Robber Baron Redux: Financial Reform Edition

by Eric Martin

You get what you pay for:

A full 90 members of Congress who voted to bailout Wall Street in 2008 failed to support financial reform reining in the banks that drove our economy off a cliff. But when you examine campaign contribution data, it's really no surprise that these particular lawmakers voted to mortgage our economic future to Big Finance: This election cycle, they've raked in over $48.8 million from the financial establishment. Over the course of their Congressional careers, the figure swells to a massive $176.9 million.

The complete list of these Crony Capitalists is below, along with the money they pulled in from Big Finance, according to data compiled by the Center for Responsive Politics (opensecrets.org). The career data goes back to 1989. Of the 69 House members who voted with Wall Street on both the bailout and financial reform, 60 are Republicans, while nine are Democrats. All 21 Senators who voted with Wall Street on both issues are Republicans, and Republicans raked in over 90 percent of the total campaign contributions. [...]

These aren't the only politicians carrying water for Wall Street—only the most flagrant. Some of the bank lobby's savviest servants on Capitol Hill do their dirty work early in the legislative process. They push through technical amendments and deploy complex procedural tricks to defang a bill, but when the final vote comes, they can still create the appearance of taking a stand against Wall Street's interests. Rep. Melissa Bean, D-Ill., is a master of this technique, and Tea Party favorite Sen. Scott Brown, R-Mass., was able to claim credit for voting in favor of reform after demanding—and receiving—a host of big bank giveaways in return for his vote.

Nor are Republicans the only recipients of Wall Street largesse. Bean, for instance, has pulled in over $773,000 from Wall Street in the 2010 cycle alone, while working overtime to carve loopholes into new consumer protections (she's scored $2.4 million over the course of her Congressional career). And the Democratic leadership has received millions as well.

When it comes to dealing out economic damage, no special interest group has been able to wreak more havoc that Big Finance. After inflating an $8 trillion housing bubble and sparking a recession that has cost the economy over 8 million jobs, public pressure to crack down on Wall Street was intense. And the public is still clamoring for Wall Street accountability—after two years in office, the Wall Street reform bill remains the most popular legislative effort championed by President Barack Obama, and getting tough on Big Finance has been a reliable re-election strategy for embattled incumbents. [...]

But if you follow the money, it's obvious why so much work remains to be done on financial reform. This year alone, Wall Street spent a staggering $251 million fighting financial reform. According to a separate analysis of campaign contributions performed by Public Citizen, lawmakers who voted with Wall Street on both the bailout and reform received nearly triple the campaign cash of those who opposed Wall Street (figures in the Public Citizen study don't correspond to those I've compiled, as Public Citizen examined contributions from 2007 through July of 2010).

Loving that Citizens United decision more and more and more.  My favorite part of this whole boondoggle was when GOP leaders were claiming (and still are) that the financial reform bill was itself a bailout of Wall Street that they, the GOP leaders, were preventing - in the interest of the common man, naturally. 

Shameless deception and exploitation of the voting public, funded by big money from Wall St.

Ain't that America!

See, also, Mike Lux on the "radioactive" Elizabeth Warren:

My favorite recent example was the hand-wringing by the "moderates" in DC over the appointment of Elizabeth Warren. Somehow the logic went that because progressives liked her, appointing her would be a political disaster with the middle. Dana Milbank, in one of his classic diatribes no doubt fed to him by a White House insider fearful of losing his influence, did a long piece full of nasty innuendo from unnamed sources about how Valerie Jarrett was leading the President to disaster, and his leading example was that Jarrett was one of the people in favor of the "politically radioactive" Warren getting her job. Having seen focus groups where working-class swing voters react to clips of Elizabeth talking about the financial industry, with them applauding and talking about how they would support her for President if she ran, I can assure Dana: you can stop worrying about Elizabeth's political radioactivity. Swing voters love her for the same reason progressives do: because she pulls no punches and takes on the powers that be. The only folks that she is radioactive with are the Wall Street execs and their friends in Congress.

And those are the only folks that count.

UPDATE: D-Day has more.

Comments

[Countme?]

The tree of liberty is aflame but I can't afford the hook-and-ladder fee, the dalmation surcharge, and the hose handling commission.

Piss on it.

[Bokonon]

Oh, hey, this is all OK. The capture of the legislature and regulatory process isn't dysfunction - it is downright patriotic! Dontcha know that the American Revolution was fought to preserve the commercial rights and prerogatives of corporate powers like the British East India Company, after all?

NOT!

But that's what the GOP essentially professes, and what the 'Baggers seem to believe when they wave their signs claiming that regulation equals fascism. And those beliefs (plus the political program that rides on top of them) is stoked by doublethink and propaganda that is bought and paid for by those same corporate interests.

[Tony P.]

Has everybody suddenly gone out and gotten a life? It has been hours since a new comment, on any thread, has shown up. What's wrong with you people?

Okay, maybe the libruls among us have absolutely nothing to add to Eric's post. But you'd think one of the conservatives around here would at least make a token effort to suggest that corporate money equals personal speech or something.

--TP

[Gary Farber]

They're over at the fun party.

The one we know the fun people are always having and not telling us about.

Bastards.

[bobbyp]

Tony,

You want comments? Here's some suggested posts to rile things up:

1. Anything on the Arab-Israeli conflict, especially if it is seen as "pro-Palestinian". That usually gets everybody going.
2. Chartalism. Guaranteed to get Sebastian's ire up.
3. Bill Ayers. Gary Farber's favorite.

Respectfully submitted with tongue in cheek.

[russell]

Okay, maybe the libruls among us have absolutely nothing to add to Eric's post.

The only thing I had to add was to call down vile curses on the heads of the bankers and their children to the seventh generation.

Boils, frogs, stuff like that.

That seemed uncivil, so I figured I'd just shut up.

Money talks and BS walks, been that way since Hector was a pup. Probably longer.

If we don't want banks driving the public policy bus, we need to get their freaking money out of the mix.

With the Citizens United decision a done deal, any folks actually interested in getting corporate money out of politics are looking at at least a generation of walking stuff back to square one, let alone making anything like an improvement.

The word for all of this is plutarchy.

In another thread I made the somewhat flippant suggestion that younger folks should stay out of debt and learn to grow their own food. GOB found that to be good advice, and in fact it is good advice if you're in a situation where the economic and political environment is unresponsive to your needs.

If the economy and political system becomes unresponsive to folks, such that they feel they have no control or input, and can find no way to regain control or input, they will begin to check out of it.

Seriously, who wants to live at the mercy of a bunch of power hungry sociopathic greedheads?

At the micro level, that might not be so bad in lots of cases. It might be great in some cases. At the macro level, I'm thinking it's not such a good thing.

[russell]

Hey, here's some more fun.

Banks are foreclosing on tens of thousands of people a month. To get that done, they're signing off on foreclosure requests without even reading the docs. Just notarize 'em and send 'em to the judge.

The perfectly predictable clusterf*** has ensued.

Congress's response is to quietly pass a law requiring courts to recognize out-of-state notarizations, including automated "notarizations" generated en masse by computer software.

Net/net, make it easier for banks to process foreclosures, override state and local requirements for documentation, limit liability to banks if they foreclose on people's homes improperly.

It's on Obama's desk. Passed the Senate by unanimous consent, without debate.

Patrick Leahy, of all people, pressed for passage, claiming that "constituents" had called for it.

Anyone here from VT? Show of hands, who called Leahy and asked for this?

Provide the banksters with a handhold, and they'll steal your freaking face.

[russell]

More laughs.

How big of a mess do the investment banks make when they screw up?

Really, really big.

h/t Dr. Duncan Black
h/t Cole's joint on my previous

And yeah, it's hate on banksters day. No worries, they can take it. They'd cry all the way to the bank, except they are the freaking bank. So it's all laughs for them.

[hairshirthedonist]

If the economy and political system becomes unresponsive to folks, such that they feel they have no control or input, and can find no way to regain control or input, they will begin to check out of it.

It's funny you should write that, russell. I was standing in the shower thinking (I was, but it's a lyric, too. Anyone?) just this morning about all the banter we've had around here about going Galt. I thought that the people who really should go Galt aren't the captains of industry, but the ones who, as you have noted, produce the value - the workers. I don't know how to do it without it sucking hard for everyone, but it's an appealing idea, the workers leaving the financiers in the lurch, with no one to make their fortunes on.

The fantasy goes something like this: We (the workers) would all work for each other, with our own underground banking system. We would insure each other simply by helping our fellows in their times of need. We would go back to basics (and play our own music). We would live in communes (and communes of communes). We would leave many of the superficial trappings of modern life behind (except for anything necessary for wireless communication, including broadband internet access. Blogs would be paramount in this corporation-free utopia. State of the art brewing equipment would also be necessary, of course).

So, who's with me?

[Countme?]

Who knew this guy would turn out to be fascist Republican vermin and Taliban Underpants Gnome, too:

Like an alien infestation planted among the human race along ago, the whackaloons among us are emerging from their zombie husks to reveal the vermin candidates within.

http://www.balloon-juice.com/2010/10/07/open-thread-itll-make-the-teabagging-more-convenient/

The prisons and the state mental hospitals are chock full of Republican candidates, too. I say Charles Manson for Secretary of Health and Human Services, until the agency is abolished and the good people employed there are butchered by Manson's staff.

I think the guy above has a chance.

Plus, the State of the Union addresses should be revealing, if he moves the guitar.

Satirizing the satire that is now our political discourse is going to be as difficult as designing a satire of Monty Python, in which silly walks (from the local and state governments, of course, not to mention Silly Walk Inc. which will pay to have silly walks outsourced to the private sector) and its political action committee) become actual campaign positions and policy initiatives.

If we're lucky, the coming violent end of the United States of America, as the old and the sick, the unemployed, the gay, and the politically moderate are murdered by the Republican Party of Vermin, will be over by 2012.

Live within your means, grow your own food, and stock as many high-powered weapons and as much ammo as possible for when the Republican taxman comes calling.

[Eric Martin]

Juana's Addicion

[hairshirthedonist]

si (too easy)

[wj]

Has everybody suddenly gone out and gotten a life?

Gotten a life? Probably not. But when the economy starts to pick up, some of us get distracted by our day jobs. Sometimes for hours on end. Sigh.

[jonnybutter]

Yeah, nothing to add. Legal corruption is still corruption. In fact, it's a lot worse than the penny ante kind. I've quoted this lyric before, but it bears repeating (it's from Bobby Zimmerman): 'Steal a little and they throw you in jail/Steal a lot, and they make you king' ('Sweetheart Like You')

[Uncle Kvetch]

Gotten a life? Probably not. But when the economy starts to pick up, some of us get distracted by our day jobs. Sometimes for hours on end. Sigh.

I'll see your sigh and raise you an "oof." Anybody got an Advil?

[Countme?]

Meanwhile: Tea Party Christianist vermin attack:

http://www.timescall.com/news_story.asp?ID=23754

I suspect this woman will be a viable Republican ignoramus candidate for Congress in 2012. Funded by the Koch Brothers and Wall Street.

She's already ahead in the polling.

Wait until she finds out Medicare is a government program and her unemployment insurance was cooked up the Kremlin.

Or perhaps she'll be the running mate for the Times Square Tighty-Whitey Underpants Cowboy Guitar Player. President FruitofthelooN.

She'll accept his offer as long as he decides to wear the more formal and Christ-inspired boxer shorts on the campaign trail.

[russell]

I don't know how to do it without it sucking hard for everyone, but it's an appealing idea, the workers leaving the financiers in the lurch, with no one to make their fortunes on.

Not sure if it really registers in the minds or wallets of the finance sector folks or not, but as of August there were about 2.4 million people in the "marginally attached" unemployment category.

"Marginally attached" means you:

• Want a job but don't have one
• Are available for work
• Have looked for work in the last year
• Haven't looked for work in the last four weeks

If you're reason for not looking in the last four weeks is "because there are no freaking jobs to be had", you're counted as a "discouraged worker".

1.1 million of those.

So, 2.4 million folks have, involuntarily, checked out of the workforce, and 1.1 million of those have done so because there's just no freaking point in beating their heads against the wall anymore.

I don't know how those people eat, or pay their rent, or what they do with their days. Maybe they squat in foreclosed houses and shoot pigeons for dinner. Maybe they sleep on somebody's living room couch and mow lawns and collect empty bottles for cash.

What they don't do is two-point-four million people's worth of economic value creation. It's a dead loss, macro-economically speaking.

At any rate, hairshirt, if you decide to pack it in and head for the hills, you'll have some company.

[Ugh]

I'll see your sigh and raise you an "oof."

How about an "ugh"?

[hairshirthedonist]

What they don't do is two-point-four million people's worth of economic value creation. It's a dead loss, macro-economically speaking.

Not only does it result in an on-going and unrecoverable loss contemporaneous with the man-hours of non-work, the longer it goes on, the more it erodes the potential productivity that could be realized if/when it ends. It's a hysteretic, path-dependant problem. The gears of our economic engine, human and mechanical (metaphorical and literal), will be harder to turn the longer they are left idle. The non-economic human losses are even worse, and will manifest themselves economically to boot. It's pretty depressing.

[Uncle Kvetch]

Yeah, that too.

[Countme?]

The unemployed and the underemployed population will not be enough to make such a movement effective.

It will take perhaps a force of ten million other Americans -- middle class and wealthy -- as well, to effectively make this country ungovernable and dangerous for the plutocracy of the fascist governing/business class.

Such a movement will not succeed without a militant tax revolt -- I don't really care about political persuasion here -- , which has as its credo that certainly no government, at any level, run by tax-hating Republicans, but also blue-dog Democrats, who have demagogued taxes since time began, will get one cent of taxes out of the millions in the movement for ANY program, from Medicare to defense to cleaning up the vermin sewage of the plutocracy.

You tax us and we will destroy you. The tax debate is over. No taxes at any level of government. Non-negotiable. The debate about 39% marginal taxes and 36% marginal rates is done. The new demand is zero.

You think you hate taxes? Wait until you get a load of us.

When there is no government standing between the government haters and the folks who believe a reasonable amount of government is necessary for a civilized society, the debate can be resumed by other means until one side or the other is effing dead.

Unfortunately, the Republican Party has been arming itself to the teeth over recent decades and once the Koch Brothers and the rest of the vile filth wrest control of the U.S. Government and its armed forces from the Democratic Party and the once-moderate Republican Party, they will not hesitate to kill as many Americans participating in the tax revolt as they can.

The gun manufacturers will sell to anyone, although you might have to tell them you're an Obama-hater as a ruse.

Once my tax dollars start paying for Sharron Angle's health insurance (it already is; her husband is a retired Federal employee, the parasite worm) as a U.S. Senator, the Republic is done.

[russell]

Once my tax dollars start paying for Sharron Angle's health insurance (it already is; her husband is a retired Federal employee, the parasite worm) as a U.S. Senator, the Republic is done.

We could take a page from Sue Lowden and send Angle a chicken.

[ral]

You Gotta Go Oww!

[Countme?]

The Interstate Commerce legislation Russell noted above was vetoed by President Obama.

Expect political ads tomorrow across the country funded by the mystery meat behind Citizen's United showing a series of black men robbing banks acrosss the country.

[Sebastian]

I'm fine with the overall thrust of the post, but it shouldn't/can't be blamed on Citizens United. All of the major banks and Wall Street players have been funding lobbying forever under whatever method needed. Citizens United really didn't change much in *effect* it only changed the method by which corporations made their donations/lobbying. All of this Goldman Sachs lobbying would have been done without the ruling, and in fact most of it was done through lobbying methods from before the Citizens United case.

[jonnybutter]

So, 2.4 million folks have, involuntarily, checked out of the workforce, and 1.1 million of those have done so because there's just no freaking point in beating their heads against the wall anymore.

Look here, there *are* jobs to be had out there. For example, there is a great need, in some areas, for workers to do the job of removing cigar butts from urinals with forks. This is a vital service, and it can't be automated or outsourced. No, it's not what most people particularly *want* to do, but that's why they call it 'work'!

[Eric Martin]

Seb: but there is much more outside group money funneling in this election. You're 100% correct that the wealthy have and will always lobbied hard, with a loud megaphone. But Citizens made it even easier.

[Countme?]

Another reason for a rejuvenated, militant ACORN:

http://www.dailykos.com/storyonly/2010/10/7/908500/-IL-Sen:-Kirks-race-based-election-protection-plan

[Tony P.]

hairshirt,

Your fantasy (at 9:22 AM) appeals to me, including the stipulation about blogs. Alas, when I think about the prerequisites for "blogs", I come up with a daunting list.

There's electricity, for starters. That's kinda hard to home-brew. Oh, sure, there's solar panels, but those are even harder to home-brew. Going Galt -- or (c)ommunist -- without reverting to a medieval lifestyle would be tough.

Most of the conveniences of modern life cannot be provided to little people by other little people. But there's one possible exception: MONEY.

I've said this once before: if we had the balls, we would find a way to match up those of us who get 0.5% interest on our savings from the banksters with those of us who pay 25% interest on our credit card balances to the banksters, and split that 24.5% vigorish between us.

But we DON'T have the balls. Most of us can probably attest that lending money to, or borrowing money from, friends is an uncomfortable experience. So we pay the banksters their vigorish for taking the embarassment off our hands.

Oh, well. Soon enough they will have ALL the money, and then it will be pointless for us to lament that we have no balls.

--TP

[russell]

Alas, when I think about the prerequisites for "blogs", I come up with a daunting list.

Carrier pigeons. Not real-time, but it'll get there. Think Usenet in digest mode.

[Rob in CT]

Tony,

Your fantasy appeals to me. Alas, I agree: no balls. I have money sitting in a savings account. I'm getting about 1% on it, last I checked (I don't check much b/c it's depressing). But I'd rather do that than risk loaning any significant portion of it to an individual, w/o safeguards.

I do know a guy who does it... I used to think of him as a borderline loan shark. His rates were high. But they aren't credit-card high. He seems to make decent money on it, and takes into account the chance of default. It works for him, I guess. More balls, perhaps.

[Tom M]

This year alone, Wall Street spent a staggering $251 million fighting financial reform.
Well,that's putting people to work right there. The wrong people,sure,but come on, the lobbyists and their friends have to buy lattes and frappecinos too, you know.

[Sebastian]

"Seb: but there is much more outside group money funneling in this election. You're 100% correct that the wealthy have and will always lobbied hard, with a loud megaphone. But Citizens made it even easier."

I would suggest that is because the stakes for bankers and financiers (the people with the most money) haven't been higher in decades. Citizens making it 'easier' is debatable. It made it more direct and traceable if you don't go through PACs and other vehicles. Bankers and financiers were going to be hitting this election hard, and they would have done so using all of the pre-Citizens tools and with all the same money as now.

Do you think you could have written this exact same post if Citizens had ruled the other way? I'm certain of it.

[Eric Martin]

It made it more direct and traceable if you don't go through PACs and other vehicles.

How so?

[McKinneyTexas]

Juana's Addicion

Que?

[Sebastian]

"How so?"

Because the obvious expenditure reporting is even more obvious than if you have to trace it through a web of PACs.

[Hartmut]

Alas, when I think about the prerequisites for "blogs", I come up with a daunting list.

Carrier pigeons. Not real-time, but it'll get there. Think Usenet in digest mode.

Recently done by a guy in Australia. He send a huge file
a) by net as usual
and
b)on a memory card by carrier pigeon
The pigeon arrived long before the file transfer by net was complete.
For a larger service it would probably a wee bit difficult to get the pigeons back from the customers regularly (the pigeon carriers could as well transport the blog posts themselves).

[yods]

"Recently done by a guy in Australia."

This is way of topic, but I'm sure that was in SOuth Africa.

[Gary Farber]

How quickly the kids forget the RFCs.

[Hartmut]

I stand corrected. It was indeed a South African company that did it (and the pigeon's name was Winston).

[russell]

Juana's Addicion

Que?

I'm thinking it's where hsh's lyric about "standing in the shower thinking" comes from. "Juana's Addicion" is AKA "Jane's Addiction", an LA band from the late 80's / very early 90's.

They brought us Lollapalooza.

Do you think you could have written this exact same post if Citizens had ruled the other way?

Most likely.

If we want corporate money out of politics, then we should make it illegal for corporate money to be in politics.

There isn't another solution.

If we don't want to do that, we will live with corporate money in politics.

The various attempts at "campaign finance reform" that we've seen over the last couple of decades have been [email protected] and ineffective (and often legally questionable) because nobody wants to deal with the elephant in the room.

"You know the way to stop me, but you don't have the discipline".

[McKinneyTexas]

Does anyone know any or most of the substantive particulars of the proposed financial reform? What exactly does 'reform' mean?

[Eric Martin]

McTex,

I know a couple off the top:

1. Banks and other Fin Institutions engaged in shadow banking must pay into a fund to be used to bail them out in the future if necessary. That way, US taxpayers aren't the backstop.

2. There are capital requirements for exotic debt instruments, like the CDOs, so that banks and other instistutions can't easily overleverage and thus require bailing out.

[McKinneyTexas]

1. Banks and other Fin Institutions engaged in shadow banking must pay into a fund to be used to bail them out in the future if necessary. That way, US taxpayers aren't the backstop.

2. There are capital requirements for exotic debt instruments, like the CDOs, so that banks and other instistutions can't easily overleverage and thus require bailing out.

Seems reasonable. Are there any reason-based counter-arguments? What is shadow banking?

[Eric Martin]

Not that I'm aware of McTex.

Most of what I've seen are arguments that regulating derivatives and exotic debt instruments will cut back on economic activity (read: the buying and trading of those instruments). And that this will cut into the profits of Wall Street firms doing the trading.

Which is not a bad thing in my book, even if it stings the bottom line on Wall St a bit, these things should not be allowed to run amok unregulated.

[ral]

"What is shadow banking?" The Wikipedia article seems to give a good description.

[Bernard Yomtov]

What is shadow banking?

The Wikipedia article is good, but the basic idea is that banks are "short-funded," that is, they borrow money short-term and lend long-term.

For example, your checking account is really a short- term loan to the bank - as a demand loan it's very short-term indeed. When the bank takes depositors' money and lends it for longer terms - think of ordinary things like car loans, commercial term loans, etc. it faces the risk of a run. The short-term lenders may want their money back before the long-term borrowers have repaid. For this reason banks are subject to reserve requirements, are forced to buy deposit insurance (thanks to that Commie FDR), and are subject to a whole host of state and federal regulations.

So-called shadow banks do something very similar - they finance their investments with short-term borrowing. But they are (were?) not under the same regulatory constraints as ordinary banks. They don't have depositors, borrowing in themoney markets, etc, and they don't make ordinary commercial or personl loans, but the short-long feature and attendant risks are similar.