Earlier this week, the Wall Street Journal detailed a successful lobbying blitz by the banks to get accounting rules relaxed. This morning, the New York Times details another: the banks' successful effort to block legislation that would have allowed bankruptcy judges to lower the principal on a primary residence.

The main reasons for the defeat, the Times reports, was the industry's success in convincing lawmakers that the move might force mortgage interest rates up (a dubious claim), the White House's weak support for the measure, and money. The industry "poured millions of dollars into lobbying: four of the industry’s top trade groups spent nearly as much on lobbying in the first three months of this year as they did in all of 2001." And here's a candid admission from the head of the Independent Community Bankers of America: “The banks get it ... They understand you need a strong political action committee to get access to the fund-raisers. That’s where the lawmakers are.”

Other links this morning:
Regulator Clash Shows Stakes on Eve of New Banking Rules (WSJ)
FDIC Pushes Purge at Citi (WSJ)
Bank Profits From Accounting Rules Masking Looming Loan Losses (Bloomberg)
Banks Put Off Plans To Sell Toxic Assets (WaPo)
U.S. Banks Rely on Conversions for 22% of Stress-Test Capital (Bloomberg)
Bank of America Ousts Head of Risk Oversight (NYT)
Chrysler Enters Legal Homestretch (WaPo)