Sunday, September 06, 2009
When an investment market is worth almost $600 trillion, banks are going to spend heavily to try and keep federal regulators from touching it. That’s what five commercial banks—JPMorgan Chase, Goldman Sachs, Bank of America, Morgan Stanley and Citigroup—are doing to convince Congress not to restrict their trading of over-the-counter derivatives, even though they contributed substantially to the financial crisis last year. The five big banks, which have spent nearly $100 million since 2007 on lobbying and campaign contributions, stand to make more than $35 billion this year trading unregulated derivatives contracts, as long as the federal government stays out of the market.
But the Obama administration is determined to toughen regulations on the risky market. When the Treasury Department submitted its plan to Congress in August, it kept things quiet so that banking lobbyists couldn’t get an early read on the proposal and begin shaping the debate. Some observers say that despite their deep pockets, banks may have a tough time overcoming the anger on Capitol Hill towards unfettered derivatives trading.
“Public sentiment isn’t very much in their favor,” Richard Lindsey, a former director of market regulation at the Securities and Exchange Commission, told Bloomberg News. “In some places, they’re not going to have anybody who wants to listen to them.”
-Noel Brinkerhoff
Wall Street Stealth Lobby Defends $35 Billion Derivatives Haul (by Christine Harper, Matthew Leising and Shannon Harrington, Bloomberg News)
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