HOW THE BANK LOBBY OWNS WASHINGTON

[EXCERPTS FROM A RECENT ARTICLE]

When Washington puts policy on the auction block, bankers are consistently the highest bidders.

The industry's most striking victory has been the watering down of post-financial crisis reforms, to the point that banks are now bigger than ever and the bonuses keep flowing. But Wall Street's campaign spending and lobbying power is so intimidating that banks have repeatedly stuck the public with the tab for their losses and no one in Washington stops them.

Why hasn't the government done something about outrageous ATM fees? Or credit card interest rates up to 30 percent? Bankers' clout is such that common-sense pro-consumer legislation is presumptively dead on arrival at Capitol Hill if it threatens banks' revenue streams.

An epic recent battle between consumers and Wall Street was fought over a congressional proposal to give bankruptcy judges the legal authority to modify principal balances on mortgages in a way that is fair to both parties. Known as "cramdown," it would have allowed more than a million ordinary Americans to keep their homes. But because it would have leveled the playing field between banks and debtors -- and would have forced banks to officially recognize losses they don't want to acknowledge -- the financial services industry fought cramdown with everything it had.

In May 2009, toward the end of his futile battle for cramdown, Sen. Dick Durbin (D-Ill.) famously told a radio host, "And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."

Consider the numbers: The finance, insurance and real estate (FIRE) sector combined to spend $6.8 billion on federal lobbying and campaign contributions from 1998 through 2011, according to the Center for Responsive Politics' examination of public records. That's $1 billion more than any other sector spent on Washington.

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Big banks' undisclosed contributions also underwrite powerful trade groups like the American Bankers Association, the U.S. Chamber of Commerce and the Business Roundtable.

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When in need, the banks can call on the firepower of former Senate leaders like Phil Gramm, Trent Lott and Bob Dole and former House leaders like Dennis Hastert, Dick Armey and Dick Gephardt.

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But in the Senate, thanks to ferocious bank lobbying -- and a puzzling lack of support, if not outright opposition, from the Obama administration -- it was defeated by a wide margin, with the bill falling 15 votes short of the 60 needed to cut off debate and move to a final vote.

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"When the voters speak, some elected officials listen. So I hope that, if we fail on mortgage foreclosure and we fail on credit card reform, I hope that people in this country will stand up and say to Congress, 'You've got the wrong friends.'"

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