Monday, August 12, 2013

How Wall Street Owns Our Government

How Wall Street Owns Our Government

The intersection of money management and politics was fully displayed on the front page of the Sunday August 10, 2013 edition of The New York Times.  Louise Story and Annie Lowry chronicled the lucrative part-time work of Lawrence Summers between his stints in the Clinton and Obama administrations, as well as his most recent foray in the private sector at the behest of Citigroup.[1]  Eric Lipton focused on the freshman members of the House Financial Services Committee.  Within weeks of joining the committee, they were showered with contributions from PACs financed by banks, insurance companies, and credit unions.  By the time the committee started to hold sessions, the freshmen, both Republicans and Democrats, were supporting the industry’s positions and even sponsoring and enacting legislation.[2]

College Savings (1999)

Mr. Lipton’s article captures the reaction I’ve heard from politicians over the years concerning campaign contributions:

A spokeswoman for Representative Patrick Murphy, a Florida Democrat who has taken in more industry PAC money than any other Democratic freshman, $53,500, said his votes had been cast based on what he believed was in the best interest of his constituents, not to please potential contributors.

I suppose the politicians have to make these kinds of statements because their position is indefensible.  The link between campaign contributions and legislative action is, quite simply, a legal form of corruption.  Wall Street and money managers are the best positioned interest groups to corrupt our politicians because they have the most money.

If words in The New York Times aren’t enough to demonstrate the corrupting impact of Wall Street, I highly recommend the interview between John Oliver and Senator Kirsten Gillibrand on The Daily Show on August 9, 2013.[3]  After talking to the Senator about eliminating sexual harassment in the military, John Oliver asked her about her large campaign contributions from the financial services industry and her tepid support for the Volcker Rule.  Senator Gillibrand, a liberal democrat from New York, was extremely uncomfortable as Mr. Oliver asked to explain her campaign contributions and her policy positions.  On a couple of occasions the Senator attempted to change the subject, but Mr. Oliver kept returning her to it.  The New York Democrat did not want to address her relationship with the Street.

After reading the stories in the Times and watching The Daily Show you’ll understand why Larry Summers should remain in the private sector.  You’ll also understand why the Dodd-Frank financial reform has done little to rein in the excesses of the financial services industry.   Owning our Congress and regulators is every Wallstreeter’s dream.


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