Justin Fox, Time's Curious Capitalist, summarizes several other posts on the lobbying agenda of Wall Street and who is doing their bidding and why.
Barry Ritholtz has a good summing-up of a new paper (pdf) by three IMF economists on the link between lobbying and risk-taking by lenders. The gist: Firms that made the riskiest loans spend the most on lobbying Congress. And what were their lobbying aims?
• prevent any tightening of lending laws that reduce the benefits of short-termist strategies over long-term profits;
• allow systematic underestimation of default probabilities by overoptimistic bankers;
• not just to originate loans that carry more risk, but to convince legislators that such lending is prudent;
• to thwart bills aimed at lax lending standards and riskier loans;
• to tighten regulations that restrict entry by others preventing competition;
• to have a higher probability of receiving preferential treatment in a crisis.
The Huffington Post also has an epic new examination of what it calls "the cash committee"—the House Committee on Financial Services. The gist is that the committee's Democratic ranks are heavy on moderate-to-conservative first- and second-termers that House leadership put on the committee so they could raise lots of money from financial interests, thus increasing their chances of getting reelected but decreasing the committee's chances of passing meaningful financial reform. The general takeaway here is that Congress is a bit, ahem, compromised when it comes to dealing with the financial sector. It's compromised in dealing with lots of other industries too, of course, but the finance-insurance-real-estate crowd is bigger and richer than any other industry, plus it just caused the worst economic downturn since the Depression. Those who would address the financial problems of the past few years with better laws and regulations (a group of which I am a member) have a big problem when the rulemakers are captured not just by the industry they regulate but the dodgiest parts of that industry.
The linked HuffPo piece gives examples of how the junior members of "Barney Frank's Committee" are frustrating his efforts to enact legislation that actually changes the legal environment for the financial industry.