At least 11 agencies, including the U.S. Justice Department and the Securities and Exchange Commission, are investigating New York-based JPMorgan for its trading losses. Last year, the company was one of five mortgage servicers that agreed to spend $25 billion to settle charges they improperly foreclosed on borrowers. The bank also is being probed for possible manipulation of power prices in California and the Midwest.
The JPMorgan loss “strengthens our case,” U.S. Representative Barney Frank, the Massachusetts Democrat who co- authored the 2010 Dodd-Frank financial-regulatory overhaul, said in a May interview. “Jamie has become the leading voice calling this unnecessary, saying you don’t know what you’re doing.”
The industry has a powerful presence in Washington even without a visible leader. Commercial banks spent $61.4 million lobbying Congress and regulators last year, almost double the $36.1 million in 2006, according to the Center for Responsive Politics, a non-partisan, nonprofit campaign watchdog.
“They’re spending all this money because they know they are in the eye of the storm,” said Bob Biersack, a senior fellow at the Washington-based group.
Wall Street banks have shifted their allegiance this campaign cycle to Republicans who fought the regulations passed by Congress and signed into law by President Barack Obama. Four years ago, Goldman Sachs Group Inc. employees gave three-fourths of their campaign donations to Democrats, including Obama. This time, they’re showering 70 percent of their contributions on Republicans, according to Center for Responsive Politics data through June 30 compiled by Bloomberg.
Of the 10 companies whose employees gave the most to Romney Victory, a fundraising committee supporting presumptive Republican presidential nominee Mitt Romney, nine were Wall Street firms, according to Federal Election Commission data. Romney, co-founder of private-equity firm Bain Capital LLC, has pledged to repeal new banking rules.
While Dimon played a key role, “there isn’t one singular voice representing the financial sector,” said Rob Nichols, CEO of the Financial Services Forum, a Washington-based lobbying group with 20 members, including the six largest U.S. banks.
Still, the lack of a statesman leaves the industry vulnerable, said Greg Donaldson, chairman of Evansville, Indiana-based Donaldson Capital Management LLC, which oversees $580 million.
“The banks have no moral authority at the moment,” Donaldson said. “Jamie Dimon had it, but that’s done. The government is piling on the banks. They’re just being hammered, and it doesn’t help our economy. Somebody has to fight the damn thing.”
That somebody probably won’t be the head of one of the other big U.S. banks, most of whom are focused on fixing their own firms or repairing their reputations.