Financial Industry Spends Big As Obama Pushes for Regulatory Reform

On the one-year anniversary of the collapse of Lehman Brothers, President Obama’s proposed overhaul of financial regulations faces fierce opposition from the securities and investment industry, which is spending furiously on lobbying Congress and on campaign contributions.

For the first six months of 2009, the financial industry spent $42 million lobbying Congress, as Obama pushes for reforms that would better monitor the financial system and the products that banks and other institutions sell to consumers with the goal of avoiding future economic meltdowns like the one that plunged the United States deep into recession.

The most vocal opposition to financial regulation reform is the U.S. Chamber of Commerce, which has focused specifically on a proposed Consumer Financial Products Agency (CFPA) meant to oversee financial products such as subprime mortgages.

Like health care or climate change, reform of the financial system in the wake of the economic meltdown is defined largely by a single proposal that is fiercely opposed by industry. National polls have demonstrated widespread support for better regulation of financial products after the explosion of risky subprime mortgages bankrupt Lehman Brothers and nearly brought down the entire banking system. As President Obama delivers his address today, the industry is spending an average of more than $250,000 a day in lobbying and advertising to kill the proposed Consumer Financial Products Agency and other reforms.

“Practically every proposal in the President’s reform agenda – from health care to climate change to financial regulation – is under attack from industries that are pouring money into campaign contributions, lobbying and advertising campaigns,” said Common Cause President Bob Edgar. “Great speeches are no match for the bottomless pockets of big corporations looking to kill reform legislation.”

In addition to lobbying and advertising, the securities and investment industry has given more than $14 million in campaign contributions this year, on top of the $156 million it gave during the last election cycle, according to data from the Center for Responsive Politics. Because the Democrats control Congress, nine of the top ten recipients of securities money so far this year are Democrats:

Candidate

Amount

Schumer, Charles E (D-NY)

$678,700

Gillibrand, Kirsten (D-NY)

$347,600

Reid, Harry (D-NV)

$336,450

Dodd, Chris (D-CT)

$209,112

Murphy, Scott (D-NY)

$155,050

Bennet, Michael F (D-CO)

$143,655

Himes, Jim (D-CT)

$139,386

Dorgan, Byron L (D-ND)

$118,250

Wyden, Ron (D-OR)

$105,400

Cantor, Eric (R-VA)

$98,100

Source: Center for Responsive Politics (www.opensecrets.org)

Any industry may soon also be able to spend similar amounts on advertising campaigns in support of specific candidates who support their position, as the U.S. Supreme Court is considering striking down restrictions on direct political advocacy by corporations. The Supreme Court will likely issue a ruling this year in Citizens United v. Federal Elections Commission on whether industries are allowed to spend unlimited amounts on candidates like they do on specific issues.

“We are going in the wrong direction lifting limits on corporate spending,” said Edgar. “President Obama came into power with a mandate for reform, but it seems corporate industries can fight back almost any public desire for change by spending enough money on lobbying and campaign contributions.”

Common Cause continues to work to pass the Fair Elections Now Act (H.R. 1826 / S.752) as the comprehensive solution to the pay-to-play culture in Washington, DC, which would create a citizen-funded election system for Congress in which candidates could run for office on a blend of small donations and public funds.