In his Thursday speech at Cooper Union college, just a few blocks from Wall Street, the president cited “battalions of financial industry lobbyists descending on Capitol Hill, firms spending millions to influence the outcome of this debate.”
Special interest lobbying and campaign money that come pouring down on Congress in advance of significant legislation should concern Americans.
At the least, it gives the appearance of undue influence on lawmakers and the law. That shakes public confidence in the integrity of Congress and what it does – as if that trust could be shaken much further. (The public holds unfavorable views of both Wall Street and Congress, but it thinks worse of Congress.)
Six major banks, including Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Morgan Stanley, spent a total of $6.9 million on lobbying in the first quarter of this year. That’s up by a third compared with the same time last year. Goldman Sachs increased its lobbying by more than 70 percent since the same period a year ago. The company is under investigation by the Securities and Exchange Commission for alleged investor fraud.
Wall Street seeks out lawmakers, and lawmakers seek out Wall Street. In recent months, politicians from both parties have raised hundreds of thousands of dollars in campaign contributions from big banks and investment companies. The fundraisers provide access to key politicians working on legislation that directly affects the finance industry.
Despite increased fundraising transparency and tougher ethics rules, it can still be difficult to trace direct influence because you can’t hear what Lobbyist X has said to Lawmaker Y, or the deal they may have brokered.
Democratic Senate majority leader Harry Reid has complained about just this thing. He criticized Senate minority leader Mitch McConnell and Sen. John Cornyn, chairman of the National Republican Senatorial Committee, for holding “backroom negotiations” with Wall Street executives earlier in April to discuss the financial-reform bill.
President Obama ran with the criticism: “Lo and behold, when he returned to Washington, the Senate Republican leader came out against the common-sense reforms we’ve proposed.”
Republicans shot back at Senator Reid for holding a recent fundraiser in New York City that was set up by Goldman Sachs president Gary Cohn, a Democrat. And they point out that employees at Goldman Sachs donated nearly $1 million to Obama for his 2008 presidential campaign.
The money and favor relationship between special interests and lawmakers could get even cozier now that the Supreme Court has ruled that corporations may spend directly on campaign ads. That means watchdogs, including the media, must be extra vigilant – watching policy outcomes in addition to money inputs.
And what results have been observed so far? Despite the industry’s influence, lawmakers are up against an angry, anti-Wall Street mood in this election year. No wonder the Senate majority leader now suggests that Democrats and Republicans can work out a compromise on financial reform.
A bigger force than even Wall Street’s millions of campaign dollars are the millions of votes at stake in this fall’s elections. A majority of Americans backs legislation to increase federal oversight of the financial sector. It’s encouraging to know that voters still have that kind of leverage.