Taking Stock of Big Three as Lobbyists

By Heller, Michele; Rehm, Barbara A. | American Banker, October 21, 2004 | Go to article overview

Taking Stock of Big Three as Lobbyists


Heller, Michele, Rehm, Barbara A., American Banker


Once the industry had just one lobbying behemoth, and its name was Citigroup.

Nearly single-handedly, the New York company persuaded Congress to pull the trigger on legislation that had languished for decades to permit common ownership of banks, brokers, and insurers. Without passage of the Gramm-Leach-Bliley Act of 1999, the previous year's merger of Citicorp and Travelers Group would have required massive divestitures.

"Citi, they are in a class by themselves," said a veteran lobbyist at another financial institution. "They are big risk-takers. Who else would have bought Travelers and then said, 'We're going to change the law' ?"

But Citigroup's class is growing. Today there are two other companies with more than $1 trillion of assets: J.P. Morgan Chase & Co. and Bank of America Corp.

JPMorgan Chase is already taking steps to build its lobbying prowess to rival Citi's, while B of A is reportedly weighing such a move.

Asset size and deep pockets are not all that set the Big Three apart. All three, particularly B of A, have a broad geographic reach that puts them, their employees, and their customers in hundreds of congressional districts and makes them important constituents of most governors.

What's more, ever-expanding business lines are moving these companies into larger areas of congressional jurisdiction - far beyond the banking committees.

"The biggest three might not have more weight on a particular issue, but they will influence more issues," said one congressional aide.

Take Citi. It is registered to lobby on dozens more bills than any other banking company. The issues range from traditional banking, financial, and tax legislation to trade, immigration, and outsourcing, reflecting its international operations.

Still, it may not be until the Big Three differ with the rest of the industry on public policy that their clout is truly tested. A possible example could be the federal law barring any one bank from holding more than 10% of the nation's deposits. When that cap constrains their growth, the trio could band together for change.

But such a must-win fight is not on the immediate horizon.

There are lobbyists and congressional staff members who say they do not think the companies have any outsized leverage.

"When you go into meetings with lobbyists, you don't think to yourself, 'Oh my gosh, this is a trillion-dollar bank.' You lump all larger banks together," said another aide to a lawmaker active on banking issues.

In fact, some said that consolidation may actually have weakened the largest banks' power.

"Now that there are fewer big banks, they may have less influence, because instead of six or eight large banks saying they want something, now there are only three," a House staff member said. "That creates a lot less noise."

It is surprising how many people here - from congressional aides to private-sector lobbyists to trade group officials - have not grasped how the Big Three overshadow the rest of the industry.

"We tend to think of the top 10 banks as being all the same players," said a veteran lobbyist. "Wachovia is the same as Wamu, and that's the same as U.S. Bancorp."

Not exactly. The biggest of that threesome is Wachovia Corp., and with $471 billion of assets, it's about $1 trillion smaller than Citi.

The power of the Big Three lies in their potential. Today none has either the reason or the infrastructure to fully flex the muscle that could be applied at both ends of Pennsylvania Avenue.

FIRST AMONG EQUALS

Few play the lobbying game better than Citi.

"There is not a weakness that you could point to at Citi like you can at the others," said one of the roughly dozen congressional aides interviewed for this story. "Plus, they have really nice offices," he said half-jokingly, referring to Citi's expansive suite on Pennsylvania Avenue, halfway between the White House and Capitol Hill. …

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