Foreign Banks Benefiting From Increased U.S. Lobbying

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Foreign banks find fortune in crisis

Foreign banks are flexing newfound muscle in Washington, spreading their money and influence while winning government business that’s off-limits to their politically toxic American cousins.

While Congress and President Barack Obama have been bashing big American banks as the cause of the nation’s economic troubles, foreign banks have been quietly increasing their presence in Washington with unprecedented lobbying and campaign spending.

The foreign companies have found a lucrative niche, essentially acting as brokers for the federal government’s bailout money. Domestic banks with the size and expertise for that role are largely banned from competing for the contracts because they have been recipients of the emergency funds.

“There is tremendous opportunity for the foreign banks, and it makes an enormous amount of sense for them to build up their lobbying power in Washington,” said Dick Bove, a financial strategist at the research firm Rochdale Securities.

“The foreign banks have come to Washington to take advantage of the shift in financial business that’s occurring in this country because of the anti-financial sentiment of the American government,” Bove said. “There is an opportunity here. They got the money. They got the freedom to operate. And we need the money, and we’re constricting the ability of our banks to function.”

Put simply, he said, “everything is right for them to come in and pick the bones of American banks.”

Still, Deutsche’s comparatively modest advocacy budget appears to be paying off.  

The German bank was selected in an open-bidding process to auction the stock options of 11 banks on behalf of the Treasury Department.  After the banks repaid their bailout money, Treasury needed to sell the stock options it had been given in exchange for its investments. When Treasury and the banks couldn’t come to terms on a price, Treasury hired Deutsche to auction them off to investors, netting the government at least $3.2 billion.

For its work, Deutsche hauled in a total commission valued at no less than $40.6 million.

“The foreign banks have built up their presence in Washington over the last five years, and they’re winning business,” a financial services lobbyist said. “They’re taking advantage of the fact that they’re not thought of as Wall Street. They’re below the radar screen because nobody’s ever heard of Barclays or Deutsche Bank.”

Barclays, based in Britain, has also been beefing up its lobbying presence. Six years ago, it spent $340,000 and had two registered lobbyists, according to CRP. Last year, it spent about $2.8 million paying a baker’s dozen of lobbyists from firms such as the Rich Feuer Group.

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