Wall Street’s famed army of lobbyists does not seem to have had much success pushing back on the regulatory overhaul bills now being considered by the U.S. Congress.
The Street remains perilously isolated in Washington, deserted even by its normal friends. As a result it has little influence over the course of bills that will have a significant impact reshaping the industry over the next few years and risks being steamrollered.
Isolation is the result of a basic miscalculation about how angry voters are about the financial crisis and its aftermath in terms of lost jobs and income.
Voters may be angry with the government and Congress (as evidenced by the passions stirred in the healthcare debate, sagging ratings for legislators in both parties, and a string of election defeats for Democrats at state and national level). But they are even angrier with banks they blame for sparking the crisis in the first place.
In this environment, the industry’s lobbying strategy has been high-risk. By pushing back on so many fronts (from the proposed consumer protection agency to the Volcker Rule and derivatives clearing) it has sometimes seemed to be arguing in favour of the (discredited) status quo. Industry lobbyists may have overplayed their hand.