OK, I'll Say It. Yes, Big Wall Street Donations Compromise President Obama
In defending herself against the argument that it is inherently problematic for a Democratic Party candidate for President to raise millions of dollars from Wall Street interests; through speaking fees, bundled campaign contributions, and through Super PACS, Hillary Clinton likes to bring up and compare herself to President Obama. "President Obama took more money from Wall Street in the 2008 campaign than anybody ever had,” she says, “and when it came time to stand up to Wall Street, he passed and signed the toughest regulations since the Great Depression, with the Dodd-Frank regulations." True enough, as far as that goes.
For the record, I am sympathetic to President Obama. For one thing, our economy was going under for the proverbial third time when he took office, and Obama saved us from the abyss. For another, in the immortal words of pollsters, I do believe that he cares about “people like me”, folks who are barely getting by. But Barack Obama got himself elected President, in part, by playing ball with a rigged campaign finance system.
Sarah Silverman, comedian extraordinaire, talked about playing ball in a crooked system on an episode of “Real Time with Bill Maher”:
“You know, all the baseball players use steroids... so they can compete. And, that’s how I think of Citizens United. You know, Hillary takes money from banks and big business and Super Pacs. So did Barack Obama. She’s no different than anybody else. She was the best choice, I thought, considering they all do it.
Then someone came along who doesn’t take steroids, who is not for sale” (that someone, of course, was Bernie Sanders).
So there we have the crux of the matter, neatly presented in a baseball metaphor. Big money has become to winning political campaigns what steroids was to winning baseball championships. But the question remains, does it really matter? What about Hilary’s point that Wall Street gave Barack Obama tons of money and he still “signed the toughest regulations since the Great Depression, with the Dodd-Frank regulations"?
Well for starters the Great Recession was, after all, the biggest economic downturn our nation and the world has suffered since the Great Depression. It would have been blatantly irresponsible to have done nothing about the circumstance that caused it. After the latter, our government responded with the since repealed and not yet restored Glass-Steagall Act which prohibited commercial banks from engaging in the investment business, after the failure of nearly 5,000 banks during the Great Depression. It worked pretty darned well until it was repealed under the Clinton Administration in 1999. So how does Dodd-Frank stack up? The Web site bankrate.com actually issued it a report card in December 2015, as part of a report: “Dodd-Frank rules: Late and watered down” wherein it says:
“Enacted in mid-2010, Dodd-Frank was part of the government's response to the 2008 financial crisis and Great Recession. Four years later, the law is still controversial.
Dodd-Frank encompassed 2,300 pages and required 398 new federal rules. Of that total, 231 rules have been finalized, 83 have been proposed and 94 have not yet been proposed, according to law firm Davis Polk & Wardwell.”
Overall they gave Dodd-Frank a grade of “C”, saying in way of summary: “Dodd-Frank has tightened controls on U.S. financial companies, though many of the provisions were watered down or late in coming”. Specifically regarding the often cited Voicker Rule, that limits bank's involvements in hedge funds, private equity funds, and trading in the stock market for their own profit, bankrate.com gave that a grade of “C Minus”, writing: “several major exception have been written into the rule for banks and other financial institutions.”
http://www.bankrate.com/finance/banking/dodd-frank-rules-late-and-watered-down.aspx
Do a Google search for "watered down" "Dodd-Frank", and you will get over 17,000 hits, many of which are quite substantive. While some focus on weaknesses inherent in the original legislation, much of what comes up concerns what has become of it's regulations since original passage. David Primo, a professor of political science and business administration at the University of Rochester, had this pithy observaion.
"If Congress really wanted to deal with the problems in the financial system, it would not have a disjointed regulatory process with competing and unclear jurisdictions," said Primo. "Big banks will be able to maneuver around the complex rules with the aid of very smart lawyers and financial wizards, But I'm concerned that with all these exceptions being put in place for some of the rules, it will be easier for rogue bankers to create problems at the bigger banks."
http://www.cnbc.com/id/100784177
When Professor Primo expressed concern over “all these exceptions being put in place for some of the rules” he was talking about those “398 new federal rules” referenced above that regulate Dodd-Frank, where it was noted “231 rules have been finalized, 83 have been proposed and 94 have not yet been proposed”. Those rules aren't in the domain of Congress, those are in the realm of Obama Administration appointees to draft and oversee. Any Administration that starts out having “friends on Wall Street”, ends up with “friends of Wall Street” in that Administration. Friends refer friends, that's simply how politics works.
I accept the more or less consensus that having Dodd-Frank, even in a watered down version from what was initially touted, is better than not having Dodd-Frank. I also appreciate that a Republican President, unlike Obama, would not have signed Dodd-Frank, warts and all, unless it was watered down even further. What I do not accept however is that a deluge of millions of dollars in special interest funding simply washes off the backs of fine Democratic Presidents, leaving absolutely no trace. To accept that requires more than a suspension of disbelief, it requires placing your brain in cryogenic storage.
Why is it, do you really think, that after the entire world economy was brought down to it's knees, and tens of millions lost their jobs, their homes, and all of their retirement savings, that no high level Wall Street or banking executive went to jail over the underlying fraud involved? There was a legal and political precedent to policing the aftermath of the Great Recession, it happened after the S&L crisis of the 1980s and 1990s, when 1,043 out of the 3,234 savings and loan associations in the United States failed between 1986 and 1995.
Joshua Holland of Moyers & Company, interviewed William K. Black about that. He is a former bank regulator who played an integral role in throwing a number of high-level executives in jail for white-collar crimes during the savings and loan crisis. Read what he has to say about the legal response to that economic crisis compared with the legal aftermath to the Great Recession.
“The savings and loan debacle was one-seventieth the size of the current crisis, both in terms of losses and the amount of fraud. In that crisis, the savings and loan regulators made over 30,000 criminal referrals, and this produced over 1,000 felony convictions in cases designated as “major” by the Department of Justice. But even that understates the degree of prioritization, because we, the regulators, worked very closely with the FBI and the Justice Department to create a list of the top 100 — the 100 worst fraud schemes. They involved roughly 300 savings and loans and 600 individuals, and virtually all of those people were prosecuted. We had a 90 percent conviction rate, which is the greatest success against elite white-collar crime (in terms of prosecution) in history.
In the current crisis, that same agency, the Office of Thrift Supervision, which was supposed to regulate, among others, Countrywide, Washington Mutual and IndyMac — which collectively made hundreds of thousands of fraudulent mortgage loans — made zero criminal referrals. The Office of the Comptroller of the Currency, which is supposed to regulate the largest national banks, made zero criminal referrals. The Federal Reserve appears to have made zero criminal referrals; it made three about discrimination. And the FDIC was smart enough to refuse to answer the question, but nobody thinks they made any material number of criminal referrals [either]”
And what are the implications of the lack of any high level criminal prosecutions looking forward? According to Black:
“...The failure to prosecute under any theory of economics and any theory of criminality means that the next crisis is far more likely, and that it’s going to be far larger, because this accounting control fraud recipe is a sure thing that guarantees that you will be made wealthy immediately as the controlling officers, and there will be no risk — zero. Not a single elite banker who caused this crisis is in prison, period. “
http://billmoyers.com/2013/09/17/hundreds-of-wall-street-execs-went-to-prison-during-the-last-fraud-fueled-bank-crisis/
The causes of the Great Recession didn't happen on Obama's watch, but the failure to criminally prosecute a single CEO who made obscene profits while fraudulent housing schemes destroyed the American economy, most certainly did happen on Obama's watch. And that was all after, in the words of Hillary Clinton: "President Obama took more money from Wall Street in the 2008 campaign than anybody ever had,”
Let me make this as clear as I possibly can. I actually like President Obama. I think he has tried to, and in many way has succeeded at, doing a good job for the American people. I assume that Hilly Clinton would try to do the same. But I will not subscribe to the fiction that obscene amounts of campaign donations from America’s most powerful business sectors, corporations, and individuals, have no tangible effect on how political policies and priorities are set and pursued by our political leaders. The only way to avoid what I believe is an inevitable and corrosive effect on our democracy, is to have political leaders who are beholden to the American people, not to America's oligarchy, for the funding they need to run their campaigns. Unfortunately that did not include Barack Obama then, and it does not include Hillary Clinton now.
I'll close by quoting Sarah Silverman again talking about her choice this year, talking about Hillary and why she is backing Bernie: “She was the best choice, I thought, considering they all do it. Then someone came along who doesn’t take steroids, who is not for sale”.
I am proud also to here note that the above quoted William K. Black is now an official economic adviser to Senator Bernie Sanders
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Of course this is true.
Thank you very much for stating it.
