Wall Street Is Paying Politicians for the Pending Budget Bill
Yesterday I wrote about the attempt to override a critical provision of Dodd-Frank that is supposed to prevent banks from using the benefit of FDIC deposit insurance to back its derivatives business. The banking industry badly wanted this provision, and Congress seems likely to oblige the industry. Of course, by industry I am only talking about a handful of huge banks.
However, it turns out there is a price. In the old days, the banking industry would have had to agree to some type of consumer-friendly reform. For example, they might have been required to make more loans in minority neighborhoods or make better disclosure of credit card terms and conditions.
The price for the repeal of the Dodd-Frank provision and other business-friendly provisions tucked into the budget bill is straightforward. Under the budget agreement, an individual donor will be allowed to contribute a total of $776,000 a year to the various congressional and national party committees. The old limit was $97,200. This looks like a legalized form of bribery. Senior bank executives, private equity managers, and hedge fund managers will gladly pay $776,000 a year to maintain control of our political process.
While these proposals are being pushed by House Republicans, I am sure democratic senators in New York, New Jersey, and Connecticut are going to enjoy collecting huge sums from their financial service constituents. In fact, many Democrats will bemoan the latest assault on campaign spending limits and then turn around and start dialing for dollars. It turns out that our so-called gridlocked political system can still pass legislation when it’s in the interest of Wall Street.
I hope the President vetoes this bill if it reaches his desk. It is worth shutting down the government when Congress creates a government that only works for the rich and powerful. I’m not holding my breath.