This post was written by Lee Drutman, data fellow at the Sunlight Foundation. He is also an adjunct professor of political science at Johns Hopkins University, the University of California, and Smith College.
On Sunday, Bloomberg News reported on an estimated $13 billion worth of income that banks gained by taking advantage of the Federal Reserve's below-market interest rates, which were sometimes as low as 0.01 percent.
The six banks that benefited the most from this "subsidy" - Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, and Wells Fargo - reaped a combined $4.8 billion of estimated extra income from the below-market loans.
It's worth pointing out that all six of these banks were major political players.
All six have also averaged at least $2.7 billion in lobbying a year for the period 2008-2010. And all six have averaged at least $2 million in campaign contributions for the last two electoral cycles. Four of the six banks rank among the top 100 political contributor organizations for the last two cycles. Two of the six were in the top 100 political lobbying organizations for the period 2008-2010. (We focus on 2008-2010 because although the bulk of the lending took place in late 2008 and early 2009, continued lobbying by the banks may have contributed to keeping these deals undisclosed until now.)
| Bank | Contributions
2007-008 & 2009-2010 (Average Per Cycle) |
Lobbying
2008-2010 (Average Per Year) |
In-house lobbyists
2008-2010 (Average Per Year) |
Firms hired
2008-2010 (Average Per Year) |
|---|---|---|---|---|
| Bank of America | $3,233,745
(rank: 57) |
$4,085,333
(rank: 160) |
5.0 | 7.7 |
| Citigroup | $3,746,536
(rank: 70) |
$5,846,666
(rank:37) |
9.0 | 13.7 |
| Goldman Sachs | $5,315,836
(rank: 51) |
$3,584,333
(rank: 179) |
7.7 | 14.0 |
| JP Morgan | $4,274,232
(rank: 56) |
$6,323,333
(rank: 70) |
9.3 | 12 |
| Morgan Stanley | $3,072,767 (rank: 108) |
$2,710,000 (rank: 237) |
4.0 | 4.3 |
| Wells Fargo | $2,000,573
(rank: 126) |
$3,518,580
(rank: 197) |
3.7 | 3.3 |
While it's difficult to infer causality from these numbers, it is fair to say that these companies were no strangers to Washington. And this probably didn't hurt them when it came to negotiating bail-out deals with the Federal Reserve and keeping these deals undisclosed.
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Am I missing something? Using the numbers on the chart for "Lobbying; 2008-2010 (Average Per Year)", I calculate an average of $4,344,708 per year. Where does the "$2.7 billion in lobbying a year" come from?