By Dan Eggen
Washington Post Staff Writer
Sunday, April 25, 2010; A12
The decision by Senate Democrats to move ahead with financial overhaul legislation this week has prompted a last-ditch lobbying campaign by major banks and business groups, which fear the political winds have shifted against them amid widespread public anger over the excesses of Wall Street.
The efforts represent an escalation of the multimillion-dollar lobbying effort against the proposed overhaul, which would create an agency to protect consumers and give the government power to wind down large, troubled firms. Many top Wall Street firms, including J.P. Morgan Chase and beleaguered Goldman Sachs, have also ramped up campaign contributions to Republican lawmakers who have united to oppose the bill.
The campaign prompted sharp words last week from President Obama, who in a speech to Wall Street titans decried the "furious efforts of industry lobbyists" to derail the legislation. "I'm sure that some of these lobbyists work for you," Obama told the crowd Thursday.
In one typical event this week, the U.S. Chamber of Commerce, Washington's largest business group and lobbying force, brought 25 CEOs to Capitol Hill to plead their case with individual lawmakers. The executives argued against key elements of the legislative package, including measures that could limit the size of banks and clamp down on the largely unregulated world of derivatives trading.
The Business Roundtable, which represents chief executives, organized a similar "fly-in" by 20 leaders of member corporations, such as IBM and Boeing. The group has nearly doubled the pace of its lobbying this year compared with 2009, spending at the rate of $25,000 a day during the first quarter, disclosure records show.
"This is priority 1, 2 and 3 for us," said Scott E. Talbott, senior vice president for government affairs at the Financial Services Roundtable, a separate group that has also increased its lobbying. "Modernizing the regulatory framework will have effects for decades to come."
More than 2,500 lobbyists are registered to represent the finance, insurance and real-estate sector, which is dominated by banking interests. Hundreds more work on behalf of other industries that fear the impact that the legislation might have on their interactions with the financial markets, according to lobbying disclosure data compiled by the nonpartisan Center for Responsive Politics.
Those on the lobbying payroll at major banks include dozens of former lawmakers, such as former House majority leader Richard A. Gephardt (D-Mo.), whose firm is registered to represent Goldman Sachs and Visa, records show.
Disclosures filed last week show that the top 25 firms in the commercial banking industry spent more than $11 million on lobbying during the first three months of 2010, up 5 percent from a year earlier. Firms including Goldman, Wells Fargo and Credit Suisse Securities have significantly boosted spending on Washington lobbying this year, the records show.
"We're seeing what happens when money is no object with lobbying," said Kirsten Brost, spokeswoman for Christopher J. Dodd (D-Conn.), chairman of the Senate banking committee and sponsor of the main Democratic overhaul bill. "We've been inundated; everyone has."
Senate Majority Leader Harry M. Reid (D-Nev.) has signaled his intent to move forward with Dodd's bill late Monday, when he has scheduled a crucial test vote that must be held before a floor debate. The legislation would establish a system to close down firms whose failure would threaten the financial system; create a consumer-protection agency; and increase government oversight of derivatives. A final Senate bill would have to be merged with an overhaul package passed by the House.
Banks and investment firms have won a number of key victories in the legislative battle, including blocking proposals to break up large banks by force and preventing a more powerful new consumer-protection agency. But in recent weeks the financial lobby has also been battered by serious setbacks, including the committee approval of a bill from Sen. Blanche Lincoln (D-Ark.) that is far tougher on derivatives than previous measures were.
The industry has been damaged further by a series of embarrassing developments, including the recent fraud charges levied against Goldman Sachs by the Securities and Exchange Commission. Democrats also criticized Republican leaders for holding a private meeting with two dozen Wall Street leaders just before the GOP lawmakers threatened to block Dodd's bill.
"I must say the Democrats have played it very well," said one senior financial lobbyist, who requested anonymity to speak frankly about the topic. "It all just seemed to come together, and we have made a lot of mistakes."
Although Obama and other Democrats held the edge on Wall Street fundraising during the 2008 election cycle, the political action committees for major banks and financial services companies have dramatically shifted their giving toward Republicans in recent months, data show. Goldman's PAC, for example, gave almost $300,000 to candidates and parties in March, nearly two-thirds of which went to the GOP.
Tom Quaadman, executive director for capital markets at the Chamber of Commerce, said the group has organized the mailing of more than 200,000 letters to Congress in opposition to the legislation, including about 40,000 letters and e-mails sent within the past three weeks. He said the chamber would continue to ratchet up the pressure on lawmakers to fix those areas of the package, including the derivatives regulations, that are objectionable to many business leaders.
"Many of our members have been quite active in going up on the Hill and educating senators on the challenges posed by this legislation," Quaadman said. ". . . Our goal always has been that there needs to be a good bill, rather than a bill just for its own sake."
Staff writer Tim Farnam contributed to this report.