Lobbyists for banks and finance companies big and small were crawling all over Capitol Hill last week as the Senate worked on a bill to overhaul the financial regulatory system. But senators, it seemed, only saw the ones that represented local business back home.
“I’m trying to think of the last time I had a meeting with any of the big banks. It’s been months, I think,” said Sen. Mike Crapo (R-Idaho), who is a member of the Senate Banking Committee. His office later offered examples of groups Crapo and his staff have met with, such as the Idaho Bankers Association and the Idaho Credit Union League. “I met with the auto dealers,” said Sen. Olympia Snowe (R-Maine), whose vote is being heavily courted by Democrats. “And obviously the community bankers, some Maine community bankers.”
Sen. Charles Schumer, the New York Democrat who raised campaign contributions from Wall Street executives while heading the Democratic Senatorial Campaign Committee during the 2006 and 2008 elections, just said “I don’t know” in response to a question about who had contacted his office on financial regulatory reform. Sen. Jon Kyl (R-Ariz.), the Republican whip, said he is “a lot more focused on how this legislation might affect Main Street than I am the big guys on Wall Street who have demonstrated they can pretty well take care of themselves.”
Of course, just because senators say they’re not talking to big-bank lobbyists, it doesn’t mean their staffs aren’t. Lobbyists for some of the largest financial firms are using every tool they have as their clients spend millions to influence the bill. Podesta Group and Venable lobbyists that represent a host of corporate clients, including Bank of America Corp., Dun & Bradstreet Corp., the Private Investor Coalition and The McGraw-Hill Cos., were among those hanging on every word at the Agriculture Committee markup of a key provision governing derivatives last week, whipping off live-time updates and responses to clients from their BlackBerrys.
John “Jake” Seher, a Venable lobbyist who has been trying to get language into the bill for the new Swaps and Derivatives Market Association, stood in the back, alternating between watching the committee and tapping on his BlackBerry.
The association, made up of smaller financial services businesses such as broker-dealers, want language in the derivatives measure that would allow them to clear trades, something they currently can’t do. So far, that’s not in there, but Seher is still trying. He’s spoken to Agriculture Committee staffers Cory Claussen and Pat McCarty three or four times about it, he said, and has submitted legislative language to members and staff with whom he has met, including Sen. Kirsten Gillibrand (D-N.Y.), a committee member.
He’s hoping the provision will be included in the final bill that comes before the Senate for a vote.
“I’m going to leave to go back to my office now because we’re going to want to follow up,” he said after the committee session ended, greeting acquaintances he later said represent Nasdaq and the New York Stock Exchange. “We’re going to want to go back now immediately to the various Senate offices we met with previously to explain again the need and necessity of this.”
‘BATTALIONS OF LOBBYISTS’
Democrats and Republicans are each accusing the other of steering the bill toward corporate interests, a political tactic that has made big-bank lobbyists a toxic asset.
Democrats have been pounding Senate Minority Leader Mitch McConnell (R-Ky.) and Sen. John Cornyn (R-Texas), the National Republican Senatorial Committee chairman, over a meeting the two had with Wall Street executives earlier this month. And in a sign of how The Goldman Sachs Group Inc. has fallen out of favor since the U.S. Securities and Exchange Commission filed a fraud suit against it on April 16, Senate Agriculture Committee Chairman Blanche Lincoln (D-Ark.), the author of the derivatives proposal, last week canceled a planned fundraising lunch with Goldman executives, citing the suit.
In a speech on the need for regulatory reform in New York on April 22, President Barack Obama pointed to Wall Street lobbying as an example of why reform is needed in Washington, referring to the “battalions of financial industry lobbyists descending on Capitol Hill” and adding that the bill makes significant improvements to the regulatory system “despite the furious efforts of industry lobbyists to shape them to their special interests.”
The Wall Street firms that would arguably be affected most by the bill are spending big bucks to shape it. JPMorgan Chase & Co. reported spending $1.5 million on lobbying in the first three months of the year, roughly 15% more than the same period last year. Goldman Sachs reported $1.15 million, a 72% jump. Lobbyists on its payroll include former Democratic Majority Leader Dick Gephardt and Elmendorf Strategies, a firm headed by Democratic strategist Steve Elmendorf that includes Jimmy Ryan, a former senior aide to Senate Majority Leader Harry Reid. Bank of America reported $940,000, a 42% increase.
The rhetoric and the bill’s accelerated pace — it’s expected to reach the floor this week — have changed the atmosphere for lobbying, said Andrew Lewin, head of financial services lobbying for the Podesta Group in an interview outside the Agriculture Committee markup.
Lewin said members and their aides are “just getting crushed right now with interested parties,” which means aides are trying to respond via e-mail or phone calls, and it’s harder to get meetings. “It helps if there’s a constituent interest in the senators’ state,” he said.
Lewin said he has 15 to 20 clients interested in the financial regulatory reform bill, and “getting them a real-time update” from the hearing chamber as the markup took place “is helpful.” His clients include Bank of America and McGraw-Hill, which owns credit ratings agency Standard & Poor’s. Besides the markup, Lewin said he had three or four conference calls planned with clients on the bill that day and was escorting another one to a meeting with the Treasury Department.
The committee’s amended bill sparked a volatile afternoon for K&L Gates partner Daniel Crowley, who suddenly found himself dealing with an avalanche of unexpected client calls. A provision that prohibits banks from engaging in proprietary trading, or betting on the future prices of certain kinds of assets, is “causing lots of agita for a lot of clients,” he said. Crowley’s client list includes the Farm Bureau Bank; Pitney Bowes Inc., which owns a bank; and JPMorgan Chase, a client on tax issues that would be heavily affected by a bank-tax proposal that could become part of the regulatory overhaul. He also monitors the legislation for institutional investors such as pension funds and hedge funds.
The pace of the legislation makes it harder to have a substantive discussion, Crowley said, adding that “ideally, you’d like to have a five-minute discussion, and you end up having a 30-second chat in an elevator ride.”
Some aides and senators do say they want to make sure they hear from everyone on the complicated measure.
One aide to a Democrat on the Senate Banking Committee who was not authorized to speak on the record said last week that his office has gotten a large number of calls, e-mails and meeting requests, including from representatives of major Wall Street firms. “We try to hear people out” and respond to as many as possible, he said, adding that he was “not sleeping a lot.”
Sen. Tim Johnson (D-S.D.), the No. 2 Democrat on the Senate Banking Committee, said he’s been “hearing from everybody.” He was the only senator to acknowledge recently meeting with large banks, saying that home-state giants Wells Fargo and Citibank have “been very much in touch. They came, and the community banks also.”
“I don’t want to shut anybody out,” he said.
Carrie Levine can be contacted at email@example.com.