Influence for Sale: Paying for an Inaugural Parade
This post is a follow up to “The Financial Services Industry: When Your Side Loses,” which I wrote right after the election. For the most part, Wall Street supported Governor Romney’s bid for the Presidency. I noted that it wasn’t too late to buy political influence because, “Next January, there’s an inaugural event that will require funding, and Wall Street will help pay for it.” In recent days, the Presidential Inaugural Committee has released its financing strategy, which clearly contemplates Wall Street’s participation.
Here’s the good news. Synovus Financial, Popular, and Zion National Bank are off the hook. These financial institutions, headquartered in Georgia, Puerto Rico, and Utah respectively, have yet to repay the US Treasury under the Troubled Asset Relief Program (TARP). Thus, they can’t contribute to the Presidential Inaugural Committee. Of course, they won’t receive tickets to the parade or the Presidential Ball. However, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, and any other institution that’s closed out its TARP account at the US Treasury is eligible and has undoubtedly received a solicitation from the committee. By the way, the executives at AIG should be getting the invitation, since the US Treasury just sold its remaining $7.6 billion position. The big insurer can thank the administration by donating to the inauguration.
Here’s what the committee said four year’s ago:
The Presidential Inaugural Committee (PIC) announced today that it will abide by an unprecedented set of limitations on fundraising as part of President-elect Obama’s pledge to put the country on a new path. Unlike previous inaugural committees, the PIC will not accept contributions from corporations, political action committees, current federally-registered lobbyists, non-U.S. citizens and registered foreign agents. The PIC will not accept individual contributions in excess of $50,000. Current law does not restrict the size of donations. In past inaugurations, contribution limits have run as high as $250,000.
While the lobbying and PAC prohibitions remain in effect, the new guidelines place no limitations on the amount of corporate giving. Apparently, the appeal to corporations is necessary because the President’s traditional sources of support are tapped out. This is a message straight out of the Wall Street playbook on the credit bubble. Even if you are “tapped out,” you don’t have to make the hard decisions or stick to principles. Simply take a second mortgage or home equity loan or put it on your credit card, and worry about it later.
While corporate donations to finance the inauguration festivities are not loans, they will be paid back. Of course, if you ask any spokesperson for the President, he’ll say that the administration will not be influenced by corporate donations. I’ve been around politicians for 30 years, and I’ve heard them use the same line over and over. It’s twaddle. The purpose of contributions or donations is to earn a return on the investment. Sometimes the return inures to shareholders, and sometimes it benefits corporate executives. It will be exacted, no matter the politician’s words, and it seldom benefits the public.
Let’s get back to the TARP exception, because this really exposes the moral weakness of the Committee’s position. While there are still a few large TARP recipients, most of the remaining institutions are small or troubled and hardly in a position to make contributions. Moreover, the idea that the repayment of TARP frees banking institutions from government support is laughable. The Federal Reserve is still warehousing all sorts of toxic securities plucked from bank balance sheets, and the IRS is still waiting for many of the banks to take advantage of special provisions that will enable them to write-off losses incurred during the crisis. Meanwhile, the Department of Justice and the SEC have yet to complete any number of proceedings relating to the credit crisis.
Here’s my recommendation to the President. You’re going to be sworn in privately on Sunday, January 20, 2013. Why not cancel the hoopla on the 21st and donate the money to help the homeless in Washington, DC? These are the folks that the DC police will move far away from the viewing stands where the Wall Street big shots will be sitting.