Bipartisans, bankers and baloney

Along with protecting their profits, big banks also care deeply about getting revenge against those politicians who cross them.

That’s the message from the primary defeat of Sen. Richard Lugar, the veteran Indiana Republican who has been highly touted as one of the last of a vanishing breed of respectable bipartisan statesman-politicians.

Lugar, 80, was defeated by a tough-talking Tea Partier, Indiana state treasurer Richard Mourdock, who said his idea of compromise was bashing Democrats until they gave in.

While much of the media has blamed Lugar’s defeat on his willingness to work with Democrats, if you follow the money against Lugar, you’ll find other, familiar forces at work.

This was hardly a grassroots victory against the Washington status quo, unless by grassroots you mean the Financial Roundtable and the American Bankers Association.

As Politico and the Republic Report detailed, the attack on Lugar was funded by the Financial Services Roundtable and the American Bankers Association, along with Wall Street-backed anti-tax, anti-regulatory groups including Dick Armey’s FreedomWorks and the Club for Growth.

Even though Lugar opposed financial reform, Wall Street is still mad at him because he took the side of giant retailers like Target and Wal-Mart in another epic battle, over debit swipe fees.

The banks suffered a rare defeat in the Senate last year when it rejected a delay in implementing a rule that limited the amount banks could charge you to swipe your debit card, costing the banks about $16 billion. Lugar was one of the few Republicans who sided with the retailers to stand for election this year.

His defeat will no doubt serve as a useful example for legislators considering opposing Wall Street.

On key votes on bread and butter issues, Lugar the bipartisan voted against economic stimulus, and he favored extending unemployment benefits only if the Bush era tax cuts were extended.

I wouldn’t waste any tears for Lugar.

It’s only a matter of time until he lines up a lobbying deal, if he wants one. He can join his former Senate colleague from Indiana, Evan Bayh, a Democrat who was also celebrated as a great bipartisan.  After leaving the Senate gnashing his teeth over the increased partisan rancor, Bayh landed a sweet gig lobbying his former colleagues on behalf of the Chamber of Commerce.

If by bipartisan one means always ready to fight for corporate interests, big banks or the titans of retail, then both Lugar and Bayh fit the definition. But Lugar’s defeat is just the latest example of how the media and the Washington insiders persist in wringing their hands over the phony loss of bipartisanship while ignoring the much more compelling reality of corporations that wield way too much power in Washington at our expense.

 

 

 

 

What Would Pecora Do?

There have been lots of positive comparisons between Phil Angelides and Ferdinand Pecora, who led an earlier investigation of Wall Street excesses that led to the Great Depression.

Pecora was a no-holds barred former prosecutor who ran his hearings with meticulous preparation and theatrical flair, and his work galvanized public support for widespread reforms.

Some have been impressed by Angelides’ reputation as a reformer from his days as California treasurer, when he tried to use the power of the state’s investments for socially worthy causes and implemented some protections for shareholders. Angelides was widely praised after public hearings earlier this year for his understanding of high finance and his scolding of the head of Goldman-Sachs, Lloyd Blankfein, comparing him to a used –car dealer.

I’ve been less impressed by Angelides, who doesn’t seem to have a grasp on the opportunity he has to marshal support for real financial reform. And he’s too cozy with a Democratic leadership that’s been soft on Wall Street in the wake of the financial meltdown.

I’m also suspicious of Angelides, the politician and former real estate developer who unsuccessfully ran for governor against Arnold Schwarzenegger, because of his close ties to the Democratic Party elite. In addition, I’m wary of the impact of Angelides' main job running a coalition promoting green technologies. That’s certainly a laudable goal, but Angelides and his Apollo Alliance aren’t going to get very far without lobbying the Obama administration and the Democrats, who would not be happy with a hard-hitting report.
Whatever drama Angelides manages to muster at any given moment, I’m concerned that his multiple roles and background will cause him to soft-pedal his investigation. Those concerns were only heightened after Angelides surfaced as part of a curious SEC report last week that cautions firms about “pay to play” in the state investment business.
According to the SEC, when Angelides was running for treasurer in 2002 he hit up a top J.P. Morgan official to co-chair a fundraising event. It wasn’t just an honorary position. The price tag for the co-chairmanship? $10,000.

According to the report, the official didn’t co-chair the event but donated $1,000 to Angelides” campaign personally ­– and helped raise $8,000 more. In asking other J.P. Morgan brass to contribute to Angelides, the official noted that that the state of California was an important client for the firm.

Just how important became clear in the next couple of years, when J.P Morgan received about $37 million in fees from the state on more than 50 bond offerings totaling $15.8 billion – overseen by Angelides as state treasurer.

In the SEC’s curious take on the matter, neither Angelides nor J.P. Morgan is accused of doing anything improper.  Angelides isn’t even mentioned by name. The agency merely uses its report to caution finance officials about not running afoul of SEC regulations.

OK, so the SEC doesn’t think Angelides did anything wrong soliciting funds from J.P. Morgan and then giving them the state's business. But the report serves as a bitter reminder that those who we’re counting on to get to the bottom of the financial meltdown are steeped in the toxic brew of cash and politics that has seeped into the core of our government.

I hope I’m proven wrong about Angelides; that his intimacy with this unseemly world has left him with a sense of sustained outrage and not empathy for it.  But it will take more than a few zingers to convince me. I mean, let’s be serious. Would Ferdinand Pecora have solicited money from J.P Morgan? Not much chance. After Pecora grilled the son of the legendary banker, J.P. Morgan, Jr. described the investigator as having “the manners of an assistant prosecuting attorney who is trying to convict a horse thief.”

Rating Wall Street's New Sheriff

By Martin Berg

In the 1930s, the Senate Banking committee appointed a no-nonsense assistant district attorney named Ferdinand Pecora to lead an investigation into the causes of the stock crash of 1929.

Pecora held hearings that were equal parts public spectacle and tough scrutiny of the financial industry’s abuses. His investigation, closely followed by an angry American public, led to a raft of reforms of the banking system, most notably the Glass- Steagal Act, which kept the federally guaranteed business of making loans and taking deposits separate from other, riskier aspects of banking and investing.

Now Congress has appointed a financial inquiry commission to explore our recent financial meltdown.

The panel will not be headed by a hard-nosed prosecutor but by a real estate developer who became Democratic California treasurer from 1999 to 2007 and then an unsuccessful gubernatorial candidate, Phil Angelides.