Congress and the Financial Services Industry, 1989-2008

Abstract

This thesis explores the congressional politics of the financial services industry in the United States between 1989 and 2008. Three approaches are pursued. First, I provide a detailed account of the major legislation concerning the industry during this period, with particular reference to interest group competition between commercial banks, securities firms and insurance companies and to the repeal of the Glass-Steagall Act in 1999. I suggest that intraindustry conflict was instrumental in delaying Glass-Steagall's repeal until 1999, but that these eventually faded away in response to events outside the Congressional sphere and gave way to a period of intra-industry cooperation in the years after 1999 because the repeal of Glass-Steagall effectively aligned the interests of industry sub-sectors. Second, I present statistical evidence that suggest that these changes are reflected in the contribution strategies of PACs aligned with the financial services industry. Before the repeal of Glass-Steagall, competing groups within the industry valued certain individual legislator characteristics (above all, various committee memberships) at quite different levels. However, after 1999, the contribution strategies of the industry sub-sectors converge in patterns consistent with the reduction of interest group competition. Third, I present the results of statistical models that provide further evidence that the repeal of Glass-Steagall represents a turning point with respect to intra-industry competition. I show that after 1999 competing interest groups began to coordinate their contributions to members of committees with jurisdiction over financial services legislation; before the repeal of Glass-Steagall, there is no evidence of this. Taken together, these three approaches suggest that the regulatory environment shapes not only the business practices of corporations, but also the ways they attempt to influence public policy.