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It was hardly how Wall Street and banking-industry lobbyists wanted 2010 to begin.

Facing fresh political headwinds, public ire over bank bonuses, and tough election prospects in November, the Obama administration has grabbed Wall Street's attention by adopting a more populist and critical tone toward the nation's largest banks and backing its rhetoric with high-profile proposals for new taxes and regulations.

The first salvo came on January 14 when the administration announced plans to impose a decade-long tax on the nation's 50 largest banks. The levy would offset projected losses of about $117 billion in the Troubled Asset Relief Program, which helped Wall Street firms and other financial institutions recover from the recession. The tax proposal, details of which are still being worked out, is expected to be included in President Obama's budget next month.

Obama fired another blast at giant banks one week later when he embraced a plan pushed by adviser Paul Volcker, the former Federal Reserve Board chairman, who had previously enjoyed scant influence in the White House. The president called for limiting the size of the largest financial firms. To lessen risks further, the administration indicated that it would bar the biggest banks from owning hedge funds or private equity funds and curb their ability to engage in proprietary trading for their own accounts.

It's all making the financial industry anxious. "I think the White House tax and regulatory proposals have sparked utter fear and panic, not only among large banks but others on Wall Street who wonder, 'What's next?' " says Dave Franasiak, a principal at Williams & Jensen, who lobbies for hedge funds and other financial services firms.

It will be difficult for large Wall Street institutions to fight back, Franasiak notes: "Some banks are nervous about being too visible on these proposals because they feel they would become political lightning rods."

The Obama proposals will need congressional approval, which may further complicate passage of broader financial services reform measures working their way through Congress. The House in December approved a sweeping package of changes that include creation of a Consumer Financial Protection Agency to regulate products such as credit cards and mortgages; new regulations for some risky derivatives; and requirements for deeper capital cushions and more oversight for the largest banks and Wall Street firms. Lobbyists are focusing their attention on the Senate Banking, Housing, and Urban Affairs Committee, where Chairman Christopher Dodd, D-Conn., has been trying to forge a bipartisan compromise. K Streeters hope that the financial protection agency will be left on the cutting-room floor.

Lobby powerhouses and hired guns are moving quickly to respond to the broadsides by hiring legal talent for possible court challenges, pitching new coalitions to fight the administration plans, and stepping up efforts to ensure that a consumer protection agency isn't included in the final financial reform measure.

The Securities Industry and Financial Markets Association recently retained Carter Phillips, a prominent Supreme Court litigator with Sidley & Austin, to explore a possible court challenge to the bank tax on constitutional grounds, because it targets only the biggest institutions.

Sam Geduldig, a lobbyist with Clark Lytle & Geduldig and a former aide to Republican House leaders, sent e-mails last week to six large Wall Street banks to gauge their interest in forming a coalition to fight the proposed bank tax.

Leading financial services lobbyists complain that the flurry of White House initiatives and the sharper criticism are largely partisan populism.

"The tone has become, frankly, way too political and way too aggressive to suit my style," says former Rep. Steve Bartlett, R-Texas, who runs the Financial Services Roundtable, a trade group consisting of 98 of the nation's largest integrated financial services companies. Bartlett concedes that "there are clearly differences" on reform between his members and the White House but adds that "they're not between good and evil." The roundtable, like many other industry trade groups, is hoping that the Senate winds up with a bipartisan bill that is weaker than the House measure, which passed with no Republican support.

At a meeting of the roundtable's board in Washington on January 21 -- the very day the White House unveiled the Volcker plan -- the lobby group's members decided to finance a more vigorous communications and image effort. Or, as Bartlett puts it: "We're looking for relief from the pain. We're getting hammered every day." He said that the largest roundtable members would contribute $75,000 to $100,000 each, while some of the smaller ones would donate as little as $5,000 apiece.

Other lobbyists share Bartlett's dismay over the administration's hotter rhetoric. "A big concern of bankers around the country is the language being used in Washington," says Ed Yingling, president of the American Bankers Association, which includes both large and small banks. He contends that people are getting an erroneous picture of the banking industry as a whole because they don't realize that the new tax and regulatory initiatives are largely aimed at the biggest banks and not the industry in general. "Our overall concern is that the loose use of the term 'bank' is leading to a misrepresentation with the public," he said, and is generating a false sense of the extent of risky investments in the broader banking sector.

Yingling and other lobbyists also point out that the proposed levy could slam several big banks that have repaid their TARP money with interest.

Last week, dozens of ABA members from the group's state associations made the rounds of Capitol Hill offices to voice their concerns about the latest White House reform proposals and other issues.

The association will continue to press lawmakers hard in the coming weeks. In March, the trade group will hold its annual government-relations meeting in Washington, an event that is expected to draw more than 1,000 bankers. The ABA is also known for its ability to mobilize grassroots support. "Last year, we generated over 300,000 letters to Congress mostly on financial services reform," Yingling said.

Meanwhile, securities industry association President Timothy Ryan issued a statement warning that the tax could hurt customers in the end. "In our industry, costs are typically passed along to institutions and individual investors, so the burden will likely fall on them."

On top of the two new initiatives, the White House has sent strong signals that it will keep fighting hard for the Consumer Financial Protection Agency as part of the final reform package. Obama met with Dodd this month to stress the importance of including the new agency in the Senate legislation.

In their battle, financial services lobbyists have benefited from the firepower of the U.S. Chamber of Commerce. For months, a chamber-led coalition has poured millions of dollars into television and other ads in an effort to kill the proposed agency. The chamber is currently running radio and online ads in several key states where senators are considered possible swing votes, such as Arkansas, Indiana, Montana, Nebraska, and North and South Dakota.

The ABA is one of many financial industry groups that have blasted the concept of a separate regulator devoted to consumer protection. Looking ahead to a Senate bill, Yingling noted that Republicans have "made clear that they're opposed to the CFPA," which gives him cause for optimism that the idea may not make it into the final legislation.

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