WASHINGTON — Last Wednesday, Representative David Scott, Democrat of Georgia, mingled with insurance and financial executives and other supporters at a lunchtime fund-raiser in his honor at a chic Washington wine bar before rushing out to cast a House vote.
Charles Dharapak/Associated Press
Representative Barney Frank, left, and Senator Christopher J. Dodd lead the financial committees in the House and Senate.
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Join the discussion.Nearby, supporters of Representative Michael E. Capuano, Democrat of Massachusetts, gathered that evening at a Capitol Hill town house for a $1,000-a-head fund-raiser. Just as that was wrapping up, Representative Peter T. King, Republican of New York, was feted by campaign donors at nearby Nationals Park at a game against the Mets.
It was just another day in the nonstop fund-raising cycle for members of the House Financial Services Committee, which has become a magnet for money from Wall Street and other deep-pocketed contributors, especially as Congress moves to finalize the most sweeping new
financial regulations in seven decades.
Executives and political action committees from Wall Street banks, hedge funds, insurance companies and related financial sectors have showered Congressional candidates with more than $1.7 billion in the last decade, with much of it going to the financial committees that oversee the industry’s operations.
In return, the financial sector has enjoyed virtually front-door access and what critics say is often favorable treatment from many lawmakers. But that relationship, advantageous to both sides for many years, is now being tested in ways rarely seen, as the nation’s major financial firms seek to call in their political chits to stem regulatory changes they believe will hurt their business.
The biggest flash point for many Wall Street firms is the tough restrictions on the trading of
derivatives imposed in the Senate bill approved Thursday night. Derivatives are securities whose value is based on the price of other assets like corn, soybeans or company stock.
The financial industry was confident that a provision that would force banks to spin off their derivatives businesses would be stripped out, but in the final rush to pass the bill, that did not happen.
The opposition comes not just from the financial industry. The chairman of the Federal Reserve and other senior banking regulators opposed the provision, and top Obama administration officials have said they would continue to push for it to be removed.
And Wall Street lobbyists are mounting an 11th-hour effort to remove it when House and Senate conferees begin meeting, perhaps this week, to reconcile their two bills. Lobbyists say they are already considering the possible makeup of the conference panel to focus on office visits and potential fund-raising.
The House’s version of the bill does not include the tougher derivatives ban, and Wall Street lobbyists said one chief target would be Representative
Barney Frank, the Massachusetts Democrat who leads the Financial Services Committee and shepherded the House bill. Others include Representative Paul E. Kanjorski, the Pennsylvania Democrat with a senior role on the House financial services panel, and Representative Collin C. Peterson, Democrat of Minnesota, who leads the House Agriculture Committee, which has jurisdiction over futures contracts and derivatives.
“This is not the end of the process,” said David Hirschmann, senior vice president of the
Chamber of Commerce, which has spent more than $3 million to lobby against parts of the bill.
He said the chamber planned to keep fighting for a loosening of the regulatory restrictions — first in the House-Senate conference, then in the implementation phase after final passage of a bill, and “if all else fails,” in court.
Scott Talbott, a senior executive at the
Financial Services Roundtable, a lobbying group that represents about 100 of the largest financial companies, said his group had already begun meeting with House members it believes will be important in getting the derivatives restrictions stripped from the Senate bill.
While the industry’s objections are widely known this late in the debate, Mr. Talbott said that the way to press the case was to meet with lawmakers and their aides as often as they could.
“There’s no substitute for old-fashioned gumshoe lobbying,” Mr. Talbott said. “The staff here knows it. We offer to resole their shoes when they wear them out.”
Along with the aggressive lobbying, of course, comes general political support from the industry, and political consultants and campaign strategists said the recent strain in relations between Wall Street and Congress had not slowed the flood of money yet.
A few lawmakers have indicated that they will curtail fund-raising from Wall Street firms in the regulatory debate because of fears of a possible conflict. For instance, Senator
Blanche Lincoln, the Arkansas Democrat who has led the push to restrict banks from trading in derivatives, said after the
Securities and Exchange Commission sued
Goldman Sachs that she would no longer take contributions from the firm and scrapped a possible fund-raiser with it.
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