Banks' Spending on Lobbyists Reaches Record High

U.S. banks have taken a beating to their public images lately, between Occupy Wall Street protests and a wave of customers moving their money to credit unions.

Their bottom lines, though? Well, those are looking pretty good.

Banks just posted their highest quarterly profits in four years, the Wall Street Journal reported Tuesday, with a net income of $35 billion. That’s a whopping 49-percent increase from the same quarter last year. This was the industry’s ninth consecutive profitable quarter, the Journal notes.

It’s not that banks are lending a lot of new money, however. The gains have come as the economy’s gradual recovery has reduced banks’ need to set aside large amounts of cash to cover losses on bad loans. Still, Bloomberg News reported Tuesday that bank purchases of risky, leveraged loans has also risen to its highest level in four years.

What else are banks doing with their growing profits, at a time when they’re under public pressure for perceived excesses, including their outsize influence in Washington?

Spending more money on lobbyists, of course!

An analysis by the Charlotte Observer, hometown paper of Bank of America, found that “the money banks spend on lobbying is on pace to reach a record high again this year as the industry battles to weaken or repeal hundreds of rules being crafted by federal regulators.” From the story:

At this time last year, the commercial banking industry had spent about $42 million on lobbying, the center's data show. So far this year, the figure stands at nearly $47 million. Should this year's pace continue, 2011 will be the sixth straight year that commercial bank lobbying has set a record, according to the (Center for Responsive Politics, a research group that tracks federal lobbying activity).

San Francisco-based Wells Fargo is among the biggest spenders, putting 80 percent more money into lobbying efforts this year than last. Surprisingly BofA is one of the few that has cut spending on lobbying, the Observer notes—perhaps because it’s struggling more than its rivals. The Wall Street Journal reports the bank’s board has been warned by regulators that it must get stronger or risk enforcement action.

The Observer explains that the banks’ spending on lobbying has come in response to a flurry of new federal regulatory efforts in the wake of the financial crisis, including the Dodd-Frank financial reform bill. The Observer quotes a spokesman for the Center for Responsive Politics:

Most ordinary Americans don't have lobbyists that they're sending a paycheck to, but all of the major banks and financial institutions do. … They are trying to slow new regulations down, sometimes nip them in the bud before they are even floated as an idea. There's a lot that these banks are interested in, and they want to make sure that they get as favorable treatment as possible.

Read the Observer’s full story here.