Monday, June 01, 2009

Crooked Banksters And Their Congressional Shills Still Trying To Kill Regulations That Protect The Public


Our weekly guest at FDL this past Saturday was South Carolina Democrat Linda Ketner, an attractive candidate in 2008 who came within 2% of beating reactionary barnacle Henry Brown in a district that was created to elect conservative white Republicans. Now that Linda has shown how weak Brown is, other Republicans smell blood in the water and are circling. Strom Thurmond's kid wants the job but he won't primary Brown. Carroll Campbell's kid, on the other hand, is a crazed coke freak and whoremonger with no such compunctions-- nor would, Katherine Jenerette, "the Sarah Palin of the South," hesitate for one moment to deal the wounded and flailing Brown a knockout blow. I asked Linda who she would prefer to run against in 2010, the drug-addicted adulterer, the right-wing whacko whose stepdaughter claims she's been sexually abused by Katherine's hubby Van (another GOP politician) or the entrenched incumbent. She didn't hesitate for a second-- "Brown."

Brown's voting record is pure poison-- or, from the perspective of an opponent, gold. He's been on the wrong side of every vote he's ever participated in, particularly when it came to protecting consumers from predators. Brown has taken $451,255 in "contributions" from the financial, insurance, real estate sector since getting into Congress in 2000. It's been an excellent investment for the banksters; Brown has never let them down. It hasn't worked out nearly as well for his constituents. And that's the battleground Linda wants to fight on.

"Congress," she told me, "needs to get busy putting a modern regulatory system back in place. We're in a mess because legislation like Glass-Steagall was gutted." Now, Congressman Brown has never come across a piece of deregulation he didn't get behind and because of him and congressmen like him, the country has been taken to the cleaners by financial predators. When I asked Linda about campaign finance reform on Saturday, she got right to the point:
I love this question Howie because I just spoke on it at our local Rotary yesterday! Bottom line-- our government is for sale. If you ever wondered if that were true, just look at what happened last week with the credit card bill. There was so much yapping from politicians about what they were going to do for us, and when it came to a vote on putting a cap on interest rates, only 33 Senators were in favor of a 15% cap. All you have to do is look on to find out why. There are hundreds of millions of dollars going to incumbents from the financial sector.

The result? What’s good for the taxpayer RARELY is the primary motivation of Congressional votes. For incumbents … forget it! Unless you’re VERY wealthy, you can’t match the war chest the incumbent comes in with … generally millions.

In this morning's NY Times Gretchen Morgenson and Don Van Natta, Jr. make the point that despite the cliff they've led the country over-- and despite some setbacks they've taken politically-- the banksters are far from laying down and giving up. No white flags in sight, especially not on Wall Street-- and still plenty of allies in Congress, from small fry like Henry Brown, right up to the worst co-conspirators, from Mitch McConnell (R-KY- $5,093,903), Richard Burr (R-NC- $2,466,422), Chuck Grassley (R-IA- $2,261,480), Arlen Specter (R/D-PA- $5,839,910) Evan Bayh (D-IN- $4,053,616) and Max Baucus (D-MT- $4,676,093) in the Senate to virtually the entire Republican caucus in the House, led by crooked representatives John Boehner (R-OH- $3,107,459), Eric Cantor (R-VA- $3,192,188), Roy Blunt (R-MO- $2,667,605), Paul Ryan (R-WI- $1,593,345) Spencer Bachus (R-AL- $3,815,224), and Mike Pence (R-IN- $958,541).
As the financial crisis entered one of its darkest phases in October, a handful of the nation’s largest banks began holding daily telephone sessions. Murmurs were already emanating from Washington about the need for a wide-ranging regulatory overhaul, and Wall Street executives girded for a fight.

Atop the agenda during their calls: how to counter an expected attempt to rein in credit-default swaps and other derivatives-- the sophisticated and profitable financial instruments that were intended to limit risk but instead had helped take the economy to the brink of disaster.

The nine biggest participants in the derivatives market-- including JPMorgan Chase, Goldman Sachs, Citigroup and Bank of America-- created a lobbying organization, the CDS Dealers Consortium, on Nov. 13, a month after five of its members accepted federal bailout money.

To oversee the consortium’s push, lobbying records show, the banks hired a longtime Washington power broker who previously helped fend off derivatives regulation: Edward J. Rosen, a partner at the law firm Cleary Gottlieb Steen & Hamilton. A confidential memo Mr. Rosen drafted and shared with the Treasury Department and leaders on Capitol Hill has, politicians and market participants say, played a pivotal role in shaping the debate over derivatives regulation.

Today, just as the bankers anticipated, a battle over derivatives has been joined, in what promises to be a replay of a confrontation in Washington that Wall Street won a decade ago. Since then, derivatives trading has become one of the most profitable businesses for the nation’s big banks.

The looming fight over regulation is the beginning of a broader debate over the future of the financial industry. At the center of the argument: What is the right amount of regulation?

...[F]inanciers are aggressively seeking to fend off regulation of the very products and practices that directly contributed to the worst economic crisis since the Great Depression. In contrast, after the savings-and-loan debacle of the 1980s, the clout of the financial lobby diminished significantly.

The current battle mirrors a tug-of-war a decade ago. Arguing that regulation would hamper financial innovation and send American jobs overseas, Congress passed legislation in December 2000 exempting derivatives from most oversight. It was signed by President Bill Clinton.

The law passed despite the strenuous objections of Brooksley Born, a former head of the Commodity Futures Trading Commission, who left the government after her unsuccessful effort to impose more regulation. In a recent speech, Ms. Born said big banks are again trying to water down oversight efforts.

“Special interests in the financial-services industry are beginning to advocate a return to business as usual and to argue against any need for serious reform,” Ms. Born, now a lawyer in private practice, said at the John F. Kennedy Library in Boston, where she received a Profile in Courage Award.

After the 2000 legislation was passed, derivatives trading exploded, helping the biggest traders earn immense profits.

The market now represents transactions with a face value of $600 trillion, up from $88 trillion a decade ago. JPMorgan, the largest dealer of over-the-counter derivatives, earned $5 billion trading them in 2008, according to Reuters, making them one of its most profitable businesses.

Also writing today, Zach Goldfarb, looked at very recent history-- Chris Cox's role as Bush's SEC chair-- for how very badly things can go when the foxes are watching the hen house. When Cox was a California congressman he was a favorite of the banksters-- and one of the few, at that time, who was on the take for over a million dollars ($1,296,091 to be precise, far more than they were paying most of their shills at the time). His complicity with every deregulatory excess in the banking sector made him the ideal candidate for the SEC job in Bush's mind-- and the banksters popped a lot of champagne corks when Cox was confirmed. According to Goldfarb's report, "After Cox became SEC chairman in mid-2005, he adopted practices that undermined the enforcement division's efforts to investigate cases of corporate wrongdoing and punish those involved, according to interviews with 19 current and former SEC officials." The GOP Establishment responded by pushing his name out there as a potential presidential nominee.
During Cox's tenure, investigators who wanted to subpoena documents or compel interviews faced an increasingly cumbersome process to win the commission's approval for each case, according to current and former agency officials.

Cox also required enforcement officials to see the commissioners before approaching a company about a civil settlement. In several high-profile cases, when SEC lawyers were ready to ask the commission to authorize lawsuits or approve settlements, Cox postponed the decisions at the last minute, leaving cases unresolved for months, the sources said. At times, as in the Biovail case, the commission eventually weakened the sanctions sought by the enforcement division... [I]n a report last month, the Government Accountability Office, after interviewing many enforcement lawyers, concluded that the SEC penalty policies in 2006 and 2007 "led to less vigorous pursuit of corporate penalties, may have made penalties less punitive in nature and could have compromised the quality of settlements."

During Cox's tenure, penalties imposed on companies fell 84 percent, from $1.59 billion in 2005 to $256 million in 2008... Cases began disappearing from the agenda shortly after Cox became chairman

And this just as Cox's-- and Bush's-- corporate pals were ramping up for the biggest heist in American history. Luckily for them we have a Justice System that doesn't hold wealthy, powerful and well-connected people-- like a Chris Cox or Dick Cheney or any Bushes-- accountable for ant crimes, no matter how much damage was caused to the country.

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