How Spencer Bachus Sold His Own Constituents To J.P. Morgan

No one ran against Spencer Bachus last year. No one ran against him in 2008 either. Nor in 2006. Not in 2004 either. And it isn't because he's a good congressman; he isn't. He won his seat in 1992, defeating conservative Democrat Ben Erdreich, after a severe gerrymander that basically removed all the African-American voters in Birmingham and Tuscaloosa from what became the second reddest district in America-- 78% for Bush in 2004 and 76% for McCain in 2008. The district is 97% white -- in a state where 30% of the people are African-Americans. Jefferson County has more people than any other county in Alabama, close to 670,000 and almost 40% of the are African-Americans. They're all neatly in the 7th CD. The County bucked the rest of Alabama and voted for Barack Obama over McCain with 52%... but not the lily white suburban parts of the county that are the heart of Bachus' district, the 6th.

Earlier this year we covered the Jefferson County/J.P. Morgan sewer scandal-- when we saw that the shameless banksters at J.P. Morgan were threatening to sue the county for taking bribes... from J.P. Morgan. As we saw at the time, it's a case of corrupt politicians and corrupt banksters working hand in hand to rip off the people, screwing it up, and turning on each other. Everyone deserves exactly what they get, especially the teabagging imbeciles who elect these kinds of civic leaders-- and particularly Spencer Bachus, who's taken more in legalistic bribes from Wall Street, banking interests and insurance interests than any other member of the House of Representatives, save notoriously corrupt bankster stooges Eric Cantor and Charlie Rangel-- $4,808,139 so far-- and he works hard for the money. In fact, remember how Bachus thrilled his bankster buddies when as incoming chairman of the House Financial Services Committee, he insisted that federal lawmakers and regulators exist to serve the banks? "In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks," he exclaimed proudly.

This week Matt Taibbi took to the pages of Rolling Stone to bring everyone up to date on the way Bachus' pals at J.P. Morgan are ripping off Bachus' constituents in Jefferson County.

It has been established in various courts that bank officials literally bribed Jefferson County Commissioners to refinance using outrageously expensive interest rate swap deals, but despite a number of convictions of local pols like former Commissioner Larry Langford (who got 15 years for accepting bribes), Jefferson County will still be stuck paying this tab for the next gazillion years.

All of which sucks, of course, but the news keeps getting worse. The House Financial Services Committee has just voted to delay the scheduled implementation of reforms in the Dodd-Frank bill that would limit the ability of banks to pull Jefferson-County style scams in the future. Among other things, the new rules would have required banks to act in the best interests of their clients, and disclose daily pricing information about swaps, making it harder for banks to gouge clients.

In Jefferson County, the Alabamans were massively overcharged by Chase and other banks in large part because interest rate swaps, unlike, say, stocks, are not traded on open exchanges, so nobody knows how much they really cost. The situation is similar to what sports betting would be like if casinos did not publish the point spreads. If you walk into a casino the day before the Super Bowl and you're told the spread is Green Bay -6, you might think you're getting a good deal-- but the actual spread might be nine or ten points. Wall Street is making a killing similarly overcharging states and cities and counties (and even countries like Greece) for interest-rate swaps, regularly stealing half a touchdown here and there in these billion-dollar finance transactions.

The Dodd-Frank bill, ball-less as it mostly was, did have a few provisions in it that would have tightened up the rules governing such derivative transactions. But the House Financial Services Committee voted to stall implementation of these new rules until September 12th, at the very least. The cruel irony here is that the Committee is chaired by... Jefferson County's own congressman!

That's right: Alabama Republican Spencer Bachus, who up until recently was sounding like a real critic of these banking practices. This was Bachus a few years ago, making his own casino comparison:

When you have a county or city that is basically unsophisticated dealing with Wall Street professionals it's very similar to a person walking into a casino where the house always wins. Simply, the county and the Wall Street firms gambled with ratepayers money. While interest rates were low in the beginning, things ultimately blew up when the auction rate securities market collapsed.

That was then. Now, Bachus is the driving force behind this latest move to delay reforms. Wonder why? Just look to see who happens to be the top contributor to Bachus's campaigns for his career: J.P. Morgan Chase. Bloomberg elaborated on Bachus's ties to Wall Street, describing him as the third-biggest recipient of Wall Street cash in the House:

During his two decades in Congress, Bachus-- like Frank, his predecessor as chairman-- has nurtured ties to Wall Street donors who have poured cash into campaign chests of both Democrats and Republicans. He has received more than $7.1 million from political committees of finance, real estate and insurance companies and their employees, according to the Center for Responsive Politics, a Washington group that tracks campaign donations. That’s more than any House member since 1989 aside from the Republicans’ two top leaders, Speaker John Boehner and Majority Leader Eric Cantor.

If you read the whole Bloomberg piece you'll see other villains here, including Barney Frank and Michelle Bachmann(who is seeking to have all of Dodd-Frank overturned). But Bachus is the big story here. Here you have a congressman who represents a district that just happens to be the most conspicuous group of Main-Street victims of predatory banking practices in all of America-- and even he can't find a way to man up and do the right thing for his voters.

The other angle here is how finance reform inevitably gets whittled down into nothing. Dodd-Frank to begin with was maybe a ten-percent reform effort; the finance lobby killed about 90 percent of the real stuff before it even got voted on. The ten percent that did make it into "law" was still in limbo, as it always is after such laws are passed, while regulators hammered out the actual procedures for implementing the new legislation. These rulemaking processes inevitably take place in conference sessions heavily attended by industry stooges and lobbyists, with reform advocates seldom having even one or two voices at the table. You can count on another five percent disappearing in that process, if not more.

And now here comes the way to deal with the last five percent: stall. When all else fails, go into the four-corner offense and wait out the public. They will eventually forget, or else the political winds will change. It's really a beautiful demonstration of political organization and willpower-- too bad it's, you know, evil. All this for a new sewer!

So far, the Democrats have no candidate to run against Bachus... again.