The old, reliable narrative when it comes to Wall Street and Washington has always been something like this: Wall Street banks spend a gazillion dollars lobbying Washington and as a result they get whatever they want from lawmakers.
That narrative is looking a little flawed these days for a few reasons. First, it's nowhere near a gazillion dollars, nor has it ever been. Last year, lobbyist spending by finance, insurance and real-estate companies peaked at $498 million, according to the Center for Responsive Politics. Through October of this year, it was $352 million.
Granted that is a lot relative to other industries:
But within the sector, it's not the banks that are spending the most:
And on a firm-by-firm basis, the amount each company spends seems trivial in terms of Wall Street-style money. Like, not even the kind of dough that would keep a single star trader from jumping to the buy side:
Of course, for obvious reasons, firms likely do not want to be at the top of this particular league table. And there are plenty of other off-the-books ways to spread money around the Beltway, not the least of which is investing in what Sheila Bair calls "cognitive capture" by greasing the axle of the revolving door between government and the financial industry.
But the other flaw with that old narrative is that those Beltway dollars aren't providing the return on investment they once did, now that we've entered the age of the outsider candidate.
Congress is preparing to go home for the holidays without dishing out many presents to its old pal Wall Street, as Bloomberg's Robert Schmidt, Cheyenne Hopkins and Jesse Hamilton reported Thursday. In fact, lawmakers even Grinched banks out of the $7 billion in annual dividends they were due for holding stock in regional Federal Reserve banks. And for what? Road work? What about the potholes in Wall Street P&L statements this year?
It's clear banking lobbyists have become the Rodney Dangerfield of the Beltway: They don't get no respect.
As described in the Bloomberg article:
Virtually nothing on the banking wish list, which included preventing the Labor Department from imposing tough rules on brokers and winning relief for mid-size lenders from extra Federal Reserve oversight, was included in the $1.1 trillion spending bill released Wednesday.
Banks have only themselves to blame for the Beltway impotence because of their willingness to mostly avoid confrontation with the government as it collected more than $100 billion in penalties in the aftermath of the financial crisis, according to Rafferty Capital Markets analyst Richard Bove.
"It appears that the efforts of the bank lobbyists have failed to meet with any success," Bove wrote in a note to clients. "The stunning failure to impact the current budget bill is another indication that banking industry’s approach has failed to make any impact on legislators."
Some in the industry sound as if they're just taking their ball and going home. SunTrust reportedly canceled an upscale annual holiday party sponsored by a coalition of regional banks at its historic branch near the Treasury Department. The other banks scrambled to find a replacement venue in the city's baseball stadium -- but instead of fancy banker food, the D.C. denizens who attended had to settle for hot dogs and hamburgers.
With an election year coming up, and campaign-trail rhetoric that makes you wonder if the whole Street will end up Gitmo, the financial industry is faced with two options: double down on lobbying efforts or take their ball and go home until Congress finds a new tackling dummy. Based on this year's results, the latter seems like a better route to take. Let Congress eat hot dogs.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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