Dateline: October 15, 2009
How the Bankers Bought Washington
What really hurts is not so much that American politicians are for the most part utterly corrupt and unprincipled, but that they sell the public interest for crumbs
By ANDREW COCKBURN
Smart investors have certainly had plenty of opportunity to make money lately. Gold is up twenty percent. Oil has doubled. The Dow roars through 10,000. But one investment has far, far, outperformed all others in epic returns: politics.
Wall Street balance sheets make this very clear. Last year, according to the Center for Responsive Politics, major banks and other financial institutions in receipt of $295 billion in TARP money pumped $114 million into Washington in lobbying and campaign contributions. As a stand-alone figure, $114 million sounds like a lot. Set against the torrent of cash flowing in the opposite direction, it is minimal. At 258,449 percent it has been called “the single best investment in history.” Our elected representatives are giving it away.
No one should be surprised at the bankers’ dominance of Washington. They even boast about it. Hailing a further emasculation of the powers of the proposed Consumer Finance Protection Agency, the American Bankers’ Association recently issued a press release commending lawmakers for removing “the unworkable requirement that communications with consumers be ‘reasonable.’”
Keeping banker-consumer communications unreasonable has been only part
of the labors of the House Committee on Financial Services, chaired by Barney Frank. Yet the sums ladled into members’ campaign coffers are by no means proportionate to their actions. Pushing for a change in the so called ‘mark to market’ accounting rule earlier this year, a coalition of financial industry PACS, according to the Wall Street Journal, contributed a total of $286,000 to committee members. Various members then communicated their mounting dissatisfaction with the rule to the accounting standards board which, coincidentally or not, decreed the rule be changed.
The decision did wonders for Wall Street balance sheets. Wells Fargo’s capital officially soared by $4.4 billion, while Citigroup boosted its reported earnings by $413 million in the first quarter of ’09. Yet Melissa Bean, D-Ill, who got the most money from the coalition of any committee member, garnered a mere $20,000 toward her next campaign. Chairman Frank was apparently satisfied with $8,500.
To be sure, it’s not just the financial industry that knows how to get the most out of a dollar on Capitol Hill. According to Taxpayers for Common Sense, corporations angling for earmarks in this years Pentagon budget spread $1.25 million among the 18 members of the Senate Defense Appropriations Subcommittee. That’s only $69,000 per member — and these are Senators! — who nonetheless approved $762.3 million worth of earmarks sought by these same corporations.
Officials in other countries have a greater sense of self worth, as U.S. corporations doing business internationally surely know. Just this year, the Haliburton Corporation admitted to paying $180 million to Nigerian officials in connection with the Bonny River liquefied natural gas terminal project. Greece has been recently convulsed by revelations of the hundred million euros in bribes allegedly lavished on their elected politicians by the German Siemens corporation.
Just a generation ago, our own legislators displayed a more robust attitude to those seeking favor. In his instructive memoir “Wheeling and Dealing – Confessions of a Capitol Hill Operator,” former Senate aide Bobby Baker recounts his efforts in collecting the half million dollars in cash demanded by Senator Robert Kerr of Oklahoma from the Savings and Loan industry in return for a favorable legislative adjustment. And that was in the 1950s, when a dollar was still worth something. The S&L representatives, records Baker, complained bitterly, paid most of the sum demanded, and duly got their reward.
Pending concrete revelations about contemporary Kerrs in House or Senate, we have to assume that nowadays campaign contributions are as reported and cited here. Therefore, given the evident selflessness or timidity of today’s lawmakers, we might venture a modest proposal: political contributions should be taxed — at source.
Given the current state of the exchequer, a rate of one thousand percent would not be out of order. Thus the $1000 contributed by the Mortgage Bankers Association to Congresswoman Bean in pursuit of that bountiful accounting rule change could yield a cool million for the taxpayer. Though leaving several trillion to go, it would be a start. If possible, this tariff should be retroactive, so we could collect on the donations inevitably flowing to the lawmakers charged with deliberating this necessary measure.
It’s time the rest of us got in on the act.