Lobbyists in 'feeding frenzy'

WASHINGTON -- The financial services industry, which has spent billions on lobbying and campaign contributions over the last decade, is scrambling to make its case for a proposed $700 billion bailout plan amid deep public skepticism.

Wall Street firms, commercial banks and insurers are lobbying on an array of issues — from beating back proposals to make it easier to reduce mortgage debts in bankruptcy courts to fighting, unsuccessfully so far, to retain control over executive pay.

"You have a feeding frenzy going on," said Ellen Miller, executive director of the Sunlight Foundation, a non-partisan watchdog group.

Camden Fine, head of the Independent Community Bankers of America, said he worked through the weekend to successfully extend the bailout plan to commercial banks. He hasn't stopped working the phones since. "If cellphones cause cancer, I'm in trouble," he said.

The financial services industry has left its mark in other ways.

An early draft of the proposal had restricted the bailout to firms headquartered in the United States. Scott Talbott, the top lobbyist for the Financial Services Roundtable, said his group was among those that helped to expand that definition to firms with "a significant presence" here. The trade group's members include London-based Barclays.

The association was working to defeat a proposal to allow bankruptcy judges to reduce mortgage debts. Talbott said that would increase banks' risks and drive up mortgage costs. "It could price some people out of the (housing) market," he said.

Consumer groups say the bankruptcy measure would help reduce the number of foreclosures and ease the financial crisis. "Why is anyone listening to the people who brought us this problem?" asked Kathleen Day, a spokeswoman for the Center for Responsible Lending, which supports the bankruptcy change.

Government watchdogs and consumer groups say the political muscle of the industry helped it persuade Congress to change banking and bankruptcy laws in ways that contributed to the crisis.