White House Urges Blankfein, Dimon to Stop Bill Fight

April 14, 2010

Bloomberg

Julianna Goldman and Alison Vekshin

Top White House officials last week pressed the chief executive officers of Goldman Sachs Group Inc., Bank of America Corp. and JPMorgan Chase & Co. to stop lobbying against a financial-regulatory bill advancing in Congress, according to people who attended the meeting.

President Barack Obama’s senior adviser David Axelrod and National Economic Council Director Lawrence Summers met with Goldman Sachs CEO Lloyd Blankfein, JPMorgan’s Jamie Dimon, Bank of America’s Brian Moynihan and about 12 other executives at an April 6 event in Washington hosted by the Financial Services Forum, said the people, who declined to be identified because the meeting was private.

The executives told the White House aides that while they support a regulatory overhaul, they have concerns about the bill sponsored by Senate Banking Committee Chairman Christopher Dodd, which includes new consumer-protection rules.

The head of the Financial Services Forum yesterday gave no indication the group will back off from its effort to shape the bill. Asked if it will accede to the White House request, Rob Nichols said the Forum will “continue to work collaboratively and constructively with lawmakers in both parties.”

White House officials say they are confident they will get a bill this year, with one aide putting the odds at 90 percent. An administration spokeswoman said Obama, who will meet today with Democratic and Republican lawmakers at the White House to discuss the legislation, won’t agree to weaken the measure.

‘Constructive Conversation’

“We believe momentum is on the side of greater accountability for Wall Street and strong protections for consumers, and we hope Republicans in Congress will join us in a constructive conversation,” White House Deputy Communications Director Jen Psaki said of today’s talks.

At last week’s meeting, industry officials outlined their concerns. They included provisions that ban proprietary trading at U.S. banks and give states more leeway to challenge federal consumer-protection rules, the people said.

They also expressed concern about proposed bank taxes, including a fee Obama announced in January that would raise an estimated $90 billion over 10 years and hit as many as 50 financial firms with assets greater than $50 billion, one of the people said.

Summers and Axelrod responded to the industry’s qualms throughout the hour-and-15-minute meeting at the Willard Hotel without committing to changes, the people said.

Stop the Ads

During one exchange, executives raised concern over the administration’s criticism of the industry’s efforts to influence the bill, according to one participant. Summers responded by calling on the industry to cease running ads against the bill and to stop its lobbyists from trying to insert loopholes in the legislation, the person said.

White House spokesman Matt Vogel declined to comment on the meeting.

The Senate Banking Committee last month approved Dodd’s bill on a 13-10 partisan vote, sending it to the full Senate for consideration. Dodd, a Connecticut Democrat, said he wants to get the measure through the Senate before the end of May.

Last week’s meeting was one of several that industry representatives held that day to discuss financial rules with officials such as Federal Reserve Chairman Ben S. Bernanke, Securities and Exchange Commission Chairman Mary Schapiro and Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission. Bernanke told the group he is concerned about a provision in the bill that would remove the Fed’s authority to oversee small banks, one person said.

Banking Bailout

White House officials have expressed frustration with the industry for lobbying against reform efforts after a $700 billion taxpayer-funded bailout helped them restore profits and near-record compensation for executives. Goldman Sachs, JPMorgan and Bank of America are among banks that have repaid the money.

JPMorgan reported today that first-quarter earnings beat analysts’ estimates, rising 55 percent on record-fixed income trading revenue and a reduction in provisions for credit losses. Net income at the second-biggest U.S. bank by assets climbed to $3.33 billion, or 74 cents a share, from $2.14 billion, or 40 cents, in the same period a year earlier, the New York-based bank said today in a statement.

Deputy Treasury Secretary Neal Wolin criticized the U.S. Chamber of Commerce in a March 24 speech for conducting a “lavish, aggressive” campaign to defeat a proposed consumer- protection agency.

Since the beginning of 2009, large banks and financial firms have spent more than $500 million on campaign contributions and lobbying over a variety of issues, according to data from the Center for Responsive Politics.

‘In Heated Agreement’

Industry representatives also expect Congress to pass new rules this year, and with public opinion favoring more regulation, they’re trying to ensure their interests are protected.

Nichols said that while the industry was “in heated agreement” with the government over the need to overhaul the rules, “sensible and effective regulatory reform is needed.”

Douglas Elliot, a fellow at the Brookings Institution and a former managing director at JPMorgan, said the political environment “is pretty favorable here for passage.”

The American people “hate bankers with a passion right now, so it’s not necessarily a winning move for Republicans to be seen as allied with the banks,” Elliot said.

Most people interviewed in last month’s Bloomberg National Poll said they don’t like Wall Street, banks or insurance companies and favor letting the government punish bankers in the wake of the worst financial crisis since the Great Depression.

Bipartisan Support

Obama is seeking bipartisan support and will meet later this morning with Senate Majority Leader Harry Reid, a Nevada Democrat, Senate Minority Leader Mitch McConnell, a Kentucky Republican, House Speaker Nancy Pelosi, a California Democrat, House Minority Leader John Boehner, an Ohio Republican, and House Majority Leader Steny Hoyer, a Maryland Democrat.

A spokesman for New York-based Goldman Sachs confirmed that Blankfein attended the April 6 meeting, though he said he couldn’t confirm the content of the discussions.

“We are, have been and remain committed to sensible regulatory reform,” said Lucas van Praag, a company spokesman.

Jennifer Zuccarelli, a spokeswoman for New York-based JPMorgan, declined to comment.

Bank of America, the nation’s largest, has said it wouldn’t oppose the plan to create a Consumer Financial Protection Agency. Moynihan, the CEO, told White House and Treasury Department officials of the company’s stance earlier this year, a spokesman for the Charlotte, North Carolina-based bank said in February.

<- Go Back