Let's Make a Deal: Beltway Edition
JC
Group: news:alt.discuss.clubs.public.issues.politics.fritziritz Date:
Sat, Sep 19, 2009, 11:17am (EDT-3) From: Mar...@webtv.net (Marlo)
Saturday 19 September 2009
by: Michael Winship, t r u t h o u t | Perspective
Those energy lobby high rollers in denial aren't the only
ones who know how to throw a party. Last month, Public Citizen, the
consumer advocacy group that was founded by Ralph Nader, released an
investigation of the ten banks receiving the most Federal bailout money
plus five trade associations fighting government attempts to more
closely regulate consumer banking.
In the period between Election Day last November and the end
of June, the groups scheduled 70 fundraisers for members of Congress.
Along the way, they made $6 million in federal campaign contributions.
Thirty-five of those 70 wingdings - half! - were thrown by
the US Chamber of Commerce and its lobbyists. And a third of the money
contributed to candidates came from the American Banking Association and
affiliated lobbyists. Both organizations are fighting hard to keep the
government from clamping down on the financial industry. In fact, the
Chamber of Commerce is planning on spending a hundred million bucks to
keep the noses of federal snoops out of their business.
It's not hard to figure out why they're so eager to grease
palms and throw the regulatory bloodhounds off the scent. On August 31,
Bloomberg News reported that Wall Street is getting ready for a major
battle to prevent tighter government control of the nearly $600 trillion
over-the-counter derivatives market.
According to Bloomberg, "Five U.S. commercial banks,
including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Bank of
America Corp., are on track to earn more than $35 billion this year
trading unregulated derivatives contracts. At stake is how much of that
business they and other dealers will be able to keep."
Astonishing to think about when you recall that just a year
ago irresponsible derivatives trading was one of the reasons we were
being sucked into the vortex of economic catastrophe. Equally
astonishing to see the extravagant salaries banking executives are still
raking in even while their foolish financial strategies made more and
more of us eligible for the breadlines.
Recently, the Institute for Policy Studies, a progressive
think tank, issued their annual executive compensation survey. This
year's is titled "America's Bailout Barons."
The institute took a look at paychecks for the top five
executives at 20 financial companies - the ones that took the biggest
helpings from the taxpayer-funded bailout buffet. From 2006 through
2008, they received an average of $32 million apiece - compensation
packages that totaled $3.2 billion.
Just as a reality check, one hundred US workers making the
annual average wage would have to work for more than a thousand years to
make the money those hundred execs made in three.
Despite the financial crisis that nearly sank us a year ago,
the front page of the September 12 New York Times reports that,
"Backstopped by huge federal guarantees, the biggest banks have
restructured only around the edges. Employment in the industry has
fallen just 8 percent since last September. Only a handful of big hedge
funds have closed. Pay is already returning to precrash levels, topped
by the 30,000 employees of
If nothing is changed, MIT's Simon Johnson, former chief
economist of the International Monetary Fund, told the Times the banks
"will run up big risks, they will fail again, they will hit us for a big
check."
And look at this: While those executives are dancing with
your dollars, the foreclosures they helped to bring on continue to rise.
According to Moody's Economy.com, nearly 1.8 million American mortgage
holders will lose their homes this year - up from 1.4 million in 2008.
And the Mortgage Bankers Association reports that the lion's share of
those foreclosures has shifted from the dreaded subprime mortgages that
triggered this crisis to prime loans. That means people who were
employed with sufficient income and security to take out a prime
mortgage are losing their jobs and houses, too.
This jump in foreclosures is spreading nationwide to parts
of the country previously not as hard hit, such places as Illinois,
Idaho and Utah. In Oregon, where joblessness jumped to nearly 12 percent
in July, foreclosures have skyrocketed 84 percent from a year ago.
So far, government programs intended to ease the hurt have
had little effect. The Associated Press reported a month ago that
despite a $50 billion mortgage bailout from Washington, only nine
percent of the borrowers eligible for relief have seen their home loans
modified.
Many of the banks involved have been dragging their feet,
enjoying the bailout bucks, but failing to spread them around. Some
haven't modified a single mortgage.
No wonder Rep. Barney Frank of Massachusetts, chair of the
House Financial Services Committee, and Democratic Senate Whip Dick
Durbin of Illinois are reviving the reform proposal that would allow
bankruptcy judges to "cramdown" mortgage principal and interest rates to
give homeowners some much-needed relief. Durbin said, "Waiting for banks
to 'volunteer' to end this foreclosure crisis is a waste of time ...
This approach has failed miserably."
Of course, you remember what happened the last time they
tried to push "cramdown" through. Last spring, it was rejected by the
Senate, 51 to 45. In anticipation of that vote, an exasperated Durbin
told an Illinois radio station that, "The banks ... are still the most
powerful lobby on Capitol Hill, and they frankly own the place."
Like what they've done with it?
»
Michael Winship is senior writer of the weekly public affairs program
Bill Moyers Journal, which airs Friday nights on PBS.