Big Banks Flex Their Guns Against Tighter Rules

“The nation’s biggest banks are going on the offensive to fend off growing efforts in Washington to rein them in.

The banks have hired longtime, influential Washington hands to deflect regulatory and political pressure to strengthen their finances and to sell assets. Regulators and some lawmakers have raised concern that large banks remain “too big to fail” and could require another government bailout in the event of a new financial meltdown.

The effort by banks marks a lobbying turning point for the industry, which adopted a mostly low-profile stance to new regulations in the wake of the financial crisis. It also comes as banks such as Morgan Stanley, MS -0.82%Bank of America Corp. BAC -0.84% andGoldman Sachs Group Inc. GS -1.12%are shedding lucrative assets that would have required them to hold more capital to compensate for their risk.

While the banks are joining forces, much of the work is being coordinated through trade groups.

Several banks and the Financial Services Forum, a top trade association, have hired Tony Fratto, a former Bush administration official, to provide what they call a “rapid response” to criticism that banks remain too large. The too big to fail notion implies that the government would have to step in and provide funding to institutions whose failure could disrupt the financial system, as it did during the 2008 financial crisis….”

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