A Bought-Off, Shamelessly Corrupt US House of Representatives Set to Pass Bank-Written Deregulatory Legislation

A must-read and grimly amusing piece:

WASHINGTON –– To Wall Street, this town might seem like enemy territory. But even as federal regulators and prosecutors extract multibillion-dollar penalties from the nation’s biggest banks, Wall Street can rely on at least one ally here: the House of Representatives. The House is scheduled to vote on two bills this week that would undercut new financial regulations and hand Wall Street a victory. The legislation has garnered broad bipartisan support in the House, even after lawmakers learned that Citigroup lobbyists helped write one of the bills, which would exempt a wide array of derivatives trading from new regulation. The bills are part of a broader campaign in the House, among Republicans and business-friendly Democrats, to roll back elements of the 2010 Dodd-Frank Act, the most comprehensive regulatory overhaul since the Depression. Of 10 recent bills that alter Dodd-Frank or other financial regulation, six have passed the House this year. This week, if the House approves Citigroup’s legislation and another bill that would delay heightened standards for firms that offer investment advice to retirees, the tally would rise to eight.

Both the Treasury Department and consumer groups have urged lawmakers to reject the bills, warning that they could leave the nation vulnerable again to excessive financial risk taking. The House proposals stand little chance of becoming law, having received a much chillier reception in the Senate and at the White House, which on Monday threatened to veto the bill on investment advice for retirees.

But simply voting on the bills generates benefits for both House lawmakers and Wall Street lobbyists, critics say. For lawmakers, it comes in the form of hundreds of thousands of dollars in campaign contributions. The banks, meanwhile, welcome the bills as a warning to regulatory agencies that they should tread carefully when drawing up new rules.

In other corners of the nation’s capital, Wall Street has received a decidedly less cordial reception. The Justice Department recently struck a tentative $13 billion settlement with JPMorgan Chase over the bank’s mortgage practices. Federal regulators are also increasingly demanding that JPMorgan and other financial firms admit to wrongdoing when settling enforcement actions.

“The House is the odd man out in terms of doing Wall Street’s bidding,” said Marcus Stanley, policy director of Americans for Financial Reform, a nonprofit group critical of the financial industry. “They’re letting Wall Street write the law to its own benefit in ways that harm the public.” The lawmakers who support the bills say the legislation is good for the nation, not just the bank’s bottom lines.

Still, in the case of the derivatives trading bill, Citigroup’s lobbyists redrafted the proposal, striking out certain phrases and inserting others, according to documents reviewed by The New York Times. The House Financial Services Committee, a magnet for Wall Street campaign donations, adopted the bank’s recommendations in 2012 and again this May.

Wall Street’s support from the House extends beyond favorable votes. When bank executives are called to testify before Congress, industry lobbyists distribute proposed questions to lawmakers and their staff, seeking to exert some control over the debate, according to emails written by staff members on the House Financial Services Committee that were reviewed by The Times.

One House aide, in an email exchange among House Financial Services staff members last year, warned that lawmakers should not mimic the talking points from lobbyists.
“I know that some of our members are inclined to whore, but we cannot be apes,” the Republican aide said.