Top banks lobbying received larger rescue plan

NEW YORK - more aggressively pressure before the financial crisis the worst Bank loans made during the economic recession - and rescue dollars more it received, according to a study published this week by the National Bureau of Economic Research.

The report, entitled "A Fistful of Dollars: Lobbying and the financial crisis," said that banks lobbying efforts may be motivated by short-term profit gains, which can have devastating effects on the economy.

"Overall, our results indicate that the political influence of the financial industry played a role in the accumulation of risks and therefore contributed to the financial crisis," said the report, drafted by three economists of the Monetary Fund International.

The data collected by the three authors - Deniz Zaagi'igan, Prachi Mishra and Thierry Tressel - show that the more aggressive lobbiers in the financial industry from 2000 to 2007, has also made more toxic mortgages. They securitized most of the debt for real estate investors and their stock prices more closely correlated to the recession and lending plan rescue that followed.

Loans banks has also suffered from crime higher during the recession.

What economists could not definitively determine was the motivation of the banks of lobbying. If the banks were looking to generate income at the expense of the company, it would be logical to restrict their lobbying.

If the banks were especially concerned of profit in the short term and not think do not long term consequences, then Executive compensation practices should be modified, said the report. And if the banks just wish to inform legislators and were too optimistic about their future, it would be more difficult to propose reforms.

BIG LOBBYING, OF WHOLESALE RESCUE PLANS

When the bubble burst, the banks that spend more on lobbying received "a large piece of the cake" in the rescue plan of 700 billion dollars in the fall of 2008.

For example, the report cites Citigroup Inc. (c.n.r.) $ 3 million to lobby against HR-1051 predatory loan Consumer Protection Act of 2001 and the Bank of America Corp. (BAC).(N) spending $ 1 million to put pressure on housing and banking issues.

HR-1051 never signed into law, nor was 93% of all invoices for the promotion of more stringent regulations from 1999 to 2006. However, two bills that significantly reduces the restrictions on the mortgage market is in force, access to property American and Economic Opportunity Act of 2000 and the Act on the implementation of the American Dream Fund, 2003.

Citigroup and Bank of America each finally receive 45 billion of the rescue plan Fund, JPMorgan Chase & Co (JPM).(N), Wells Fargo & Co (WFC).(N) or other large commercial banks.

Now that Frank Dodd financial reform bill has passed, the big banks have been aggressively lobbying against them, are too severe restrictions. Among the top items on the agenda of the industry's lobbying are stronger capital regulation, but also a Bureau of financial Protection, new rules on derivatives trade and restrictions on the exchange of exclusive rights.

In an interview with Reuters Thursday, Zaagi'igan counterparts of the Federal Reserve Board expressed concern that "certain concepts would get watered down in the process because the financial industry is pressure against them."

On Tuesday, the House Financial Services Committee voted to delay the implementation of the reform of derivatives of 18 months. Although few expect such a measure to clear the Senate and be signed by the President, some Wall Street executives are pressing for slower rulemaking.

At a demonstration Tuesday, Morgan Stanley (MS)(N) CEO James Gorman, warned that implementation of reforms could too hastily "" tip the world's economies into recession. ""

Economists report describes the negative impacts of the lobbying of the Bank, but Zaagi'igan stated that this time, Wall Street's interests can be aligned with the whole of the economy - if by chance.

She said Bank lobbying is "not bad" and current activities can act as counterweight to tilt after the crisis of the regulators to keep banks left tight.