Links
US banks send in the lobbyists to blunt reform
Wall Street's biggest banks are engaged in the legislative equivalent of house-to-house fighting as the final provisions of the US financial reform bill are decided in Congress.
With lawmakers working to tie up the most sweeping reform of banking since the Great Depression by the end of this month, billions of dollars are at stake in almost every line of the legislation, and lobbyists for the industry are still confident of securing the defeat of some of the harshest provisions under discussion.
In particular, they are focusing on getting Congress to drop a provision that would force banks to sell off their lucrative derivatives trading businesses–but the industry is resigned to accepting a quid pro quo, namely new curbs on their ability to conduct proprietary trading.
Analysts at Citigroup yesterday estimated that up to 11 percent of Wall Street's profits are at risk from the reforms, which are designed to make the financial system safer and avoid a repeat of the credit crisis. Worst hit would be Goldman Sachs, which could lose 23 percent of its earnings.
The US Senate passed its version of a financial reform bill on 21 May, five months after the lower House of Representatives passed its own bill, and the pair now have to be married together before legislation is presented for the presidential signature–by a tentative deadline of 4 July.
Between now and then, senior politicians from both Houses and from both parties are going line by line through the legislation. This conference process began last Thursday and Wall Street has already succeeded in winning some minor victories, but the biggest fight–over exactly which bits of their business banks will be forced to exit–will come towards the end of the discussion.