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US bank lobbyists ranks swell to post-crisis high amid regulatory pushback

[February 08, 2024] By Douglas Gillison

(Reuters) - The number of big bank Washington lobbyists is the highest since the 2007-09 global financial crisis, driven by hiring among midsize lenders which are facing new rules and tougher oversight after last year's turbulence, new lobbying data shows.

At the end of 2023, 486 federal lobbyists were working on behalf of banks with $50 billion or more in assets and seven trade groups, according to a Reuters analysis of data provided by OpenSecrets, a nonpartisan political transparency group. That was a 3.4% bump on 2022 when the industry's lobbying ranks swelled to their highest level of any year since 2008, the data shows.

Reuters analyzed OpenSecrets figures for 2008 to 2023, finding the most recent numbers were the highest for all years during that period. The headcount includes registered individual lobbyists working for the banks and for outside firms the banks and trade associations hire.

Over the past six years, growth in the bank lobby's ranks has been largely driven by lenders with more than $100 billion in assets who are not among the eight Wall Street giants, such as Capital One, TD Bank and Truist.

This group of 23 banks had 255 registered lobbyists in 2023, which represents an 11% increase over 2022 and was also the highest since 2008.

The gains coincide with midsize lenders' expanding list of policy concerns as President Joe Biden's financial regulators have rolled out a raft of proposals cracking down on fair lending abuses, transaction fees, as well as capital hikes, which will dent profits.

Regulators say the rules aim to clamp down on longstanding unfair practices that hurt consumers, while capital hikes will make the financial system safer and are much-needed after three lenders failed last year. Banks say many of the rules are ill-conceived and draconian.

During the second half of 2023, the industry launched a particularly fierce campaign to kill proposed capital hikes. That proposal, known as "Basel III endgame," would apply to banks with assets over $100 billion, and "capital" or "Basel" feature frequently in banks' lobbying disclosures.

The number of lobbyists for the largest eight U.S. banks stood at 191 at the end of 2023 and that category has largely stagnated since the financial crisis.

Daniel Auble, senior researcher at OpenSecrets, said policy concerns were in general not the only reason for lobbying activity to rise, but they seemed "a likely culprit" in this case, given that the banks in question frequently cited capital issues in their lobbying disclosures.

The lobbying spend for all banks and trade organizations analyzed by Reuters was $84.6 million in 2023, the most since 2015, although cumulative inflation erases those gains.

While the analysis only goes as far back as 2008, the 2023 lobbyist figure is likely an all-time record since bank lobbying exploded just after the crisis as banks pushed hard to shape a flood of post-crisis rules, said Camden Fine, a former chief of the top Washington lobby group the Independent Community Bankers of America.

The COVID-19 pandemic transformed a lot of in-person lobbying to remote meetings that obviate the need for expensive travel and hospitality, meaning headcounts can rise faster than spending, said Fine, who now runs consultancy Calvert Advisors.

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A view of the exterior of the Citibank corporate headquarters in New York, New York, U.S. May 20, 2015. REUTERS/Mike Segar/File Photo

While the Big Eight are influential in Washington thanks to their size, deep pockets and high-profile CEOs, other banks may have to work harder to be heard, which may explain the diverging trends, he said.

"The big banks always have a seat at the table," he said.

Banks say lobbying helps educate policymakers to draft better rules, but critics say they are trying to rig the system.

"We just had some of the biggest bank failures in American history and it's critical that we don't let the bank lobby water down important prudential rules that will protect consumers," Democratic Senator Elizabeth Warren, a long-time advocate of tougher bank rules, told Reuters in a statement.

STAND OUT SPENDING

Between 2021 and 2023, TD Bank went from having a single registered lobbyist to 20, engaging consultancies whose members previously worked in Congress. TD disclosed that it lobbied on Basel in every quarter of 2022 and 2023.

Capital One reported 30 lobbyists at the end of 2023, nearly twice as many as it had in 2016. Truist also bumped its ranks from 12 to 20 lobbyists between 2021 and 2023.

TD said it had two in-house lobbyists and used two outside firms. "These two outside contracts are very modest and do not represent a material change in TD's aggregate lobbying activities at the federal level," the bank said in a statement.

Truist declined to comment while Capital One did not respond to requests for comment.

While overall lobbying expenditures have not kept pace with inflation in recent years, some individual lenders stood out in 2023.

Regions Financial hit a post-crisis high of $1.8 million, Citizens Financial doubled its outlay in 2023 to $1.4 million, also a post-crisis high, and Huntington spent the most in eight years at $483,000.

Representatives of Citizens and Huntington declined to comment. Regions did not respond to an email seeking comment.

Among all banks, Citigroup was the biggest spender for the third year in a row, laying out $5 million on lobbying in 2023, while the Bank Policy Institute (BPI), a trade organization chaired by JPMorgan chief Jamie Dimon, which has been at the forefront of the Basel pushback, spent $3.4 million in 2023, an 80% annual increase.

BPI declined to comment.

"Our advocacy works to advance and protect Citi's global business interests given the significant potential impact of public policy on our business, employees, communities and customers," a Citi spokesperson said.

(Reporting by Douglas Gillison; Editing by Michelle Price and Aurora Ellis)

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