I have long been a critic of the financial industry not being as smart as advertised. I believe the chief cause of the recession cutting so deep has more to do with stupidity than fraud, or even negligence. As a result, a Wall Street Journal article today about how the financial sector is cutting down on its lobbying efforts should not have surprised me. And yet, it still did.
According to the WSJ:
Wall Street's spending on efforts to influence policy making diminished at the start of this year as the image of financial institutions has suffered with lawmakers and the public. Some of the sector's major advocate groups lost funding and staff. Their spending declined just as the administration was hammering out its proposal for the biggest reorganization of financial-market oversight since the 1930s, details of which the White House released last month.
As I just mentioned, one of the biggest risks businesses face these days is political risk. Unfortunately, lobbying is one of the most effective ways to offset that risk. Wall Street needs to quickly recognize that if it hopes for its business to resemble anything close to what it did over the past few decades.
The block quote above notes the kind of specific, targeted lawmaking aimed at banks. Here's how they respond:
(This graph appears alongside the Wall Street Journal Article, in nifty interactive format, unlike my measly pasted version.)
Sure, they're ramping up a little since Q4. But come on guys. Cut some fat on the trading floor and hire some more lobbyists. The returns in a political climate like this one produced through lobbying will far outweigh financial returns in a sluggish economy.
Don't get me wrong: I hate lobbying. I think it's already way excessive and stunts our overall economic growth. If that money was invested in the private sector instead of to persuade Washington, we'd all be a lot better off. But from a business standpoint, firms -- especially in the financial sector -- cannot afford to only have Washington in their peripheral vision. Just ask GE.
The stupidity comes not from kissing serious political arse, but from blatantly spitting in the face of those politicians that are their staunchest critics.
Most recently, Citi raising credit card rates/fees on what, 15 million cardholders right before new legislation is passed restricting such practices?
Methinks Maxine Waters won't be too happy with that move...
MR. Indiviglio: WHO IS YOUR CEO?!?!?!
You contradict yourself methinks. You lobby for more lobbying, but call for stunting overall economic growth?
Listen to yourself.
I'm saying that I, personally, hate lobbying. But it's just stupid for business today not to ramp up its efforts. Businesses, unfortunately, have no choice but to play the politics game to get ahead as government continues to expand. I don't have to like it, but I can't ignore reality.
It seems strange to argue that lobbyists working on the behalf of firms who have received government bailouts should be using that money to influence the government. I believe most taxpayers would agree that their money shouldn't be recycled in such a way (even if this is over-simplifying the transaction). Moreover, if current economic woes can be attributed to too little government regulation, with the previous era of economic prosperity turning out to have been a mirage, these lobbyists should be the last people that the government is listening to.
http://www.enewse.com/
It looks more to me like me of the biggest lobbyist went out of business or where taken over by the government.
Bear, Lehman, Merrill, Fannie and Freddie all went to zero. AIG was greatly reduced.
However, Wells , BofA, Citi and "all other" look like they are either roughly where they were this time last year of higher.