In an alphabet soup world, what’s another acronym among friends?
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By now, everyone has heard of TARP – Toxic Asset Relief Program. A day doesn’t go by when there aren’t news items about the SEC (Securities and Exchange Commission) or the FDIC (Federal Deposit Insurance Corp.).
Then there’s SIFMA – the Securities Industry and Financial Markets Assn.
In the panoply of agencies and organizations influencing the economy, SIFMA is probably one of the most formidable groups that nobody’s ever heard of.
SIFMA’s members include securities firms, banks, broker-dealers and assets managers in the U.S. and virtually every financial center across the globe. If there is an issue that affects its membership, SIFMA is almost always present behind the scenes, but rarely visible to the naked eye.
Time to Step into the Sunshine
With the upwelling of populist ill-will towards its members, and the current legislative momentum to impose new regulations on the financial industry, SIFMA is getting ready to shed it otherwise shadowy profile.
As Wall Street’s largest trade group, SIFMA has embarked on a campaign to counter the widespread backlash against bankers, and to thwart new restrictions that the organization believes will hamstring its members.
In 1999, SIFMA worked in feverish anonymity to lobby for the repeal of the Depression-era Glass-Steagall Act, which carved a restrictive moat between depositor-based commercial banks and investment banks. Among other things, the 1933 law established the FDIC and included reforms that limited the speculative activities of depositor banks.
There is little argument that the repeal of Glass-Steagall set the stage for the free-wheeling high stakes investment practices that have led to the collapse of so many otherwise staid financial institutions and the subsequent implosion of the credit markets.
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Now with the lynch mob mentality that has gripped Congress, SIFMA is gearing up to change the tide of negative public opinion that it believes may lead to a legislative overreaction. The trade organization has commissioned a flurry of public opinion polls, unleashed its potent spin machine and hired two chief aids of former Treasury Secretary Hank Paulson to spearhead the effort.
Strong Resemblance to the President
In a series of recently uncovered confidential memos to some of the industry’s top executives, SIFMA outlined its operational plans to influence the tone of the current debate over re-regulation of the financial industry. SIFMA has grafted its tactics right out of the Obama campaign crusade handbook.
During the execution phase, which began this month, SIFMA encourages its members to “embrace change and accountability.” According to the memos, once its membership has established that it is part of the solution and not the problem, it will be in a better position to mold the legislative outcome.
Widening Government’s Role
“It is imperative that in this historic period of reform, the industry be recognized as playing a positive role in seeking change and providing solutions to the problems we face,” one of the memos said. “There is currently widespread skepticism about the industry’s commitment to this needed change.”
As part of its push for an image makeover, SIFMA has endorsed the President’s idea of a federal systemic risk regulator and has pushed for increased government power to wind down financial firms that don’t own banks. In a move that surprised some, SIFMA even has gotten out front on the issue of bridling executive compensation.
SIFMA’s plan not only targets U.S. legislators, but it is aimed at the media in New York, London, Washington and Brussels. Harkening to past movements for social justice, the SIFMA strategy calls for a “city-by-city, grass roots” approach to cementing its message.
The bankers’ organization hopes that its sideways line of attack will soften the public’s perception of the industry and prevent the regulatory pendulum from swinging too far against its members’ interests.
By any measure, SIFMA’s plan is a brilliant example of adaption to the changing attitudes towards the financial industry. Instead of a lead pipe, the industry has donned a pair of velvet gloves.
Next thing you know, it’ll start running ads with kids, puppies and Catherine Zeta Jones.
John Cohn is a senior partner in the Globe West Financial Group, based in West Los Angeles. He may be contacted at www.globewestfinancial.com
