I have long been a critic of the financial industry not being as smart as advertised. I believe the chief cause of the recession cutting so deep has more to do with stupidity than fraud, or even negligence. As a result, a Wall Street Journal article today about how the financial sector is cutting down on its lobbying efforts should not have surprised me. And yet, it still did.
According to the WSJ:
Wall Street's spending on efforts to influence policy making diminished at the start of this year as the image of financial institutions has suffered with lawmakers and the public. Some of the sector's major advocate groups lost funding and staff. Their spending declined just as the administration was hammering out its proposal for the biggest reorganization of financial-market oversight since the 1930s, details of which the White House released last month.
As I just mentioned, one of the biggest risks businesses face these days is political risk. Unfortunately, lobbying is one of the most effective ways to offset that risk. Wall Street needs to quickly recognize that if it hopes for its business to resemble anything close to what it did over the past few decades.
The block quote above notes the kind of specific, targeted lawmaking aimed at banks. Here's how they respond:
(This graph appears alongside the Wall Street Journal Article, in nifty interactive format, unlike my measly pasted version.)
Sure, they're ramping up a little since Q4. But come on guys. Cut some fat on the trading floor and hire some more lobbyists. The returns in a political climate like this one produced through lobbying will far outweigh financial returns in a sluggish economy.
Don't get me wrong: I hate lobbying. I think it's already way excessive and stunts our overall economic growth. If that money was invested in the private sector instead of to persuade Washington, we'd all be a lot better off. But from a business standpoint, firms -- especially in the financial sector -- cannot afford to only have Washington in their peripheral vision. Just ask GE.