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Megabanks’ influence takes a hit

By Claes Bell, CFA · Bankrate.com
Thursday, November 8, 2012
Posted: 4 pm ET

There's a reason that when Jamie Dimon goes to Capitol Hill, he rocks a pair of presidential cuff links. In most elections, 2008 included, banking industry groups have been some of the best in the business at spreading money around to influence a broad swath of politicians.

But in this election, big banks ended up on the losing side in many cases.

So why did banks fail to play both sides?

One factor is the fallout from the financial crisis and the industry's defiant response to regulation has made Americans less sympathetic to the concerns of the financial industry. As a result, many politicians, especially on the Democratic side, were less willing to be associated with and more likely to criticize the banks, says Mayra Rodriguez Valladares, managing partner at MRV Associates, a financial regulatory and capital markets firm.

"They've definitely lost a lot of prestige," Valladares says. "There should have been public humility: 'Look, we understand we're part of the problem. What can we do to fix it?' And instead it's just become so shrill."

Instead, the banking industry as a group decided to donate much of their money to more bank-friendly politicians such as Mitt Romney and Mass. Sen. Scott Brown, who ultimately lost, Valladares says.

"Do I think that lobbying is going to be over and it's decimated? No," she says. "But I think Wall Street is going to go back to thinking, 'Maybe we need to be backing both horses,' which is what they've done in the past."

What do you think? Will banks change their lobbying strategy?

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