Volcker Rule splits regional banks from Wall Street

Mid-sized banks that mostly let Wall Street and small firms speak for the industry during the debate over the Dodd-Frank Act have decided it’s time to carve out their own agenda in Washington.

Companies including U.S. Bancorp., SunTrust Banks Inc., PNC Financial Services Group Inc. and Regions Financial Corp. are opening their own lobbying shops and staffing them with seasoned Washington hands. Regulators and lawmakers have begun to pay attention as the banks argue for changes in how they’re affected by Dodd-Frank rules including the so-called Volcker ban on proprietary trading and procedures for unwinding failed banks.

Executives and lobbyists for regional banks say they should be treated differently by agencies implementing the new regulations, because they focus on traditional deposits and lending rather than the higher-risk activities of firms such as JPMorgan Chase & Co. and Goldman Sachs Group Inc.

“We are not Wall Street banks but we face the same regulatory regime as a Wall Street bank,” said Mark Oesterle, a lobbyist for SunTrust who formerly served as an aide to Senator Richard Shelby of Alabama, the top Republican on the Senate Banking Committee.

Regional banks tend to have more than $50 billion in assets, mostly in commercial and retail loans rather than complex investment banking products. Their size is well short of a Wells Fargo & Co., which is 20 times larger with assets of more than $1 trillion. Most have a distinct geographical footprint, like Regions in the South. There are about a dozen such firms in the U.S. who have become active in Washington.

Lobby Expenses

Atlanta-based SunTrust spent less than $5,000 on lobbying in 2011 and 2010, according to federal records. So far in 2012, the bank has reported spending $75,000.

Other banks are opening their checkbooks even wider. PNC, based in Pittsburgh, reported spending $570,000 in 2010, $1.53 million in 2011 and $750,000 so far this year, records show. Regions, of Birmingham, Alabama, spent $540,000 in 2010, $1 million last year and $890,000 so far in 2012.

Cincinnati, Ohio-based Fifth Third Bancorp., which spent $145,000 in 2010 and $680,000 so far this year, hired Eric Rizzo, a former congressional aide and insurance industry lobbyist, to open a Washington office in June 2011.

“We needed to beef up, to have that day-to-day presence in Washington,” Tom Ruebel, the bank’s Columbus, Ohio-based director of government affairs. “It’s not just Dodd-Frank implementation but a long-term investment for us.”

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