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Bankers lobby against financial regulatory overhaul

By Brady Dennis and Steven Mufson
Washington Post Staff Writer
Friday, March 19, 2010; A18

If not for the sea of navy business suits and the hotel ballroom's chandeliers, the gathering Wednesday morning might have seemed more like a pep rally than a meeting of the American Bankers Association. But the 900 bankers were preparing to storm Capitol Hill, and they were getting revved up.

"We have a lot of work cut out for us," David Bochnowski, an Indiana bank executive, said to the troops, who had assembled just after 8 a.m. in the Grand Ballroom of the Renaissance Hotel downtown. "Our job is to have an impact on the Hill. Are we going to have that impact?"

"Yeah!" the bankers shouted, as applause broke out.

"We need to shape what's in and what's out of any reform legislation," Michigan banker Art Johnson told his peers from every corner of the country. "All of us know what's at stake. It's really about our industry's future . . . We're not going to sit silently while we are blamed for problems that were caused by others."

And then came the blessing of a leading lawmaker. "You're all going to be lobbyists today," House Minority Leader John A. Boehner (R-Ohio), told the crowd. "I know that's a dirty word, but that's what you're doing." He told the bankers not to be afraid to stand up to members of Congress or "these little punk staffers," as he called them.

"Don't be bashful about who you are," he said. "Stand up for yourselves, for goodness sakes."

The bankers soon headed to Capitol Hill, talking points in hand -- white folder for House visits, blue folder for Senate visits. They were to protest the creation of a new consumer financial protection regulator, to argue that national banks should remain exempt from state consumer laws and to advocate that the Federal Reserve keep oversight for some state-chartered banks, among other issues.

While the bankers showed up in force this week, they are not the only ones with a hefty stake in the financial regulatory overhaul under consideration in Congress. Investment banks, hedge funds, student loan firms, coal companies, automakers and credit card companies are among those seeking to influence the reforms.

"The thing about this bill is that it's so broad," said one leading lobbyist, who spoke on the condition of anonymity because his clients don't want him to publicly discuss issues they hope to quietly fix. "The bill impacts not just the Goldman Sachses and Morgan Stanleys, but a huge swath of companies."

Lawrence Summers, a top economic adviser to President Obama, said Thursday in response to Boehner, that at "a time when industry has spent $1 million on lobbyists per member of Congress, at a moment when there are four lobbyists per member of the House and Senate working this issue, we at the administration do not believe that the prominent issue is allowing bankers to stand up for themselves."

Many of the people trying to reshape the financial reform bill introduced Monday by the Senate banking committee's chairman, Christopher J. Dodd (D-Conn.), are veterans of legislative battles.

Citigroup's head of government relations, Nicholas E. Calio, was the top legislative affairs aide to Presidents George H.W. Bush and George W. Bush. John F.W. Rogers, a former aide to James Baker, is now a top executive at Goldman Sachs, where he is "the maestro," said one lobbyist. Thomas R. Nides, a former top staffer for then-House Speaker Thomas Foley and later U.S. Trade Representative Mickey Kantor, holds a similar job as Rogers at Morgan Stanley.

The ABA's Ed Yingling is an outspoken player; his father was a Senate banking committee staffer in the 1950s and later a Citibank lobbyist. Former congressman Richard Baker (R-La.) is chief executive of the hedge fund industry association, whose name omits the words "hedge fund"; it is called the Managed Funds Association.

Most lobbyists were loath to talk on the record or appear to be opposing tougher financial regulation. "Who is hated more than congressmen?" asked one GOP lobbyist. "Bankers."

Dodd's hefty bill touches almost everyone, and almost every other proposal has its foes.

Big banks want to kill a proposal to rein in banks' own risky trading activities, which have been major profit centers in the past. "That is the thing that could send a lot of the big guys over the edge," said one lobbyist.

Community bankers, with tentacles in every congressional district, have won key exemptions.

Tighter derivative rules are aimed at big Wall Street firms and hedge funds, but industrial companies, such as coal giant Peabody, often use derivatives to hedge against variations in commodity prices; they are trying to soften proposed regulations, to the delight of financial firms.

Auto companies worry that the legislation could make it harder to give car buyers cheap credit.

The Chamber of Commerce has strongly opposed the proposed new consumer watchdog, saying that it could hurt small businesses. Credit card companies are worried about the consumer watchdog's powers.

Dodd said Thursday that "there's nothing evil" about people expressing their concerns about the bill, but he insisted that if lobbyists expect to browbeat lawmakers into shaping the policy to fit certain interests, "then they're wasting their time."

Still, Dodd acknowledged he would have to change the current bill. "You hold on as much as you can to what you believe in," Dodd said. "I'm a chairman, and I'm one vote. But I want to get as strong a bill as I can."

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