Throughout the financial reform debate, the finance industry has waged an unprecedented assault on the democratic process, spending an estimated $1.4 million per day to influence Congress and hiring 70 members of Congress and 940 former federal employees to lobby on their behalf.
The six biggest banks—Goldman Sachs, Bank of America, JPMorgan Chase, Citigroup, Morgan Stanley, and Wells Fargo—account for a disproportionate share of this activity. In the two years since the first federal bailout of a big bank (Bear Stearns), these banks and their principal trade associations have hired over 240 former government insiders as lobbyists and spent hundreds of millions of dollars on an influence game designed to thwart reform, shape bailout programs and maintain their status as “too-big-to-fail” institutions.
The big banks have employed an unrivaled network of in-house lobbying teams, hired guns, industry associations, front groups and behind-the-scenes influence peddlers with deep connections to Congress and the Obama administration, including the leadership of the House Financial Services Committee, the Senate Banking Committee, the Treasury Department, and key regulatory agencies.
The lobbying spree is taxpayer-funded—it follows $160 billion in bailouts from Congress and trillions in cheap loans from the Federal Reserve. And as their influence has come to be viewed as increasingly toxic in Washington, the banks have shifted segments of their political activity to a “shadow lobby” that includes such front groups as the U.S. Chamber of Commerce.
Many of the current big-bank lobbyists were architects of the too-big-to-fail banking regime while they were employed in Congress or elsewhere in the federal government, and they are now drawing lucrative salaries from the banking behemoths they helped create. Now, on a range of issues, the big banks’ armies of lobbyists have scored victories that assure the continued existence of Wall Street’s casinos, despite the threat they pose to the American economy.
Findings from the report
- 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.
- This includes 33 chiefs of staff, 54 staffers to the House Financial Services Committee and Senate Banking Committee (or a current member of that committee) and 28 legislative directors. Many of the revolving-door lobbyists were key architects of financial deregulatory legislation during their time as congressional staffers, including the Financial Services Modernization (Gramm-Leach-Bliley) Act of 1999 and the 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.
- Citigroup employs 55 revolving-door lobbyists, more than any other big bank or financial industry trade association. The federal government was until recently Citigroup’s largest shareholder. Other banks are also employing huge lobbying armies: Goldman Sachs with 45, JPMorgan Chase with 32, Morgan Stanley with 19, Wells Fargo with 14, and Bank of America with 12. The top big-bank lobbies, the Securities Industry & Financial Markets Association and the American Bankers Association, have hired 84 revolving-door lobbyists.
- The top big-bank lobbying firm in Washington is Elmendorf Strategies, founded by Steve Elmendorf, former chief of staff to Rep. Dick Gephardt. Elmendorf’s financial team includes former top staffers to Senate Majority Leader Harry Reid, Maryland Sen. Paul Sarbanes, and Gephardt. The firm represents the most powerful Wall Street banks and associations, including Citigroup, Goldman Sachs, the Financial Services Forum, and the Securities Industry and Financial Markets Association. Other top lobbying firms include the Podesta Group and Porterfield, Lowenthal, & Fettig.
- Senate Banking Committee chair Christopher Dodd (D-CT) leads all current members of Congress, with five former staffers now working as big bank lobbyists. Banking Committee ranking member Richard Shelby (R-AL) and members Chuck Schumer (D-NY) and Tim Johnson (D-SD) each have four.
- Big banks are hiding lobbying activities in a burgeoning shadow industry of generic business associations, ad hoc coalitions and front companies. Government bailouts and partial federal ownership have made it difficult for big banks to ramp up direct lobbying; instead, they are routing their dollars through this shadow lobby.
- Sullivan & Cromwell, the firm defending Goldman Sachs in its Securities and Exchange Commission fraud suit, secured the most lucrative big bank lobbying contract in 2009, a $520,000 deal with Clearing House Payments Co. – a company owned by JPMorgan Chase, Wells Fargo, Citigroup, Bank of America, and several other banks. The firm also lobbied on behalf of Goldman Sachs during the same period. In a past financial reform fight, lawyers at Sullivan & Cromwell lobbied on behalf of Enron, and appear to have helped craft the “Enron loophole.”