Three dozen of the largest US banks and the groups who represent them increased spending on lobbying Congress by 19.3% last quarter as fears of a banking contagion spread.
(Bloomberg) — Three dozen of the largest US banks and the groups who represent them increased spending on lobbying Congress by 19.3% last quarter as fears of a banking contagion spread.
Thirty-two of the largest banks and four trade groups collectively spent $22 million on influencing lawmakers in the first quarter of 2023, according to federal lobbying disclosures, up from $18.4 million in the same period last year.
Regional banks, including PNC Financial Services Group Inc., KeyCorp, and Citizens Financial Group, were among those boosting lobbying expenses at the highest rates. Bank Policy Institute, which counts large- and mid-size banks among its membership, nearly quadrupled its expenditures from $550,000 in the first quarter of last year to $1.9 million in the initial three months this year. None immediately responded to requests for comment.
The surge of bank lobbying coincided with the collapse of crypto-friendly lender Silvergate Capital Corp. and failures of regional institutions Silicon Valley Bank and Signature Bank undermined confidence in the banking system and sparked calls for more scrutiny.
While lobbying expenses can fluctuate due to a variety of factors, including how much companies want to invest in influencing policies that may take years to come to fruition, the near-universal increase suggests banks reacted to the prospect of more regulation. Only SVB, State Street Corp., Truist Financial Corp. and Ally Financial Inc. cut expenditures compared to the first quarter last year.
SVB, which in March became the biggest bank to fail since the 2008 financial crisis, spent $30,000, down from $50,000 it spent in the first quarter of last year. Companies are supposed to list the specific issues they are lobbying Congress about, but many are vague. SVB was no exception, naming only one priority for the first quarter: “Banking issues related to innovation and technology.”
The Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. stepped in with a last-minute deal to protect startup-focused SVB’s depositors, fearing that not protecting those funds could lead to a system-wide bank run. The FDIC is in the process of selling the lender’s assets.
Signature Bank, which has ties to the crypto industry and was shut down by regulators in March, hasn’t reported spending anything on lobbying since 2020.
Before the banking turmoil this spring, bigger banks such as US Bancorp and PNC were already bracing for more regulations since Michael Barr took over as the Fed’s No. 2 official last summer. March’s bank failures mean that even more banks are likely to face regulations or scrutiny from Congress.
Those that appear the least concerned about increasing their lobbying presence in Washington? The biggest banks and the smallest ones.
Many community banks don’t have their own lobbyists, but the trade group that represents them spent at a level that was in-line with prior quarters.
Likewise, the systemically important banks such as Bank of America Corp. and Citigroup Inc. are already subject to regulations imposed after the 2008 financial crisis and didn’t spike spending like the smaller, regional banks who are more likely to be subject to additional regulations.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.