How the Wall Street Bankers Bought Congress
June 25th, 2009
You would think that causing the worst financial crisis since the Great Depression might have repercussions. You would think being a major factor in the destruction of around 40 percent of the world’s wealth might get you in trouble. You would think being the cause of the worst housing crisis in history — with millions of people losing their homes because of you — might force a restructuring of how Wall Street does things.
You would think that. But you’d be wrong.
For Wall Street’s lobbyists in Washington, it’s business as usual. Since Barack Obama took office, the bankers have succeeded in pushing through bogus “stress tests” of financial institutions’ solvency, escaping tougher government oversight, and steamrolling attempts to give working-class borrowers a break.
Even the much-hyped limits on CEO pay are being rolled back. In mid-June, Barack Obama lifted a five-month-old limit on executive compensation at financial firms that took federal bailout money. Apparently, only $500,000 a year in salaries and other perks was just too much of a sacrifice for the financial system to bear. Instead, Obama has established a “special master of compensation,” who will decide on pay to top executives at banks still reliant on government money.
While having a “special master” oversee pay might sound like a big deal, the banks aren’t sweating it. “Our people kind of thought it was a non-event,” one unnamed executive of a large bank told the Washington Post. “I don’t think there are worries about it on Wall Street.” And, the executive added, “It’s not like the horrible and unethical action from Congress, where they were putting artificial caps on pay or trying to steal back bonuses.”
The sense of entitlement on display in comments like these is staggering — as if the “wizards” of Wall Street deserve the billions in compensation showered upon them in the past decade for producing what has proved to be fictitious wealth, while destabilizing the economy and destroying the lives of people across the U.S.
As for legislation aimed at stemming the kinds of predatory lending practices that helped exacerbate the housing bubble and ultimately triggered the financial crisis, Senate Banking Committee Chair Christopher Dodd recently said, “We’ve got a lot on our plate. We’ve got other things to do.”
Apparently, however, one of those “other things to do” was not passing “cramdown” legislation — a measure that would have enabled bankruptcy court judges to lower the principal on existing mortgages for homeowners facing foreclosure, thereby helping people to keep their homes. In that bill, defeated in early May, the Senate sided with banks over homeowners by a 51-45 margin.
Housing rights activists estimate the legislation could have staved off 1.7 million foreclosures and preserved $300 billion in home equity. Nevertheless, a dozen Democrats in Senate voted against it.
“Instead of defending ordinary Americans, the majority of the senators went with the banks,” said the Center for Responsible Lending in a statement. “Yes, the same banks who have benefited so richly in the [$700 billion Troubled Asset Relief Program, or TARP] bailout.”
Meanwhile, the Treasury Department was celebrating the fact that 10 banks would be paying back TARP funds — insinuating that the financial system is on stable enough ground that the government could begin backing off.
But the same day that Treasury Secretary Tim Geithner talked up the TARP repayments, TARP Oversight Panel Chair Elizabeth Warren said the so-called stress tests, conducted to determine whether the big banks were on safe financial footing, should be redone.
“The employment numbers for 2009 have already exceeded the harshest scenario considered so far, suggesting that the stress tests should be repeated,” Warren’s report stated.
There was just one piece of legislation that didn’t go entirely the banks’ way: a bill, signed into law by Obama in May, that put some restraints on the out-of-control credit card industry,
The new law bans increases in annual percentage rate interest charges during the first 12 months after opening up an account. Consumers must get 45 days’ notice of changes in rates or contracts, and 30 days’ notice for account closures. The law also eliminates the notorious practice of “double billing,” in which credit card issuers impose finance charges based on balances already paid.
Yet even here, industry lobbyists were able to block changes sought by industry critics. Crucially, there’s still no cap on the interest rates that credit card companies can charge.
That’s why John Taylor, chief executive of the National Community Reinvestment Coalition, said in a recent interview: “It’s the bottom of the ninth, and it’s bankers 10, consumers zero. It’s like being in a street fight, and you and a few friends just went up against 100 other people, and you’re just picking yourself up off the ground. And you’re just bloodied.”
One reason bank lobbyists have been so successful is that they have convinced Congress to take on financial issues piecemeal, rather than in a single piece of legislation. That way, the lobbyists could focus on one battle at a time.
And on each bill, they made the case that new rules would restrict credit and jack up interest rates, thereby hurting consumers. Overall, the financial industry spent $42 million in lobbying efforts in the first quarter of 2009 — even as many banks were still being bailed out with taxpayer money.
By and large, this tactic has been successful. Scott Talbott, a lobbyist at the Financial Services Roundtable, admitted, “We knew we were going to be up against it. Yeah, we know it was going to be a tough year. And so far, it has not been a tough as expected.”
So despite Wall Street’s greatest crisis since the 1930s, the banking system is still calling the shots in Washington. Indeed, in a rare moment of candor, Sen. Dick Durbin (D-Ill.) said: “And the banks–hard to believe in a time when we’re facing a banking crisis that many of the banks created–are still the most powerful lobby on Capitol Hill. And they frankly own the place.”
What’s more, the same people move seamlessly back and forth between the corridors of power in finance and politics. Consider the case of Michael Paese, an ex-JP Morgan employee who became the top staffer to Rep. Barney Frank, chair of the House Financial Services Committee — which oversees Wall Street. Last September, Paese bolted to become Goldman Sachs’ top lobbyist. There he replaced Mark Patterson, who, in turn, left Goldman Sachs to become chief of staff at the Treasury Department.
Goldman Sachs, remember, is the firm that was run by former Treasury Secretary Henry Paulson before he went to Washington to work in the Bush administration. And don’t forget that Treasury Secretary Timothy Geithner himself is a disciple of Ronald Rubin, another former Goldman Sachs executive turned treasury secretary during the Clinton administration.
Given this Wall Street-Washington circuit, it’s little surprise that Barney Frank has written a piece of legislation on lending “reform” that seems tailored to Wall Street.
His proposed measure has nine consumer, housing and civil rights groups up in arms. The National Consumer Law Center, for example, says the proposed legislation would “do more harm than good,” and added in a statement, “The bill is complex, convoluted and simply will not accomplish its main goal–to fundamentally change the way mortgages are made in this country.”
Just in case the Wall Street/Washington revolving door isn’t sufficient to get their way, the finance capitalists spread enormous amounts of money around Congress.
In the 2008 election cycle, securities and investment firms donated a whopping $154.9 million to political campaigns — $57 million more than the 2004 elections, according to OpenSecrets.org. Of that, 57 percent went to Democrats and 43 percent to Republicans. Real estate, which became deeply enmeshed with Wall Street during the housing bubble, donated another $136.7 million. The split was 49 percent Democrats and 51 percent Republicans.
Commercial banks, meanwhile, contributed $37.1 million to politicians–the most ever from that sector–with 48 percent going to Democrats and 52 percent to Republicans. Lastly, hedge funds tossed in another $16.7 million — four times as much as the sector had donated in any other election cycle. Hedge funds favored Democrats by a 65-35 percent margin. Altogether, that comes to $345.4 million.
While the numbers may have been larger than ever, Wall Street has long bought members of Congress in both parties to advance its legislative agenda. And it was a Democrat, President Bill Clinton, who signed into law two key pieces of legislation that set the stage for the current financial crisis.
The Gramm-Leach-Bliley Act, passed by a Republican Congress in 1999, repealed the Depression-era Glass-Steagall laws, which had separated risky investment banking from traditional, deposit-taking commercial banks. A year later, Congress passed the Commodity Futures Modernization Act, which kept large parts of commodities trading beyond the reach of regulators — including complex financial instruments that triggered the financial meltdown.
Today, Democrats have total control of the legislative process. But Wall Street is still getting its way, despite the bankers’ shattered credibility for their role in crashing the economy. Real financial reform that provides relief to working people will come only when social movements can put enough pressure on politicians to force them act.
Source: Dissedent Voice
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June 25th, 2009 at 12:48 pm
Ahhhh – our very famous president – the never ending traveling burlesque Bush`Obama comedy of blood and fascism show patriotically broke from his campaign, along with the fellow Viet POW moniker`ed “Song Bird” McCain, to return to their Senatorial roost to assure poor poor AIG gambling debt’s were paid off bu US Taxpayers to the tune of 180 Billion USD.
And we should never forget the ever so great full, and always willing to play “find the the quarter” with his AIG owners, Christopher Dodd, first denied, then didn’t remember and finally had to confess that it was he that removed the language from the Bankers’ Welfare Act that disallowed money belonging to US stakeholder citizens money.
AIG only had to pay the Obama campaign 100,000$ to get his vote – not near as much to McCain. Once a low end street pimp – always a low end street pimp – or is it “whore”? Good thing Mr. Bomba-all-the-Sand-Negros-I-Can, as commander `n chief, gets to buy tax free ciggies at the PX while us sinners pay the taxes that allow him to sanctimoniously sign acts that raise the cost of sin on the rest of the smoking universe.
And of course, NBC and all all her affiliates, are drooling over the Pimp-Or-Whore’s presidential glow – and we can be sure it does not have anything to do with the 138 Billion USD bailout the parent company, GE, got.
And all these wars in the middle east – are they really for energy security? We get most all our oil from Canada – why ain’t we bombing them? No my friends – the allusion of middle east oil war is not about securing energy – it’s about assuring the oil traders and brokers having a good story to speculate oil to prices 5 times above fair value.
From the pulpits of the K-Street Brothels that once were our houses of government government, the realization of a spit drowned dictators dream has finally made it to the the sermons spoon fed America:
“Fascism should rightly be called Corporatism, as it is the merger of corporate and government power” – Benito Mussolini
Anybody got any tar and feather coupons to trade?
June 25th, 2009 at 1:55 pm
Agree with everything in this article regarding corruption and anti-little guy administrative moves in favor of wall street and ultra rich. However, I do want to clarify one point, as someone who works for one of the world’s largest banks and runs the pricing models for proposed legislation: the claim that this legislation will restrict credit and increase interest rates is accurate. Banks make more money profiting off of the “bad” borrowers who miss payments, don’t manage their money well, and thus don’t adjust when interest rates are hiked up. On the other hand, they generally lose money loaning to smart consumers who pay off monthly balances, depending on the income of the bad to pay for the good. So, the claim is correct: tie banks hands on raping of consumers and it will drastically change the shape of how banks lend money.
As a macro-economist, and someone who loves America and is direly concerned about our future, I do wish we’d “drastically change the shape or our current baking environment”. It is in the best interest of our country to raise interest rates and limit credit.
June 26th, 2009 at 5:13 am
oh sure, when it comes to legislation on the banks…that they put through piece by piece , but when it comes to legislation where the PEOPLE are concerned they “CRAM” that through piggybacked and buried in amongst a whole load of bull—- and in such a hurry NO body knows what hit the fan, till it’s too late.
“WE THE PEOPLE , ARE COMING….WE ‘ARE’ COMING.
June 26th, 2009 at 8:41 am
In 1492, Chemor, chief Rabbi of Spain, wrote to the Grand Sanhedrin, which had its seat in Constantinople, for advice, when a Spanish law threatened expulsion.2 This was the reply:
” Beloved brethren in Moses, we have received your letter in which you tell us of the anxieties and misfortunes which you are enduring. We are pierced by as great pain to hear it as yourselves.
The advice of the Grand Satraps and Rabbis is the following:
1. As for what you say that the King of Spain obliges you to become Christians: do it, since you cannot do otherwise.
2. As for what you say about the command to despoil you of your property: make your sons merchants that they may despoil, little by little, the Christians of theirs.
3. As for what you say about making attempts on your lives: make your sons doctors and apothecaries, that they may take away Christians’ lives.
4. As for what you say of their destroying your synagogues: make your sons canons and clerics in order that they may destroy their churches. [Emphasis mine]
5. As for the many other vexations you complain of: arrange that your sons become advocates and lawyers, and see that they always mix in affairs of State, that by putting Christians under your yoke you may dominate the world and be avenged on them.
6. Do not swerve from this order that we give you, because you will find by experience that, humiliated as you are, you will reach the actuality of power.
(Signed) PRINCE OF THE JEWS OF CONSTANTINOPLE.”
2. The reply is found in the sixteenth century Spanish book, La Silva Curiosa, by Julio-Iniguez de Medrano (Paris, Orry, 1608), on pages 156 and 157, with the following explanation: “This letter following was found in the archives of Toledo by the Hermit of Salamanca, (while) searching the ancient records of the kingdoms of Spain; and, as it is expressive and remarkable, I wish to write it here.” — vide, photostat facing page 80.
~ The above was quoted from Waters Flowing Eastward by Paquita de Shishmareff, pp. 73-74
June 26th, 2009 at 2:28 pm
The FED came about as part of the WZO initiated Balfour Declaration, an accomodation by the UK, who was preparing to end WW I through a “gentleman’s” surrender to Germany (read Benjamin Freeman’s 1961speech on this topic at Sweet Liberty), to set aside the colonized lands belonging to Palestinians and have them transferred to the WZO Bankers cult of Gypsies – a people without loyalty to nation and a dominion heretics’ disregard for the laws of men.
At the time, and just as it was before the US entered WWII, the US populace was against the UK on the side of Germany. The sayans of the WZO persuaded the UK ministries not to surrender with the promise of finance for rearmament and the entry of US blood and treasure into the fray.
To do this, the WZO’s media sayans in the US delivered the necessary commentary with the false surveys of US desire. Their main sayan, Justice brandies of the US supreme court assured Woodrow Wilson would break his promise not to enter the war and his support for the usury infrastructure necessary for the WZO finance, the Federal Reserve Act, by showing Wilson a few photographs and affidavits of his “Monica” doing embarrassing unspeakable breaches of Victorian conduct with Woodrow in the hat room.
Wilson caved, WWI was extend by years, Millions of Americans died and the Federal Reserve was born. The accommodation demanded by the Balfour Declaration was codified in the first act of the UN, an act that created the abomination commonly called the State of Israel, out of thin air,on the homelands of the true descendants of Abraham and Jesus, the Palestinians.
Goes a long way in explaining why all those Zionist Madrassa’s, like Harvard, Princeton, Yale, Columbia, etc. have at least one hall named after Woodrow Wilson and Justice Brandies!
America islso the only developed (well used to be developed) nation to treat health as a privilege instead of a right. The Wall Street Journal constantly complains how poor people don’t pay taxes – well they do they pay FICA, or Social Security Taxes. It’s capped for wealthy hustlers. Let’s remove the cap and let the wealthiest among us enjoy the same tax free existence America’s poor do.
In other developed nation – there is no “Health Insurance Industry” driving up the costs of health care. Even less developed countries, like Cuba enjoy longer life spans and lower infant mortality. In countries where health care is a right, doctors are paid bonuses, not based on the number of 6000$ MRI scans they prescribe when a 50$ ultra-sound scan would provide the necessary diagnosis, but based on the well being of their patients. Something is very wrong in America. The media elite barking from the public pulpit relegate the people who pay all their benefits to chattel they refer to as “consumers”. The truth is – the consumer is the “producer” and all those oligarchs falsely hailed as so called producers, as well as their clerks, maids and “Johns” in our alleged government are, in truth and reality, the real consumers.
The problem is that a cult of corruption relies on the ignorance of non-enlightened players to perpetuate the cult. They begin to believe their lies are facts. They begin to believe they are omnipotent – and that will be their downfall – they think like a food crop – and soon they will be harvested – they tender spoiled flesh roasting on the spits of those they mistook through ignorance, as consumers, instead of what we actually are – the owners – the inventors – the maintainers – the builders – the producers – the people of the United States of America.
June 27th, 2009 at 1:39 pm
“A Zionist is not a Jew. A Zionist is a Zionist, period.”
Mahmoud Ahmadinejad
Note: A lot of American Jews share this sentiment. Zionism repeats is the classic cliche of all dominion heresies that have soiled the history of humankind, that the cult of the dominion heresy is chosen by God and above the subhumans not chosen by god. The dominion heretics loyalty is only to the “cult”. The dominion heretic’s cult is above loyalty to nation and above the laws of the rest of us, the sub-humans, not chosen by god.
Read Mark Glenn’s Six Simple Words, you sub-human you.
Truth be known Israel and her little rag tag band of Masada II bound dominion heretics are nothing more than stooges for War Bankers. For a fist full of a few shekels and the freedom enjoy an orgy of blood lust with defenseless Palestinians, they create the hate and fire that assure blood soaked dollars continue to poor into the counting rooms of War, Energy and Dope Exchanges’ counting rooms. Consider this, a barrel of opium is worth a million barrels of oil. In 2001, the Taliban, according to a UN report, had completely stopped opium production in Afghanistan. A record opium harvest was recorded the first season after the US invasion. In August of 2001, Taliban officials met with Bush Administration DOE officials and suits from Unocal in Houston Texas to discuss a pipeline (BTW Aug 2001 is the month Larry Silverstein purchased the twice condemned for Asbestos and under waiver for same, WTC complex – Larry was also the only property owner on Manhattan to have a triple indemnity insurance policy with a pay off clause that covered the precise set of circumstances that occurred on 911.). When the Taliban refused the right of way, they got the expected “Bomb you back to the stone age” call from DoS undersecretary Armitage (how many times has that guy used that cliche?)
On 9-10 DoD boss Donald Rumsfeld reported 2.3 Trillion Dollar accounting issue related to the DoD comptroller, Dov Zacheim, a rabbi. An office in the Pentagon had been set up to audit Dov’s missing 2.3 Trillion fuzzy book. That office was the precise location an alleged hijacked plane struck the Pentagon. We should note that before the good Rabbi was embezzling at the DoD, he ran a company that had developed remote and autonomic navigation and flight control systems that have been installed on US commercial airliners for more than 20 years. Kind of makes you wonder – why weren’t those systems used to prevent that plane from crashing into the office at the Pentagon that was auditing the 2.3 Trillion Dollar embezzlement? How could 3 heavy airliners, all with that same flight control hardware installed lumber through the most expensive air defense system in the world, in the middle of 3 simultaneous “defense drills” over the skies of NYC that day?
From the movie “V”: “There is no such thing as a coincident, only the allusion of one.”