Big Banks Reshape Lobbying Game

By Lalita Clozel 

Big banks are revamping their lobbying approach as Trump-appointed regulators set out to ease rules put in place after the financial crisis.

On Monday, two trade groups representing some of the largest banks, including JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc., will join forces to seek regulatory relief for an industry that remains tainted by the 2008 crash and more recent sales-practice scandals at Wells Fargo & Co.

The new Bank Policy Institute -- merging the Clearing House and Financial Services Roundtable -- will represent 48 of the largest banks, a group that notched a limited win in the banking bill signed by President Donald Trump in May, which was more focused on regulatory relief for medium to small banks.

"The safety and soundness of banks can be maintained while fostering an ability to drive growth in all sectors of the economy," said SunTrust Chief Executive William Rogers Jr. "We want to make that statement in the strongest way possible."

Big banks, which have largely accepted the postcrisis order put in place by the 2010 Dodd-Frank financial law, aren't asking for a wholesale rollback of the regulatory regime.

Instead, they are working to influence the paring down of those rules by a set of receptive regulators.

"Postcrisis regulation wasn't built in a day," said Greg Baer, the group's CEO. "I don't think a thoughtful reconsideration of it can take place in a day."

The new lobbying group will crank out studies and nitty-gritty regulatory analysis in its efforts to influence policy makers. It will also seek to expand its focus beyond the U.S., convening chief executives of major international banks twice a year to discuss global regulatory coordination issues.

Across the street from the Bank Policy Institute in downtown Washington, a smaller organization called the Financial Services Forum, which represents eight Wall Street powerhouses, is also shaking off the cobwebs and staffing up. In April, it hired Sean Campbell, a former high-ranking Fed economist, to lead its policy research.

The forum will "ensure that these largest institutions have a voice in the policy space that ensures that its views are properly represented," said its president and CEO Kevin Fromer, a former Treasury official under President George W. Bush.

The lobbying push is up against a drumbeat of criticism the industry continues to receive from politicians such as Sen. Elizabeth Warren (D., Mass.), who argue that easing regulation could increase financial risk at a time when the industry is already posting record profits.

"There still is a hangover with some parts of the public from the financial crisis and there still is a hangover politically," said Edward Yingling, the former head of the American Bankers Association.

The new lobbying apparatus, an effort to cut redundancies among bank trade groups, will also have to manage competing interests between its members especially at the granular level of detail that characterizes rulemaking.

In separate June letters to the Federal Reserve, Bank of America and JPMorgan openly disagreed on how the central bank should calculate a key capital requirement.

JPMorgan, Citigroup, Bank of America and Wells Fargo will carry more weight than the other members, holding permanent seats on the rotating 17-member Bank Policy Institute board.

"While there's a large degree of commonalities between banks," Mr. Baer said, "How regulations get calibrated may mean one bank gets a better deal than another."

Write to Lalita Clozel at [e-mail]

(END) Dow Jones Newswires

July 16, 2018 05:44 ET (09:44 GMT)

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