Economic news

Analysis-US bank lobbyists ranks swell to post-crisis high amid regulatory pushback

2024.02.08 06:30


© Reuters. FILE PHOTO: The solar rises over the U.S. Capitol in Washington, U.S., November 9, 2022. REUTERS/Tom Brenner/File Photo

By Douglas Gillison

(Reuters) – The variety of massive bank Washington lobbyists is the very best for the reason that 2007-09 international monetary disaster, pushed by hiring amongst midsize lenders that are dealing with new guidelines and harder oversight after final yr’s turbulence, new lobbying information reveals.

At the tip of 2023, 486 federal lobbyists have been engaged on behalf of banks with $50 billion or extra in property and 7 commerce teams, in accordance to a Reuters evaluation of knowledge offered by OpenSecrets, a nonpartisan political transparency group. That was a 3.4% bump on 2022 when the trade’s lobbying ranks swelled to their highest degree of any yr since 2008, the info reveals.

Reuters analyzed OpenSecrets figures for 2008 to 2023, discovering the latest numbers have been the very best for all years throughout that interval. The headcount contains registered particular person lobbyists working for the banks and for out of doors corporations the banks and commerce associations rent.

Over the previous six years, progress within the bank foyer’s ranks has been largely pushed by lenders with greater than $100 billion in property who aren’t among the many eight Wall Street giants, resembling Capital One, TD Bank and Truist.

This group of 23 banks had 255 registered lobbyists in 2023, which represents an 11% improve over 2022 and was additionally the very best since 2008.

The features coincide with midsize lenders’ increasing record of coverage considerations as President Joe Biden’s monetary regulators have rolled out a raft of proposals cracking down on honest lending abuses, transaction charges, in addition to capital hikes, which is able to dent income.

Regulators say the foundations intention to clamp down on longstanding unfair practices that harm shoppers, whereas capital hikes will make the monetary system safer and are much-needed after three lenders failed final yr. Banks say most of the guidelines are ill-conceived and draconian.

During the second half of 2023, the trade launched a very fierce marketing campaign to kill proposed capital hikes. That proposal, often known as “Basel III endgame,” would apply to banks with property over $100 billion, and “capital” or “Basel” function incessantly in banks’ lobbying disclosures.

The variety of lobbyists for the most important eight U.S. banks stood at 191 on the finish of 2023 and that class has largely stagnated for the reason that monetary disaster.

Daniel Auble, senior researcher at OpenSecrets, mentioned coverage considerations have been typically not the one cause for lobbying exercise to rise, however they appeared “a likely culprit” on this case, provided that the banks in query incessantly cited capital points of their lobbying disclosures.

The lobbying spend for all banks and commerce organizations analyzed by Reuters was $84.6 million in 2023, essentially the most since 2015, though cumulative inflation erases these features.

While the evaluation solely goes way back to 2008, the 2023 lobbyist determine is probably going an all-time file since bank lobbying exploded simply after the disaster as banks pushed arduous to form a flood of post-crisis guidelines, mentioned Camden Fine, a former chief of the highest Washington foyer group the Independent Community Bankers (NASDAQ:) of America.

The COVID-19 pandemic remodeled a variety of in-person lobbying to distant conferences that obviate the necessity for costly journey and hospitality, that means headcounts can rise sooner than spending, mentioned Fine, who now runs consultancy Calvert Advisors.

While the Big Eight are influential in Washington thanks to their measurement, deep pockets and high-profile CEOs, different banks could have to work tougher to be heard, which can clarify the diverging tendencies, he mentioned.

“The big banks always have a seat at the table,” he mentioned.

Banks say lobbying helps educate policymakers to draft higher guidelines, however critics say they’re attempting to rig the system.

“We just had some of the biggest bank failures in American history and it’s critical that we don’t let the bank lobby water down important prudential rules that will protect consumers,” Democratic Senator Elizabeth Warren, a long-time advocate of harder bank guidelines, instructed Reuters in a press release.

STAND OUT SPENDING

Between 2021 and 2023, TD Bank went from having a single registered lobbyist to 20, participating consultancies whose members beforehand labored in Congress. TD disclosed that it lobbied on Basel in each quarter of 2022 and 2023.

Capital One reported 30 lobbyists on the finish of 2023, practically twice as many because it had in 2016. Truist additionally bumped its ranks from 12 to 20 lobbyists between 2021 and 2023.

TD mentioned it had two in-house lobbyists and used two outdoors corporations. “These two outside contracts are very modest and do not represent a material change in TD’s aggregate lobbying activities at the federal level,” the bank mentioned in a press release.

Truist declined to remark whereas Capital One didn’t reply to requests for remark.

While general lobbying expenditures haven’t saved tempo with inflation in recent times, some particular person lenders stood out in 2023.

Regions Financial (NYSE:) hit a post-crisis high of $1.8 million, Citizens Financial (NYSE:) doubled its outlay in 2023 to $1.4 million, additionally a post-crisis high, and Huntington spent essentially the most in eight years at $483,000.

Representatives of Citizens and Huntington declined to remark. Regions didn’t reply to an electronic mail searching for remark.

Among all banks, Citigroup was the largest spender for the third yr in a row, laying out $5 million on lobbying in 2023, whereas the Bank Policy Institute (BPI), a commerce group chaired by JPMorgan chief Jamie Dimon, which has been on the forefront of the Basel pushback, spent $3.4 million in 2023, an 80% annual improve.

BPI declined to remark.

“Our advocacy works to advance and protect Citi’s global business interests given the significant potential impact of public policy on our business, employees, communities and customers,” a Citi spokesperson mentioned.

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