Influence of revolving-door lobbyists helps lead to financial sector's downfall, report says
It’s almost as if HuffPo’s Dan Froomkin knew I’d still be working on my mug of coffee this Monday morning. He decided to lay it out really clearly for me in this morning’s post:
Two economists at the International Monetary Fund crunched the numbers and determined lobbying by lenders and other U.S. financial interests encouraged the watering-down of regulations that contributed to the 2007 meltdown of the mortgage market, he wrote.
Revolving door! Regulations! Financial reform! Oh my.
In the six years before the total meltdown of the financial market, federal legislation fared better when lawmakers were lobbied by former members of their own staff, Froomkin reported. Here’s a breakdown in numbers: Between 2000 and 2006, there were 19 bills seeking to tighten financial regulation. Of these, only 5 became law. But on the other side of the regulatory battle, there were 32 bills aiming to loosen regulation on the financial sector; 16 percent were signed into law.
But even more stunning was the relationship between the lawmakers and lobbyists in the deregulation camp.
Network connections had a big influence on voting patterns, [IMF researchers] Igan and Mishra found. “If a lobbyist had worked for a legislator in the past, the legislator was very likely to vote in favor of lax regulation,” they wrote.
Public Citizen has fought to limit revolving door activity, as well as advocated for increased regulation of the financial system to rein in the risky practices that crashed our economy. But our work is far from over. See what else must still be done.