The financial industry is commonly described as one of the most influential in politics. The numbers certainly support this impression. In terms of lobbying expenditures in the United States, the banking sector outspent even the health care sector. Few industries have comparable resources available and have been able to establish such a strong institutional presence. In many countries, top bankers and high-ranking public officials meet frequently; revolving doors between the two worlds are common; and the technical complexity of financial regulation makes consultation with the industry at all levels of decision-making a necessity. Accordingly, commentators in the media and academia warn about conflicts of interest and undue influence.
The financial sector certainly lobbies actively, employs skilled and well-connected people, and has created very effective organizations such as the Institute of International Finance. But it would be a mistake to overestimate the importance of lobbying activities. Despite their fervor, these strategies are neither the most important source of influence for the banking industry, nor are they always successful at defending the industry’s positions. What is more, a study of the banking crisis reveals that collective political action of the industry was in fact lacking in the process of crisis management. This article details these three aspects—the real influence, the failures and the shortcomings—and concludes by looking at the future of bank lobbying.
The Political Success of Finance