On Aluminum, Banks Have Finally Made Enemies With Real Clout

A blog about business and economics.
July 23 2013 10:57 AM

On Aluminum, Banks Have Finally Made Enemies With Real Clout

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The champagne of beers

Photo by Scott Olson/Getty Images

I'm watching the livestream of the Senate Banking Committee's hearings on the subject of bank ownership of physical commodities industries with a specific focus on the aluminum issue the New York Times raised. The thing that jumps right out at you is that up on the dais you have Timothy Weiner, global risk manager for MillerCoors LLC, talking about how he would never question the free market but the banks are out of control in this instance.

That's a crucial issue, because even though you have a lot of talk about "Wall Street versus Main Street" there's really been very little sector-versus-sector lobbying in the bank regulation debate. But that's crucial. Given issues of regulatory capture and the inevitable waning of public attention, the country is going to have adequate supervision of the financial sector on a sustained basis if and only if other elements of the business community want to see banking crises avoided in the future. The key thing here is that while Goldman Sachs is a big company with political clout in the United States, so is MillerCoors. So is Coca-Cola. So are PepsiCo and the Dr Pepper Snapple Group. So is General Motors. When you get a situation where large industrial firms want the federal government to do something that banks don't want it to do, then the odds of the banks losing get pretty good. You saw something similar in the debit card swipe fee debate where Wal-Mart, Home Depot, and other major retailers were able to beat the banking lobby.

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It's really easy for just about any industry group to win a fight in Congress where then there's no major pressure on the other side. But when it becomes industry versus industry, the outcome is really up for grabs. And even though the banks have a ton of money, these lobbying fights aren't won by the side with more money to spend as long as both sides have enough money to get their pet priorities on the agenda. If anything, banks are in a somewhat weakened state post-crisis (and deservedly so) so they find themselves at a rhetorical disadvantage whenever a nonbank sector wants to intervene in a major way.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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