Dog Bites Man

Bankers are lobbying against financial regulation:   

Bankers lobby against financial regulatory overhaul, by Brady Dennis and Steven Mufson, Washington Post:

If not for the sea of navy business suits and the hotel ballroom’s chandeliers, the gathering Wednesday morning might have seemed more like a pep rally than a meeting of the American Bankers Association. But the 900 bankers were preparing to storm Capitol Hill, and they were getting revved up.

“We have a lot of work cut out for us,” David Bochnowski, an Indiana bank executive, said to the troops… “Our job is to have an impact on the Hill. Are we going to have that impact?”

“Yeah!” the bankers shouted, as applause broke out. …

Michigan banker Art Johnson told his peers… “All of us know what’s at stake. It’s really about our industry’s future . . . We’re not going to sit silently while we are blamed for problems that were caused by others.”

And then came the blessing of a leading lawmaker. “You’re all going to be lobbyists today,” House Minority Leader John A. Boehner (R-Ohio), told the crowd. “I know that’s a dirty word, but that’s what you’re doing.” He told the bankers not to be afraid to stand up to members of Congress or “these little punk staffers,” as he called them. …

The bankers soon headed to Capitol Hill, talking points in hand — white folder for House visits, blue folder for Senate visits. …

Lawrence Summers, a top economic adviser to President Obama, said Thursday in response to Boehner, that at “a time when industry has spent $1 million on lobbyists per member of Congress, at a moment when there are four lobbyists per member of the House and Senate working this issue, we at the administration do not believe that the prominent issue is allowing bankers to stand up for

themselves.” …

Dodd said Thursday that “there’s nothing evil” about people expressing their concerns about the bill… Still, Dodd acknowledged he would have to change the current bill. “You hold on as much as you can to what you believe in,” Dodd said. “I’m a chairman, and I’m one vote. But I want to get as strong a bill as I can.”

Punk staffers?

We shouldn’t worry when firms are against regulation of their industry, the time to worry is when industry does not oppose or even supports new regulation. Why? One reason is that this can be a sign of regulatory capture. For example, a firm could quietly lobby for (or not oppose) legislation that requires new firms to have their labs certified, where the standards for certification are relatively strict. If the incumbent firm already satisfies this standard, the regulation costs them nothing, but it imposes additional certification costs on start-ups and makes it harder for them to enter the industry.

When firms oppose legislation, they sometimes have good reasons so we should at least listen, but the mere fact that firms in an industry oppose legislation doesn’t say much about the merits of the proposal.

Originally published at Economist’s View and reproduced here with the author’s permission.
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