The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
reportedly spent more than half a million dollars on lobbying the federal government in the first quarter, about the average run rate over the past several quarters.
With legislators squabbling over Dodd-Frank and a host of other reforms on the docket, Schwab hopes that new regulations don't impede its securities brokerage and banking businesses. Schwab competes primarily with firms like
Bank of America
for Charles Schwab is $19.64, implying about 25% upside to the market price.
Schwab spent $570,000 in the first quarter on lobbying with the Dodd-Frank Wall Street Reform Act reportedly being at the top of its list of legislative concerns. The Dodd-Frank Act was aimed at gaining more control over financial companies and also sets limit fees and commissions such as the fees on debit-card transactions.
The company spent $540,000 in the fourth quarter of 2010 and $621,000 in first quarter of 2010. These funds were directed towards the Senate, House of Representatives, Securities and Exchange Commission, Treasury Department, Labor Department, Commerce Department and Federal Trade Commission over a variety of proposed reforms and bills.
Schwab's lobbying expenses form a part of the company's reported "other expenses" which we include in our analysis as the forecast for the company's margins.
the impact of Schwab's low margins compared to industry peers in a recent article. And the significant lobbying expenses have clearly contributed in keeping margins low.
While the lobbying efforts would have a positive impact on the company's value in the long run and can also help improve the market conditions for the company to earn more, there clearly is a need to cut down expenses in this area.
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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.