Banking

New Bank Trade Group Excludes Goldman, Morgan Stanley And Credit Suisse

JPMorgan

Goldman Sachs Group Inc., Morgan Stanley and Credit Suisse Group AG have all been left on the sidelines of the banking industry’s new power lobbying group.  Though all three firms were originally slated for inclusion in the trade association — formed to lobby on behalf of banks in the wildly different regulatory environment that exists in 2018 — they were pushed out after some concerns that looping in more mega-banks would highlight the stigma that Wall Street still carries from the 2008 financial crisis. Others were less worried about optics, but believed that the group should only include consumer-facing lenders.

The debate is playing out as banking’s most high-profile CEOs — Jamie Dimon from JPMC and BoA’s Brian Moynihan among them — attempt to bring the Financial Services Roundtable and the Clearing House Association together under a single umbrella. The negotiations have unearthed some old tensions in the industry, which has in turn prompted some regional banks to threaten to bail on the whole endeavor.

“Such is the nature of mergers,” said Steve Bartlett, a former Texas Republican congressman who ran the roundtable from 1999 to 2012 and vastly increased its membership. “Mergers are hard.”

The process, according to Bloomberg’s reporting, has been largely the arena of the banking CEOs themselves, who have carried out the main bulk of deliberations and possibly slowed the process some.

Bank of America’s Brian Moynihan, the roundtable’s chairman, is leading the effort. He has also brought in a team of Bank of America mergers and acquisitions specialists to help push things along.  SunTrust Banks Inc. CEO Bill Rogers, PNC Financial Services Group Inc. Chief Executive Officer William Demchak and Chase’s Jamie Dimon have all also been central.  Rogers is the chairman-elect of the Roundtable and Demchak heads the Clearing House board of directors.

Spokesmen for JPMorgan and SunTrust declined to comment on the private deliberations.

Moynihan, in a statement, said:

“The CEOs of the member companies agree that we’re creating an organization that will produce high-quality research and be an important advocate for pro-growth policies and a safe, sound banking system.”

On the membership question, Dimon and Rogers argued for excluding Goldman Sachs, Morgan Stanley and Credit Suisse. Greg Baer, who runs the Clearing House, was amenable to their inclusion and Moynihan was agnostic, according to the people. Dimon’s main argument against the three excluded players was that they specialize in underwriting and trade securities as opposed to banking. He also noted neither had been a member of either the Roundtable or the Clearing House.

Spokesmen for Goldman Sachs, Morgan Stanley and Credit Suisse declined to comment. Insiders noted that all three firms will continue participating with other trade groups. Some also reportedly questioned — off the record — how a trade group could claim to represent the “banking industry” when leaving out three very large and influential banks.

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