Go to the Globe and Mail homepage

Jump to main navigationJump to main content

JPMorgan Chase's offices in San Francisco (Paul Sakuma)
JPMorgan Chase's offices in San Francisco (Paul Sakuma)

Banks

U.S. banks on a lobbying and ad blitzkrieg Add to ...

JPMorgan Chase & Co. is running image-boosting ads in major U.S. newspapers, touting its work counselling cash-strapped homeowners and extending credit to small businesses.

Bank of America is spending millions on a series of spots highlighting the bank's role in key historical events, airing during the History Channel's 12-part miniseries "America: The Story of Us."

More Related to this Story

It's the soft side of an unprecedented banking industry effort to clean up its sullied image as Congress puts the final touches on a sweeping overhaul of Wall Street rules.

Behind the scenes, however, the industry is lobbying hard and furiously to protect its lucrative derivatives business and avoid tougher government regulation.

The financial services industry is spending an estimated $1.4-million (U.S.) a day - $600-million since the 2008 financial crisis - to influence Congress, according to a new study by the labour-funded Campaign for America's Future. That's more than $1-million for every member of Congress.

"The big banks have employed an unrivalled 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," said Kevin Connor, the study's author.

The six largest U.S. banks employ 243 lobbyists who used to work for the federal government, including former members of Congress and top White House and administration officials.

Citibank leads the way with 55 inside and outside "revolving-door" lobbyists, according to the report.

Investment bank Goldman Sachs ranked second with 45.

Goldman, which is reportedly facing both criminal and civil probes of its mortgage finance activities, spent roughly $1.1-million on lobbying in the first three months of this year, nearly matching its annual budget four years ago. It has built up a 12-person government relations office in Washington, headed by a former chief of staff to U.S. Representative Barney Frank, chairman of the House financial services committee. And it's hired a roster of well-connected outside advisers, including Gregory Craig, President Barack Obama's former White House counsel, and Richard Gephardt, the former Democratic House leader.

Goldman, in particular, faces a daunting task. The bank has become the whipping boy of what critics say is wrong with Wall Street - the murky deal making, the bloated bonuses and the out-sized profits.

The bank earned a dismal 4 per cent approval rating in a Wall Street Journal-NBC News poll last week. The same survey showed Toyota, which has had a series of embarrassing defect recalls this year, at 31 per cent, and BP PLC at 10 per cent, in spite of the Gulf oil spill.

The final shape of a 1,400-page financial reform package is still in flux as a result of a spate of amendments now being debated in the Senate - some designed to toughen the legislation, others aimed at watering it down.

The flurry of proposed changes prompted Senate finance committee chairman Chris Dodd to warn that amendments could kill the legislation.

"We run the risk of losing this bill," Mr. Dodd said on the floor of the Senate.

It's unclear whether the banking industry's hard - and soft - sell is working. Joe Eaton of the Washington-based Center for Public Integrity said the current bill is already much tougher on the industry than it was a month ago.

"The lobbyists may not be getting their way," Mr. Eaton remarked. "It looks like we'll have a tough package."

On Thursday, for example, senators approved two initiatives aimed at addressing the role that major credit rating agencies played in the 2008 financial collapse, including a proposal to weaken the market power of companies such as Moody's Investors Service and Standard & Poor's. Lawmakers also voted to cap the $50-billion a year in fees that banks charge businesses to process transactions using credit and debit cards.

Mr. Eaton pointed that other groups have been successful, including community banks, which managed to escape much of the proposed regulatory crackdown.

Follow on Twitter: @barriemckenna

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories