Tag Archives: Washington

Regulatory Capture and the Washington/Wall Street Revolving Door

28 Sunday Mar 2010

Posted by in bailout, financial reform, financial regulation, lobbyists, Politics, Wall Street

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Regulatory capture: a term used to refer to situations in which a state regulatory agency created to act in the public interest instead acts in favor of the commercial or special interests that dominate in the industry or sector it is charged with regulating.

See also John C. Dugan, Office of the Comptroller of the Currency. Related subject: Washington/Wall Street revolving door. From today’s New York Times:

Houston

John C. Dugan, a former bank lobbyist, has been comptroller since 2005…and he’s responsible for regulating banks with national charters, including giants like Citibank and Chase. Like his recent predecessors, Mr. Dugan often takes positions that align with banks, even as they have come under withering attack for their role in the financial crisis.”

“For now at least, the nation’s front line for consumer financial protection resides on the 34th floor of a downtown office tower here…The Office of the Comptroller of the Currency operates this service center, fielding thousands of complaints each year about the nation’s banks…What many customers may not realize is that the man who oversees the operation used to represent the very banks they are complaining about.

Here comes the revolving door:

“A 2005 appointee of President George W. Bush, Mr. Dugan came to the O.C.C. after working for 12 years as a lawyer and lobbyist representing the banking industry. Before that, he worked for the federal government, including stints as counsel for the Senate Banking Committee and as an assistant secretary in the Treasury Department.”

Mr. Dugan’s term expires in August. Any guesses where he’s headed after that?

Who’s In Charge Here, Washington or Wall Street?

06 Monday Apr 2009

Posted by in Politics

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There are both encouraging and discouraging signs today in the battle over who’s in charge, Wall Street or Washington. First the good news. Finally, somebody in D.C. gets it.

“Elizabeth Warren, chief watchdog of America’s $700 billion bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration’s approach to saving the financial system from collapse.

She declined to give more detail but confirmed that she would refer to insurance group AIG, which has received $173 billion in bailout money, and banking giant Citigroup, which has had $45 billion in funds and more than $316 billion of loan guarantees.”

With one simple sentence Warren summed up what, in my opinion, should be the consensus among those in the Obama administration.

“The very notion that anyone would infuse money into a financially troubled entity without demanding changes in management is preposterous.”

That’s the good news, now for the bad. There are some “administration officials”( I smell Larry Summers) who are busy looking for loopholes in congressional restrictions placed on financial institutions who receive bailout money.

“The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefitting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.”

“Persuading”, aka bribing.

“The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.”

“Special entities” acting as “middlemen”, aka money launderers.

Speaking of limiting executive pay, Rep. Alan Grayson’s Pay for Performance Act, which does exactly that, passed the House 247-171, with 10 Republicans voting yes.

But there’s rain on that parade, too. Rep. Melissa Bean of Illinois, one of the so-called Blue Dog Democrats, sponsored an amendment which would “allow institutions that enter into a payment schedule with Treasury on terms set by Treasury to no longer be subject to the bonus and compensation restrictions created by the Act.“

It passed 228-198 with the support of 63 Democrats, most of whom also voted for Grayson’s bill. Go figure.

McCain Fiddles While The Economy Burns

26 Friday Sep 2008

Posted by in Election 2008, McCain, Obama, Politics, Uncategorized

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John McCain rode into Washington, D.C. on his white horse yesterday, after suspending (not really) his presidential campaign, and proceeded to sabotage negotiations which had produced a tentative agreement on a plan to rescue the crumbling financial markets.

In an attempt to revive his sagging poll numbers by exerting leadership and looking presidential, McCain attended a meeting at the White House, along with Congressional leaders from both parties. His contribution, according to those in attendance, was virtually nothing.

From Talking Points Memo:
“During the late afternoon meeting at the White House McCain sat silently at the table until nearly the end, according to a Hill source who was briefed on the meeting. At that point, I’m told, McCain vaguely brought up the proposal being pushed by the Republican Study Committee, the group of House conservatives that is bucking the GOP leadership. But McCain didn’t offer any specifics and didn’t necessarily advocate for the plan, according to the Hill source.

Responding to McCain, Treasury Secretary Paulson said that the RSC proposal was unworkable, my source says, at which point McCain didn’t really advocate for it or state his own position. The meeting adjourned soon after, amid confusion over where negotiations could go next.”

The House Republicans, by the way, are pushing a plan which includes more deregulation and more corporate tax breaks. Great idea, let’s put out the fire by pouring gasoline on it.

But some Republicans in the House may have other plans, from  Politico:
“According to one GOP lawmaker, some House Republicans are saying privately that they’d rather “let the markets crash” than sign on to a massive bailout.”

Nice job Republicans, let’s sacrifice the economic stability of the country to try and score some political points. For some reason I have this image of Emperor Nero in my head.

Here’s my take on what happened. McCain saw that progress toward an agreement was being made without him. So he went to Washington and joined with House Republicans to create a deadlock where none existed in order to appear to be the one who brings the Republicans on board, thus showing his leadership and presidential qualities.

What Senator McCain has actually shown is that he is so desperate to become president that he is willing to risk our economic future and the possible collapse of the financial markets for his own personal gain. This is putting country first? I don’t think so.