Why haven't more lawmakers insisted on strict financial regulation? Maybe because that's not where the money is.
Members of Congress who have called for a weak, watered-down version of the Volcker rule -- a key piece of financial regulation currently under intense debate in Washington -- have received handsome donations from the financial sector, according to a new analysis from the nonprofit advocacy group Public Citizen.
On the other hand, Senators and representatives who have urged regulators to pass a strong Volcker rule with far-reaching regulatory powers have gotten considerably less love from the financial industry.
To get specific, advocates for a weak Volcker rule have each received an average of $388,010 in financial-sector contributions since 2010, according to the report. That's more than four times as much as the people calling for a strong Volcker rule got -- an average of $96,897 each.
The Volcker rule, named after former Federal Reserve chairman Paul Volcker, is seen by its supporters as one of the most important parts of the Dodd-Frank financial regulatory overhaul. The rule would curb banks' risky trades with their own holdings, rather than on behalf of clients -- a practice known as proprietary trading.
The rule has gone through several draft versions, growing more complex and less ironclad with each new iteration. Many analysts believe the rule now contains too many exceptions and qualifications to make a meaningful difference.
Regulators recently held a public comment period in which anyone could write in and express their thoughts about the latest version of the Volcker rule. They were flooded with letters from the financial sector, arguing that the rule needed to be defanged further, lest it restrict market activity -- a scenario that Treasury Secretary Timothy Geithner has said isn't actually very likely.
The onslaught of lobbying efforts, including hundreds of face-to-face meetings between regulators and banking representatives, have slowed the rulemaking process to the point where Federal Reserve officials now believe the Volcker rule won't be ready by its July 21 deadline.