What does it take to make a Wall Street banker squirm with shame?
Not content with having swindled tens of millions of Americans out of
their homes and life savings, the very bankers who caused the biggest
economic catastrophe since the Great Depression are now subverting
government regulations designed to prevent comparable disasters in the
future.
(Image: AP)
Top
of the list of those responsible are the hustlers at Citigroup, once
the world’s largest financial conglomerate, and a leading practitioner
of the sordid behavior that caused the housing meltdown. Indeed,
Citigroup was allowed to form as a merger of the investment banking of
Travelers and the federal insured commercial banking of Citicorp only
because lobbyists for those institutions successfully engineered the
reversal of the Depression-era Glass-Steagall law that had banned such
combinations.
Then when the new monster banks moved to exploit the subprime housing
market with all sorts of financial gimmicks, their lobbyists succeeded
in freeing all such trading in so called derivatives from any
significant regulation.
The banks were so successful in marketing those often toxic assets
that the federal government had to step in when the bubble burst and
save Citigroup from bankruptcy, with a direct infusion of $45 billion in
taxpayer funds and a guarantee of more than $300 billion of Citigroup’s
bad paper.
You would think that the consequence of such destructive behavior
would be a profound erosion of the ability of Citigroup and other
banking lobbyists to write the nation’s laws governing financial
activity. But just the opposite has occurred as the company’s influence
has only grown in direct proportion to the harm it has bestowed. As The
New York Times reported last week:
“Bank lobbyists are not leaving it to lawmakers to draft legislation
that softens financial regulations. Instead, the lobbyists are helping
to write it themselves.
“One bill that sailed through the House Financial Services Committee
this month—over the objections of the Treasury Department—was
essentially Citigroup’s, according to emails reviewed by the New York
Times.
“In a sign of Wall Street’s resurgent influence in Washington,
Citigroup’s recommendations were reflected in more than 70 lines of the
House committee’s 85-line bill. Two crucial paragraphs, prepared by
Citigroup in conjunction with other Wall Street banks, were copied
nearly word for word.”
Of course they were faithfully copied by the staffs of Congress
members from both political parties, who might as well be on the payroll
of Citigroup and the other mega banks. The Republicans, with the
exception of a few die-hard libertarians, always do the bidding of the
banks that finance them, but the Democrats are just as eager to pig out
at the bankers’ trough. Wall Street lobbyists were only too happy to
hold a fundraising dinner last week for Democratic Rep. Sean Patrick
Maloney of New York, who co-sponsored the Citigroup bill, one of several
such events banking groups have organized for lawmakers who support
their legislation.
What is at issue here is an attempt to gut the already tepid effort
of the Dodd-Frank Act to control the runaway $700 trillion derivatives
trading market. One source of alarm is the extensive in-house trading in
these derivatives between affiliates of the too-big-to-fail banks. As
an example of the profound corruption of our legislative process,
congressional staffers turned to top corporate lawyers to draft the
wording pretending to rein in their activity.
For example, as the emails reviewed by the Times revealed, House
committee staffers consulted Michael Bopp, a partner at the elite law
firm Gibson, Dunn who represents corporations involved in derivative
trading, as to the verbiage he would prefer in the legislation. His
language was well received, as the Times reported: “Ultimately, the
committee inserted every word of Mr. Bopp’s suggestion into a 2012
version of the bill that passed the House, save for a slight change in
phrasing.”
That last sentence, conveying the essence of America’s crony
capitalist system, should stand as the defining epitaph for the death of
representative democracy.
“I won’t dispute for one second the problems of a system that demands
immense amount of fund-raisers by its legislators,” Jim Himes, a
Democrat from Connecticut who supported the bankers’ recent bills and
conveniently heads fundraising for House Democrats, conceded to the
Times. Himes, who worked for Goldman Sachs before pretending to
represent the people’s interest as an elected representative, is one of
the top beneficiaries of Wall Street payoffs but claims to be distressed
by the corruption that is his way of life. As he told the Times, “It’s
appalling, it’s disgusting, it’s wasteful and it opens the possibility
of conflicts of interest and corruption. It’s unfortunately the world we
live in.”
No, buddy, it’s the world you guys make and wallow in. Other folks
just lose their jobs and homes while you manage to slither out of the
slime richer and more powerful than ever.
© 2013 TruthDig
Robert Scheer is editor of
Truthdig.com and a regular columnist for The San Francisco Chronicle.
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