Big U.S. banks are set on getting Congress this year to loosen or eliminate the Volcker rule against using depositors' funds for speculative bets on the bank's own account, a test case of whether Wall Street can flex its muscle in Washington again.
In interviews over the past several weeks, half a dozen industry lobbyists said they began meeting with legislative staff after the U.S. election in November to discuss matters including a rollback of Volcker, part of the Dodd-Frank financial reform that Congress enacted after the financial crisis and bank bailouts.
Lobbyists said they plan to present evidence to congressional leaders that the Volcker rule is actually bad for companies, investors and the U.S. economy.
Big banks have been making such arguments for years, but the industry's influence waned significantly in Washington after the financial crisis. The Obama administration's regulators and enforcement agencies have been tough on banks, while lawmakers from both parties have seized opportunities to slam Wall Street to score political points.
Banks now see opportunities to unravel reforms under President-elect Donald Trump's administration and the incoming Republican-led Congress, which appear more business-friendly, lobbyists said.
While an outright repeal of the Volcker rule may not be possible, small but meaningful changes tucked into other legislation would still be a big win, they said.
"I don't think there will be a big, ambitious rollback," said one big-bank lobbyist who was not authorized to discuss strategy publicly. "There will be four years of regulatory evolution."
Proponents of the Volcker rule say lenders that benefit from government support like deposit insurance should not be gambling with their balance sheets. They also argue such proprietary bets worsened the crisis and drove greedy, unethical behavior across Wall Street.
Bankers intend to counter that proprietary trading had little to do with the root causes of the crisis. They say Volcker is inherently flawed because it can be challenging to tell whether a trader is speculating or filling customer demand.