healthcare lobby, LittleSis.org put together a similar list of revolving door lobbyists and we found over 500 healthcare lobbyists who used to be Congressional staffers. But that was for literally hundreds of companies in the healthcare sector.

The 240 we came up with this time work primarily for six big banks.

These big bank lobbyists want to operate in the shadows. The banks are hiding much of their lobbying activity in a stealth lobby of generic business associations like the Chamber of Commerce. The report points to several instances of how banks are routing their political spending through these organizations, but there are likely many more examples.

The Washington Post reported last week that lobbyists are now looking to Congressional leaders to work out the final details of the bill in closed-door conference. Big Bank Takeover notes that at least one infamous deregulatory catastrophe happened behind closed doors: the Enron loophole, a legislative exclusion in 2000 derivatives legislation which has been blamed for spikes in energy prices. The same lobbyists that pushed for that measure are on the scene once again.

The report was released in anticipation of next week's Showdown on K Street, when thousands of Americans will descend on DC in the hopes of setting things straight with the big bank lobby.

I'll have more on the big banks and their influence army throughout the week. In the meantime, all this data also exists in an open format at LittleSis.org, so if you'd like to take a closer look you can check it out there. Special thanks to Priscilla for helping compile it, as well as Matthew, co-founder of LittleSis.org. OpenSecrets.org was also an invaluable resource in putting it together.

The Big Bank Lobby: Too Big to Bare?

Robert Borosage — Tue, 11 May 2010 14:34:12 -0400

Two-hundred and forty former legislators, bank committee staffers, and Treasury officials deployed to lobby. $600 million spent in lobbying, trade association activity and political contributions since March 2008. And that is just from the six biggest banks. The entire financial industry is spending an estimated $1.4 million a day, hiring 70 former members of Congress to make their case.

These figures, drawn from a new report released by the Campaign for America's Future (which I co-direct), would be shocking if they weren't so sad and predictable. As the Senate moves towards passing financial reform legislation, it is worth focusing on how the lobby works.

Bailed out by taxpayers, the big banks - Goldman Sachs, Bank of America, JPMorgan Chase, Citigroup, Morgan Stanley and Well Fargo - are emerging from the financial crisis larger and more concentrated than ever. Their very size offends market competition. Entities that are too big to fail cannot be disciplined by the market.

Worse, as former IMF economist Simon Johnson has emphasized, their size and wealth also undermine democratic accountability. As the report shows, they exercise immense political power which they use not only to fend off reforms that might curb their excesses, but to sculpt laws and regulations that consolidate their privilege and profits. So despite popular anger at the banks, the Senate last week voted down the Kaufman-Brown amendment that would have put a lid on the size of banks, forcing the break-up of the big six.

The report, written by Kevin Connor of the Public Accountability Initiative and LittleSis.org, highlights the corrupting revolving door that Washington insiders view as a sensible career path. The banks heavily rely on hiring retired legislators, former committee staffers and legislative aides. Although these are salad days for Democratic lobbyists, bipartisanship reigns. The banking lobby includes Dick Gephardt, former leader of the House Democrats; Trent Lott, former leader of the Senate Republicans; and former Republican House leader (and putative leader of one branch of the Tea Partiers) Dick Armey. Connor names names of the major players of over 240 former government insiders now on the banks' payroll.

Needless to say, former legislators and staffers are masters of the back rooms. They gain easy access to sitting legislators. They help draft legislation. They know how to slip in key amendments and loopholes in the dead of night. They know the players and the process.

More corrosively, the players—the sitting legislators and current staffers—know that after leaving Congress, they can comfortably make the family fortune by joining the lobbying profession. Not surprisingly, many seek to curry the favor of those who might later employ them. The revolving door doesn't just give special access to the bank lobby; it compromises sitting legislators and staffers looking out for their own futures.

PODCAST

How this backroom influence works is illustrated in the most recent 'Financial Services Bulletin" of Concept Capital's Washington Research Group. (Concept Capital bills itself as a "total solutions provider" to hedge funds and other investors).

The bulletin (not available on the web) details amendments still to be considered to the financial reform bill and the timeline for moving to a vote. It highlights for its clients Senate Banking Chair Sen. Chrisopher Dodd's "manager's amendment" likely to be unveiled this week.

"This is by far the most important amendment as it represents all of the deals that he has cut to find 60 votes for the bill. This is the most likely spot for many of the small changes to the bill to find their way into law," (emphasis added) including such bank favorites as preempting state attorneys general enforcement powers.

The deals in the backrooms are getting cut as the debates on the floor drone on.

Ironically, The Washington Post recently reported on the distress of bank lobbyists faced with a financial reform bill that was being debated on the floor of the Senate in the light of day rather than in quiet of the banking committee. Speaking anonymously, they groused at a process that was out of control," "populist," "irrational." It is "time for grownups to step in," wrote JPMorgan analyst James Glassman. The Post reported that the lobbyists were pinning their hopes on the House-Senate conference process where "adults" could sit together and work things out.

Clearly, the only thing that limits the power of the banking lobby is the rage of American voters that the very banks that drove the economy over the cliff and were bailed out by taxpayers are now spending lavishly to block reforms needed to insure this doesn't happen again. That popular anger makes legislators reluctant to appear in the banks' pockets in public.

That is why National People's Action, SEIU, the AFLCIO and other groups are bringing citizens to a Showdown on K Street on May 17. Citizens from across the country will "visit" with lobbyists in their offices and haunts, exposing them to some of the human pain caused by their clients -- families that have lost their homes, the retired who lost their savings, workers who lost their jobs. And in doing so, they'll help educate Americans about the scope of this lobby.

That is why the Campaign for America's Future will join with dozens of groups to support House Financial Services Chair Barney Frank's call to televise the conference committee between the House and Senate on financial reform, assuming there is one. We can't control what happens in the cloakrooms. But as the banking insiders seek to weaken the legislation in conference, we can at least give Americans a chance to see exactly what side their legislators are on.

That is why legislators should be on notice that they will be held accountable this fall for how they voted on Wall Street reform. Steps will be taken to insure that voters are told the truth.

And that is why the current financial reform legislation should be seen as a first step, not an answer. We'll need a lot more revelations, scandals, prosecutions and investigations. We'll need action to tax financial speculation, curb credit card company fees and interest rates, wage another fight to limit the size of the big banks, and more.

The Washington Research Group predicts for investors that the Congress "will enact a moderate financial reform bill that ... will not destroy [read impact] the industry's business model." But changing the industry's business model and breaking up the banks that are too big to fail are vital to the new economy that we build out of the ruins of the old. This fight must go on.