Wednesday, April 21, 2010
Financial Regulation -- A Blueprint for Political Coercion
Financial Regulation -- A Blueprint for Political Coercion
by Dick Morris and Eileen McGann 4-21-2010
How odd that when the president's largest corporate donor, Goldman Sachs, gets indicted, it is seen in the wonderful world of Washington as catalyzing his efforts to modify Wall Street regulation. Goldman's employees, of course, gave Barack Obama just shy of $1 million, a total only exceeded by the faculty and staff at the University of California, making them the second-largest bundle of donors to the Obama campaign.
There are so many reasons to oppose Obama's financial regulation bill.
Some Republicans have focused on the fact that it sets up a TARP II fund that starts the bidding at $50 billion. In making such an offer to back up firms that are too big to fail, the bill guarantees:
-- The big firms will feel free to make whatever risky bets they can get away with since their downside (i.e., backside) is covered.
-- The bigger firms eclipse the smaller ones (as Fannie Mae and Freddie Mac did to the mortgage industry) because of their implicit federal guarantee.
-- More firms crowd to get under the $50 billion umbrella, and it expands into an even-larger bailout.
Other Republicans correctly complain about the power the treasury secretary is given under the bill to seize any financial institution that he deems too big to fail and that he thinks is at risk of insolvency. They rightly worry about the constraint this provision imposes on business growth and the dictatorial powers it gives the administration to fire management, replace directors, liquidate stock value and sell off parts of the companies it seizes.
But we also need to worry about how the power to seize on the one hand and bail out on the other will be used by this administration. Already, we have seen how Obama and Timothy Geithner did not hesitate to throw their regulatory weight around to force bondholders to take a pittance in very partial repayment of their loans to General Motors. We can imagine how much political clout these new powers will give to Obama.
With PACs and bundling by financial firms play an ever larger part in campaign finance and issue advocacy advertising? Will any large financial institution feel free to let its executives work against Obama's re-election? Will they not worry that he could take them over in a twinkling of an eye? Or will they be so anxious to come in out of the rain of competition to nestle under the bailout umbrella that they won't want to risk antagonizing Obama?
Particularly after the Citizens United case, anything that inhibits corporations from participating politically limits political debate and slants it toward the administration. In the very debate now underway, are financial corporations not already pulling their punches so as not to alienate a president whose hand can feed them or seize them as he wishes?
Yes, George W. Bush acquired vast new powers for the executive branch of government in the Patriot Act and the war on terror. But there is no record of his intentionally misusing them to intimidate political opponents. But Obama has a more ruthless mind. His war on Fox News shows how this thin-skinned president keeps track and takes names. We can well imagine a Nixonian enemies list of financial institutions earmarked for special regulation and intensive oversight -- not for their economic performance, but for their political views.
Let's remember the days of JFK phoning steel company executives to force a rollback in their price increases, while Attorney General Bobby Kennedy threatened increased antitrust scrutiny. Equipped with the powers about to be conferred in the financial regulation bill, such government tyranny could be even more dangerous.
Some seem willing to confer these powers if only a bankruptcy judge signs off on the takeovers and seizures. But the administration, which appoints the judges in the first place, can shop for a compliant one like a prosecutor looking for a jurist to issue a search warrant.
Fidel Castro and Hugo Chavez could only marvel at giving the government such powers.
All the President's Goldman Sachs Men
by Michelle Malkin 4-21-2010
While President Obama assails the culture of greed and recklessness practiced by the men of Goldman Sachs, his administration is infested with them. The White House can no more disown Government Sachs than Da Boss-in-chief can disown Chicago politics.
Obama is headed to Wall Street on Thursday to demand "financial regulatory reform" -- just as the U.S. Securities and Exchange Commission has filed civil suit against Goldman Sachs for mortgage-related fraud. Question the timing? Darn tootin'. There are no coincidences in the perpetually orchestrated Age of O. Everyone from disgraced former New York Attorney General Eliot Spitzer to analysts at the Brookings Institution and Barclays Capital to the GOP leadership and Rush Limbaugh has noted the reeking political opportunism in the air.
As the New York Post reported Tuesday, the Democratic National Committee immediately bought sponsored Internet ads on Google that direct web surfers who type in "Goldman Sachs SEC" to Obama's fundraising site. "It's time to hold the big banks accountable," the money-grubbing DNC message bellows. But just like his crony capitalist predecessor George W. Bush, Obama has relied on Goldman Sachs and Wall Street power brokers to engineer massive government interventions to "rescue" failing businesses with the tax dollars of ordinary Americans.
While irony-challenged Democratic candidates like mob-linked banker Alexi Giannoulias in Illinois (who hopes to fill Obama's old Senate seat) call on Republicans to return their fat-cat Goldman Sachs donations, the Democrats are silent on the $994,795 in Goldman Sachs campaign cash that Obama bagged. The class-warfare Dems are also mum on all the president's Goldman Sachs men sitting in the catbird's seat:
-- Goldman Sachs partner Gary Gensler is Obama's Commodity Futures Trading Commission head. He was confirmed despite heated congressional grilling over his role, as Reuters described it, "as a high-level Treasury official in a 2000 law that exempted the $58 trillion credit default swap market from oversight. The financial instruments have been blamed for amplifying global financial turmoil." Gensler said he was sorry -- hey, it worked for tax cheat Treasury Secretary Tim Geithner -- and was quickly installed to guard the henhouse.
-- Goldman Sachs kept White House Chief of Staff Rahm Emanuel on a $3,000 monthly retainer while he worked as Clinton's chief fundraiser, as first reported by Washington Examiner columnist Tim Carney. The financial titans threw in another $50,000 to become the Clinton primary campaign's top funder. Emanuel received nearly $80,000 in cash from Goldman Sachs during his four terms in Congress -- investments that have reaped untold rewards, as Emanuel assumed a leading role championing the trillion-dollar TARP banking bailout law.
-- Former Goldman Sachs lobbyist Mark Patterson serves under Geithner as his top deputy and overseer of TARP bailout -- $10 billion of which went to Goldman Sachs. Left-leaning government watchdog Melanie Sloan of the Citizens for Responsibility and Ethics in Washington responded: "It makes it appear that they are saying one thing and doing another." Paul Blumenthal of the Sunlight Foundation noted that, while at Goldman Sachs, Patterson lobbied against executive pay limits that Obama had crusaded for as senator (before, that is, his administration carved out exemptions for AIG). While Patterson agreed to recuse himself on any Goldman Sachs-related issues or related policy concerns, Blumenthal wrote, it "still creates a serious conflict for Geithner, as Treasury is being partly managed by a former Goldman lobbyist. Geithner is also placed in a tough position considering that his chief of staff is limited in the areas in which he can work (supposedly)."
-- Obama's close hometown crony, campaign finance chief and senior adviser Penny Pritzker was head of Superior Bank of Chicago, a subprime specialist that went bust in 2001, leaving more than 1,400 people stripped of their savings after bank officials falsified profit reports. Pritzker's lawyer at O'Melveny and Myers, Tom Donilon, is now Obama's deputy national security adviser. He earned just shy of $4 million representing her and other high-profile meltdown clients including Goldman Sachs.
-- White House National Economic Council head Larry Summers reaped nearly $2.8 million in speaking fees from many of the major financial institutions and government bailout recipients he now polices, including JP Morgan Chase, Citigroup, Lehman Brothers and Goldman Sachs. A single speech to Goldman Sachs in April 2008 brought in $135,000. Summers has prior experience negotiating government-sponsored bailouts that benefit private concerns. In 1995, he spearheaded a $40 billion Mexican peso bailout that bypassed Congress. Summers personally leaned on the International Monetary Fund to provide nearly $18 billion for the package. Summers' boss, then Secretary of the Treasury Robert Rubin, was former co-chairman of Wall Street giant Goldman Sachs -- the Mexican government's investment banking firm of choice.
Rubin continues to mentor another former employee of his with regular visits and chats -- Treasury Secretary Geithner, who as head of the New York Federal Reserve pushed bailed-out insurance conglomerate AIG to cover up sweetheart deals for investment banks that benefited, you guessed it, Goldman Sachs.
As Obama harangues Wall Street to clean up its house, all the president's Goldman Sachs men have their feet on the coffee table at his.
Posted by Brett at 11:41 AM