Wall Street And Washington Share Millions Of Dollars, Lot Of People

Wall Street And Washington Share Millions Of Dollars, Lot Of People

The close relationship between Wall Street and Washington belies their 200 mile separation and theoretically differing goals.

By spending money on campaigns and lobbyists, The financial industry has managed to give itself something of a voice in the halls of Congress, regulators’ offices and even the White House. Of the top ten firms with employees donating to Romney's campaign, eight are big banks, according to Federal Election data cited by Bloomberg. In addition, Wall Street spent more than $100 million last year on lobbying while the provisions for the Dodd-Frank financial reform law were being finalized, according to The New York Times.

But it’s not just money that Wall Street is sending to Washington. It’s people too, with major officials like President Obama’s chief of staff Jacob Lew and top regulators like Commodity Futures Trading Commission chairman Gary Gensler having spent time working at a big bank at some point in their careers.

And the revolving door moves in the other direction as well. As of last year, at least 285 members of Congress were registered lobbyists, according to data from the Center for Responsive Politics cited by the NYT.

The result: An uncomfortably close relationship between the private financial industry and the people responsible with regulating it. Neil Barofsky, the former bailout watchdog, has been an especially outspoken critic, deriding both the Obama and Bush administrations for allowing their relationship with Wall Street to color the results of the bailout. If the message isn’t clear, the subtitle of his recently-released book, “Bailout” is “An Inside Account Of How Washington Abandoned Main Street While Bailing Out Wall Street.”

But Barofsky isn’t the only critic. In an excerpt from his book, “The Payoff Why Wall Street Always Wins,” cited by Simon Johnson in the NYT, former Senator Ted Kaufman notes:

The Blob (it’s really called that) refers to the government entities that regulate the finance industry — like the banking committee, Treasury Department and S.E.C. — and the army of Wall Street representatives and lobbyists that continuously surrounds and permeates them. The Blob moves together. Its members are in constant contact by e-mail and phone. They dine, drink and take vacations together. Not surprisingly, they frequently intermarry.

What’s clear is that Wall Street and Washington are close, but what’s harder to determine is whether that directly affects how laws are written. Lawyers that used to work for the SEC and were hired by private law firms actually had tougher enforcement outcomes than lawyers at the same firms who never worked for the agency, according to a recent study cited by the NYT.

Still, there are plenty of counter examples for critics to point to. One of the SEC commissioners that voted against changing the rules for money market funds, ultimately stopping the reforms from taking effect, was a former mutual fund executive.

Many people walk between Wall Street and Washington -- here are some of the most famous:

Gary Gensler

Wall Street's Amazing Revolving Door

Before You Go

Popular in the Community

Close

What's Hot