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Banks See Midterms as FinReg Opportunity

Stocks in this article: BAC JPM WFC C

NEW YORK ( TheStreet) -- The fight over financial reform is far from over and commercial banks have devoted $11.4 million in campaign dollars to improve their odds for the second round.

After a tense partisan battle in which several prominent Democrats came out against the banking industry, the majority of its campaign spending so far has supported Republican candidates.

President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law on July 21. Much of the remaining tussle will be between banks and their regulators, who will be writing up specific rules and implementing them within the broader legislative framework.

Still, the banking industry is also pressing for certain legislative "corrections" that would lessen the cost of harsh reform measures. Peter Garuccio, a spokesman for the American Bankers Association, predicts there will be a lot of issues on the table stemming from Dodd-Frank.

"It's a massive, massive piece of legislation," says Garuccio. "It's safe to say that there will be some legislative items that seek to address shortfalls or deficiencies - things that you don't really know about until the rule-writing process gets going. I think we'll see a lot of that."

The ABA has been the top contributor within the commercial-banking sector this election season, pledging $2.1 million in campaign funds and spending $13.6 million on lobbying from 2009 to 2010, according to the Center For Responsive Politics.

The biggest contributions from individual banks have come, perhaps unsurprisingly, from the biggest individual banks: JPMorgan Chase (JPM) at $981,188; Bank of America (BAC) at $897,995; Citigroup (C) at $848,944; and Wells Fargo (WFC) at $645,426.

TheStreet's Political Pulse

JPMorgan is the only giant bank whose contributions - both through a political action comittee (PAC) and by individuals - have skewed Democratic. Bank of America is the only one whose contributions have mainly come from its PAC.

Community bankers have also been contributing heavily to ensure their concerns are heard. Independent Community Bankers of America (ICBA), an industry trade group, has contributed $786,050 to campaigns during the 2009-2010 election season. It also spent $7.5 million on lobbying during that period of time.

"Dodd-Frank is not the end of history for financial services," says Steve Verdier, executive vice president of congressional relations for ICBA. "The financial services industry will be engaged as never before with the upcoming elections."

As a representative of thousands of small, community banks across the country, some of ICBA's legislative priorities differ from bigger groups offering bigger dollars: "Our bankers are going to get a lot more sympathetic hearing from a congressman from Iowa or Nebraska than one from New York City because we're got hundreds of banks in those rural districts," explains Verdier.

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