Posted on 10/18/2008 12:10:28 PM PDT by BGHater
There was little in the federal bailout bill that most Americans could wrap their arms, much less their minds, around. What did strike a chord—and one of the rare notes of consensus—was that greedy executives of failed institutions should have to give up their high salaries and golden parachutes before getting a life raft from Uncle Sam.
But the CEO’s needn’t be too alarmed. The $2 billion their industry has invested in Washington politicians over the last 20 years will likely bring healthy returns. Pesky details like “who” and “how much” to penalize were kicked down the road or left wide open for interpretation—nothing a few fat friends on the right committees and a team of crack lobbyists can’t handle.
The hard lesson here will be that hard lessons are for chumps who can’t afford otherwise.
“The money always pays off,” said Melanie Sloan, head of the Center for Reform in Elections in Washington. “It’s all about being there, being in the room” when the details take shape behind closed doors on Capitol Hill. “And you’re not in the room if you’re not making these contributions or having highly-paid lobbyists well placed.”
The finance/insurance/real estate (FIRE) sector has given approximately $180 million to House and Senate candidates in the current election cycle, and $116 million to presidential candidates, including $25 million to Barack Obama and $22 million to John McCain.
According to the Center for Responsive Politics, the FIRE sector is the biggest contributor to federal candidates in Washington. Companies cannot give directly, so they leave it to bundlers to solicit maximum contributions from employees and families. They might have been brought down to earth this year, but they’ve given like gods: Goldman Sachs, $4.8 million; Citigroup, $3.7 million; J.P. Morgan Chase & Co., $3.6 million; Merrill Lynch, $2.3 million; Lehman Brothers, $2.1 million; Bank of America, $2.1 million.
Some think the long-term effect of such contributions to individual candidates was clear in the roll-call votes for the bailout. Take the controversial first House vote on Sept. 29. According to CRP, the “ayes” had received 53 percent more contributions from FIRE since 1989 than those who voted against the bill, which ultimately failed 228 to 205. The 140 House Democrats who voted for the bill got an average of $188,572 in this election cycle, while the 65 Republicans backing it got an average of $185,461 from FIRE—about 23 percent more than the bill’s opponents received. A tinkered bill was passed four days later, 263 to 171.
“The lobbying effort on the bailout has been brief but intense. To make up for time they do not have, interest groups have undoubtedly capitalized on relationships they’ve built over many years. And in Congress, campaign contributions are an essential tool for building relationships,” said CRP’s Sheila Krumholz.
Americans have come to eschew the excesses of Wall Street, but that doesn’t mean that lawmakers—especially presidential candidates—turn away its money. In fact, they are rolling in it.
Half of Obama’s top ten contributors, together giving him nearly $2.2 million, are FIREmen. Of that figure, $748,000 comes from Goldman Sachs, which recently reincorporated, with the Treasury’s blessing, into a bank holding company, hoping to survive. While it looks like Obama relies less on bundlers from this sector than McCain, “his campaign has ignored repeated requests from the Center for Responsive Politics and other watchdog groups to disclose his bundlers’ employers and occupations,” said CRP, with the $13 million so far attributed to such bundlers—called “Obamasaurs” by the New York Observer—“probably” an undercount.
Meanwhile, McCain’s bundlers are guys like Elliott Broidy of Broidy Capital Management, William Strong of Morgan Stanley, John Thain of Merrill Lynch, and Paul Singer of Elliott Associates, all of whom helped raise at least $500,000. Called “The Opportunist” by a February Bloomberg Markets profile and a “vulture capitalist” by others, Singer’s shtick is buying up bankrupt companies and the debt of foreign countries and squeezing money out of them. He was a big fundraiser for Rudy Giuliani.
Giuliani, who raised $13.5 million from FIRE sources for his failed presidential bid, wasn’t shy last month about how the system works: his firm announced a “financial industry task force” of his friends in the business to “guide” institutions, funds, and investors through the “legislative, regulatory and enforcement challenges” posed by the bailout. Democrats called it “crass opportunism,” but more realistic observers accepted this as business as usual.
Meanwhile, wary eyes have turned to wizened congressional leaders, with their generous coffers and inability to rein in the industry when it matters most. Sen. Chris Dodd, now chairman of the Senate Banking, Housing and Urban Affairs Committee, was recently dubbed a financial “PAC-Man” by the New Haven Advocate. He’s gobbled up $13 million from FIRE since 1989, including $5.8 million in 2008 for his failed presidential bid. Citigroup led the pack with $314,000.
Dodd and other Democratic committee leaders—including Sen. Chuck Schumer ($12 million from FIRE since 1989), Rep. Barney Frank ($2.5 million), and Rep. Charlie Rangel ($4 million, the top recipient in the House)—have been accused of taking truckloads of contributions while failing to act on the looming mortgage crisis. Dodd finally pushed mortgage reform last year, said his hometown paper, The Hartford Courant, “but by then, the damage was done.”
Republicans don’t starve. Sens. Arlen Specter, Kay Bailey Hutchison, Richard Shelby, and Mitch McConnell round out the list of non-presidential candidates with no less than $4.3 million each from the sector in the last two decades. Invariably, they helped pass the Gramm-Leach-Bliley Act to take down the regulatory firewall between investment and commercial banking activities in 1999, softened some of the blow on the accounting industry in reform efforts like Sarbanes-Oxley in 2005, and assisted the banking and credit card industries by championing the Bankruptcy Abuse Prevention and Consumer Protection Act in 2004.
Much of the criticism directed at Democrats has been over Fannie Mae and Freddie Mac, now in federal receivership. Critics say Democrats incentivized mortgage-lender Fannie Mae and mortgage-investor Freddie Mac to run amuck, leading to a situation in which the government-backed giants owned or guaranteed half of the nation’s $12 trillion mortgage market. When the market went sour, they crashed, bringing a lot of investors down too. The Democrats deny charges of killing GOP legislation in 2004 that would have strengthened oversight of the institutions.
Fannie and Freddie have always spread the wealth around, giving slightly more to the party in power, and Republicans were getting the grease back then. Still, Dodd is the biggest recipient of their campaign donations over the last 20 years, followed by Obama, who has only been in office since 2004.
FIRE money is raging through Washington, but what does it ultimately pay for, when many of these wealthy contributors suddenly find themselves on skid row? Wall Street is calling on its angels—grateful lawmakers with control over bailout-related legislation and billions of dollars to dispense.
Both parties are dirty up to their arm pits in this mess.
For got to add that all of the above need to be shown the door asap.
Looks like we are stuck with beaten wife politics.
Paul Singer of Elliott Associates helped raise at least $500,000. Called “The Opportunist” by a February Bloomberg Markets profile and a “vulture capitalist” by others, Singer’s shtick is buying up bankrupt companies and the debt of foreign countries and squeezing money out of them.
Singer was a big fundraiser for Rudy Giuliani.
Giuliani, who raised $13.5 million from FIRE sources for his failed presidential bid, wasn’t shy about how the system works: last month his firm announced a “financial industry task force” of his friends in the business to “guide” institutions, funds, and investors through the “legislative, regulatory and enforcement challenges” posed by the bailout. Democrats called it “crass opportunism,” but more realistic observers accepted this as business as usual.
No, they are not. The fact that Bawney Fwank and Chris Dodd have not named a sitting Republican congressmen as responsible, nor held serious hearings to include Raines, Gorelick is proof that rat fingerprints are all over this crime.
So you think the only crooks were at Fannie and Freddie? I got a bridge to sell ya.
Never miss an opportunity to feed at the trough.
Facts are facts. Ignore them as you wish.
Don’t confuse political talking points with the historical record of the past seven years and 10 months.
Hey, take it back 100 years, or more!
The folks that use government to enrich themselves aren’t limited by partisan politics.
And the crooks don’t only have a (D) next to their name.
Those who think crininal activity only existed at Fannie and Freddie are either ill informed or just wearing blinders.
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