Wall Street Merger on K Street

One of the latest happenings on K Street is the merger between the Securities Industry Association (SIA) and the Bond Market Association (BMA) to form the Securities Industry and Financial Markets Association (SIFMA) . The idea of reblending them (BMA was originally part of SIA) stemmed from many companies deal with both stocks and bonds, hence are members are SIA and BMA.

Washington Post reports that this mouthpiece of the financial services industry with a budget of $80 million is the biggest corporate player in national politics with only organized labor surpassing them in federal candidate donations. It is not surprisingly as they are taking on some of the most heated, high-stakes battles on Capitol Hill, such as the Sarbanes-Oxley Act regulatory requirements and tax breaks for profits from stocks and bonds. Its goals are to expand markets, foster new financial instruments' development and reduce the industry's costs, partly through regulatory relief. Although not exactly the model of corporate efficiency, SIFMA is to be co-headed by the two chiefs of SIA and BMA, Marc Lackritz and Micah S. Green.

Financial denizens say that the main driver behind the merger was Goldman Sachs, with assistance from fellow investment banking heavyweight Morgan Stanley, as they wanted more influence over the groups and perceived the combination as a way. This begs one to question if Treasury Secretary, Henry Paulson, who is the former Chairman and CEO of Goldman Sachs, played any role in this merger.

This merger is also particularly timely with the Economist commenting that the Democrats are less likely to want to loosen financial-market laws than Republicans, and slightly more inclined to toughen up hedge-fund regulation, albeit Sarbanes-Oxley was a bipartisan bill. Nevertheless, reformers must be careful as this is not just a party politics issue but more importantly affects Wall Street's global superiority as a capital market. Neither the Republicans nor the Democrats have anything to gain if reforms drive away lenders and borrowers to other markets, as they did in the 1960s.