Lobbyists swarm capital, weaken rules

May 24, 2010 at 12:00a.m.

Associated Press

Lobbyists swarmed Capitol Hill as Congress debated the most sweeping overhaul to financial rules since the Great Depression. They pushed loopholes and gaps that weaken the rules and could make them less likely to prevent future crises.

Here’s a look at some loopholes and the lobbyists behind them:

The loophole: A new consumer-protection agency is supposed to police consumer financial products, regardless of who offers them. But in the House bill, auto dealers that make loans to consumers are exempt from its oversight. It’s unclear whether the provision will survive when the House and Senate reconcile their versions.

The lobby: The National Automobile Dealers Association said auto dealers already are overseen by the Federal Trade Commission. Forcing them to follow a new set of rules would hurt them financially, it argued.

The money: The NADA spent $2.4 million lobbying on issues including the consumer agency in the nine months that ended March 31.

The loophole: Companies other than banks don’t have to make their trading of derivatives more transparent. Derivatives are complex investments that helped fuel the financial crisis.

The lobby: Groups led by the U.S. Chamber of Commerce and the Business Roundtable said derivatives help companies reduce their exposure to risks such as swings in commodity prices. They said the new rules would be too costly for companies other than banks.

The money: The two trade groups spent $141.9 million to influence Congress, regulators and the White House on issues including the financial overhaul in the nine months that ended March 31. Of that amount, $131.5 million went to lobbyists who dealt with derivatives.

The loophole: The rules are supposed to end “regulator-shopping.” That occurred when banks chose to be overseen by an agency with the loosest regulation. But the new rules apply only to multistate national banks. Smaller banks aren’t affected.

The lobby: Community banks are represented by the Independent Community Bankers of America and the American Bankers Association.

The money: In the nine months that ended March 31, the two groups spent $6.3 million to lobby on issues including the financial overhaul.

Source: Public lobbying disclosures