Banking Industry Lobbyists Fear Wall Street Reform

In recent months, House Minority Leader John Boehner (R-OH) and Senator Minority leader Mitch McConnell (R-KY) have met with Wall Street executives to craft the Republican Party's strategy on undermining and ultimately defeating Wall Street reform.  Their approach has largely relied on casting the much-needed overhaul of the nation's financial regulatory system as a generous giveaway to Wall Street. As Paul Krugman put it, the strategy is quite "possibly the most dishonest argument ever made in the history of politics."

If reform is indeed a favor to Wall Street, as the Republicans have been arguing, then you would expect lobbyists for the industry to enthusiastically support the bill.  But that's not happening.  According to the Washington Post, "lobbyists who represent some of the nation's biggest banks are feeling on edge."

They were counting on Senate committee hearings and backroom negotiations among key lawmakers to remove or soften what the financial industry considers most objectionable in the bill. That hasn't happened. And now, as early as Tuesday, the Senate will begin to consider populist amendments that spell even more heartburn for the banks.

"You've got an environment, six months before an election, where politicians are acting like politicians," said Sam Geduldig, a financial lobbyist and former Republican staffer. "They are viewing any vote as a potential campaign ad. And that might not be good for any of us."

The legislation before the Senate, which seeks to address the causes of the financial crisis, could force big banks to spin off their highly lucrative derivatives operations, jettison their hedge funds and come under the watch of a new consumer regulator.