In March, as bank regulators were framing a new rule that would affect the $630 trillion derivatives market, JPMorgan Chase sent five bankers from New York and London to Washington to raise some fine points about the impact of the financial reform.
In a jargon-laden, 23-slide presentation, the bankers walked regulators through the complexities of how their decisions would affect the arcane market, according to documents and a person familiar with the meeting.
On July 2, the Federal Reserve released the final rule. Of three requests JPMorgan made—which were backed widely by other banks and lobbying groups—regulators rejected the first, adopted the second and split the difference on the third.
The episode highlights the less antagonistic approach Wall Street is taking as it tries to blunt the force of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the 848-page legislative response to the financial crisis. Sunday marks the three-year anniversary of its passage.
Bank executives, lawyers and lobbyists now portray themselves as concerned parties trying to help stretched technocrats, who face the task of writing hundreds of complex rules to regulate high finance.
The strategy contrasts with the knock-down, drag-out fights that occurred during the legislative process—and even afterward, as bank lawyers battled agencies in court, and lobbyists fought to repeal Dodd-Frank in Congress.
Wall Street today tacitly acknowledges that it can tweak but not undo reforms.
One bank executive compared the current feeling to having just moved into a rundown house he didn't really want to buy but might not think is so bad in a couple of years after renovating it.
"You can't fight with your regulator—it's different from sparring with Congress about legislation," said Eric Edwards, a partner in the Washington office of Crowell & Moring, a law firm that focuses on government affairs issues for large financial firms. "At the end of the day, banks will want to have positive ongoing relationships with their regulators, so it makes sense for banks to take a more cooperative posture during rulemaking."
(Read more: Lew: Dodd-Frank helped save the banking system)
If anything, even five years after the financial crisis, the political and regulatory stance in Washington is only hardening. The Federal Reserve and the Federal Deposit Insurance Corp. recently unveiled tough rules on capital and leverage ratios that caught bank executives off guard.
At a Wall Street conference earlier this week, Treasury Secretary Jack Lew blamed people in the room for trying to water down Dodd-Frank and pledged that "core elements" of the law will be in place by year-end.
Those on the outside say too much is at stake for banks to believe that a subdued approach to lobbying will work. Rules being fashioned now can make a difference of billions of dollars in profits for banks. How they are written will also determine the stability of the financial system and the ability of the world to avoid another crippling crisis.
"The lobbyists might be less vocal, but they are constantly deploying their forces by visiting regulators," said Mayra Rodriguez Valladares, managing principal of MRV Associates, which advises banks and regulators on implementing the new rules.
In the derivatives market, for example, reform broadly calls for banks to hold more capital against risky positions. The rules, such as the ones JPMorgan met with regulators about in March, will determine how much money banks have to set aside to protect against trading losses and how risk is calculated.
"The American banks are going to fight this tooth and nail because their derivative positions are huge beyond belief," said Rodriguez Valladares.