Institutionalized Bribery: The Washington Way

A couple of weeks ago US Senate Republican Leader Mitch McConnell stood on the Senate floor and proclaimed that the Democratic Finance Reform Bill would “allow endless taxpayer-funded bailouts.”   It would, he argued, perpetuate “too big to fail.”

The White House and Democratic leadership went ballistic.  They said that McConnell arrived at his conclusion after meetings with Wall Street executives and pollster Frank Luntz.  In the words of President Obama, “Lo and behold, when he [McConnell] returned to Washington, the Senate Republican Leader came out against the common-sense reforms we’ve proposed.”  Obama  continued,  “In doing so, he made the cynical and deceptive assertion that reform would somehow enable future bailouts — when he knows that it would do just the opposite.”  The President essentially called McConnell a liar.

It’s true that McConnell had just met with the Wall Street Executives.   Luntz had also apparently suggested that attacking the prospect of future bailouts would win points with voters.  Here perhaps was a way to kill finance reform and make the Democrats look bad.  It is also true that during the recent campaign cycle Mitch McConnell raised $1,147,924 from the Securities and Investment industry.  Certainly this man cannot be trusted with finance reform.

Instead, we can more surely rely on the President’s “common-sense reforms”  to defend taxpayers against Wall Street greed, yes?  But wait.  According to the non-partisan Center for Responsive Politics, five of candidate Obama’s top donors came from the financial sector, including his number-one contributor, people and PACs associated with Goldman Sachs, who donated a whopping $994,795 to his Presidential campaign.  In addition, Citigroup gave Obama $701,290; J.P.Morgan, $695,132; UBS, $543,219; and Morgan Stanley, $514,881.  All of these firms were “too big to fail” and most were eventually given taxpayer cash.  But not so Lehman Brothers, which was allowed to fail.  Funny, but Lehman Brothers is not on Obama’s campaign donors list.

It’s also true that the revolving door between the White House and Goldman Sachs swings open and shut so much that it threatens – like our democracy – to become unhinged (See here).

Investment bankers can be fairly accused of many failings, but stupidity is not one of them.  They reasonably expect a return on every investment they make, including those investments in politicians.

There must be some place a taxpayer can turn for some clean finance industry regulation written by a disinterested lawmaker.  Perhaps that self-taught master of the finance industry, progressive hero and Chairman of the House Financial Services Committee, Barney Frank?  Nope.  Barney Frank, during his current two-year election cycle, has collected $111,400 from the finance industry.  He also deposited another $151,249 from the insurance industry, though this would never affect his judgment regarding bailout-related legislation for insurance companies like  taxpayer-fed insurance giant AIG, would it?

Democrat Chris Dodd, who oversees banking legislation in the Senate and is the author of current  financial reform legislation, is under a cloud for a sweetheart deal he personally got from Countrywide Mortgage.  Dodd, who won’t be seeking reelection, is also widely blamed for a loophole in bailout legislation that allowed AIG executives to give themselves juicy bonuses after collecting bailout money.   Dodd, by the way, raised $1,286,598 for his campaign war chest from the financial industry he oversees.

Ah well.  Maybe the Republicans are actually better and will take over after the fall elections.  Not so fast.  Dodd’s Republican replacement would be Richard Shelby, who collected $537,888 from financial interests.  Sure, it’s not half the sum scooped up by Dodd, but Shelby is from Alabama, with much cheaper media markets than Dodd’s Connecticut; Shelby doesn’t need so much cash to insure his own reelection.

All of this begs the question:  Is this any way to run a democracy?

Otherwise phrased:  Is institutionalized bribery any way to make public policy?

Why do the American people stand for such legal corruption?  Part of the answer is partisanship.  Politicians, and their aiders and abettors in the media, constantly stoke partisan passions and thereby distract ordinary people of various political stripes from the common interests they share against entrenched privilege and power.  Just at the moment when a citizen might start to get concerned about a legislative system based on institutionalized bribery, an angry partisan voice points a finger at the other side, and we all descend into raging and rabid recriminations.  We become dizzy and light-headed with partisan fervor and forget the good democratic common ground on which we all should be standing.

No one who takes a single dime from the banking industry should be permitted to vote on – let alone write -  legislation that purports to regulate that same industry.  Yet this is how legislation in America is made.  Shame on us for what we have allowed our political system to become.  It is high time to  consider the great divide, not the one that splits left and right, but the chasm between insiders and outsiders, the one that separates ordinary citizens from those who claim to represent them, but routinely act otherwise.