How Dumb Does Wall Street Think We Are?

Banking industry leaders are very sorry the dog ate their homework.

CEOs of the biggest U.S. banks say there's a "disconnect" between their support for tighter financial regulation and efforts by their own lobbyists to thwart passage of new industry rules, according to the WSJ. The executives also vowed to get behind the legislation.

Some of the CEOs said their lobbyists had taken stronger stands than they would have wanted, an assertion met with raised eyebrows on Capitol Hill. House Financial Services Committee Chairman Barney Frank (D, Mass.), chief architect of financial-overhaul legislation in that chamber, said in an interview he was "highly skeptical."

If standing up President Obama weren't enough of a slap, this sort of balderdash shows Big Finance's contempt for financial reform. To put a fine point on it, it simply isn't credible that Goldman Sachs (GS) or Citigroup (C) don't know precisely what their hired guns on Capitol Hill are up to. Think of JPMorgan Chase (JPM) CEO Jamie Dimon. Anyone who follows his career understands that this is a guy who knows what the custodian had for lunch, let alone what lobbyists are doing on his company's behalf.

Imagine if JPMorgan Chase's proxies in Washington were, say, encouraging legislators to break big banks into teensy-weensy pieces. Dimon himself would've chucked the offending lobbyists into the Potomac.

Yet there is a disconnect here. It's between the level of popular support for cracking down on big banks and the Obama Administration's and U.S. lawmakers' timidity in bringing these companies to heel. Even as Congress works the edges of financial reform, a chief cause of the financial crisis remains unaddressed -- the existence of mega-banks. Unlike their counterparts in Europe, Washington shows no stomach for taking on these institutions.

If there were any lingering doubts that Wall Street is out of control, this willingness to tell tall tales to the President, and to the American public, should dispel them.