With Obama’s “Dinner Date,” Wall Street’s Elite Wins… Again

“We’ve seen bat­tal­ions of finan­cial indus­try lobbyists…firms spend[ing] mil­lions to influ­ence the out­come of this debate.…I believe we can and must put this kind of cyn­i­cal pol­i­tics aside.” –Pres­i­dent Obama’s speech to Wall Street, Cooper Union, April 22, 2010.

Put cyn­i­cal pol­i­tics aside? Clearly, that is so 2010. The New York Times reported Mon­day that Mr. Obama had a recent White House meet­ing with two dozen deep-pocketed Wall Street exec­u­tives to get their thoughts on fix­ing the econ­omy. And it’s unlikely he will use the phrase “fat cat bankers,” as he did in late 2009, when he dines later this month with mem­bers of the finan­cial elite, i.e., poten­tial cam­paign donors, at the famed Man­hat­tan restau­rant Daniel.

This news is just the lat­est exam­ple of how the “wiz­ards” of Wall Street and their Wash­ing­ton allies con­tinue to win — their clout seem­ingly undi­min­ished — in the face of spec­tac­u­lar fail­ure. Here’s a round-up.

Gam­ing Finan­cial Reform

Last year, those lob­by­ing “bat­tal­ions” were try­ing to gut finan­cial reform leg­is­la­tion. Now they’re busily try­ing to weaken enforce­ment and find loop­holes. The Huff­Post’s Mar­cus Baram reported last week that reg­u­la­tors are giv­ing Wall Street “tem­po­rary relief” on cer­tain deriv­a­tives — “security-based swaps” — after what he called “intense lob­by­ing.” The New York Times this week­end had a near far­ci­cal tale of finan­cial firms try­ing to con­vince reg­u­la­tors that they are not “too big to fail”, that instead they are too small and too insignif­i­cant to reg­u­late. Being too big now trig­gers var­i­ous rules that these firms want to avoid. The Times quotes one gov­ern­ment offi­cial as say­ing the firms present them­selves “…as if they are the Sis­ters of the Char­ity.” The paper notes that the final deci­sions on who is “too big” won’t come until mid-next year — ear­li­est — with the delay, of course, ben­e­fit­ting the firms. And mean­while the biggest of the big, those that don’t have a chance in suc­cess­fully argu­ing they’re too small to reg­u­late, remain dan­ger­ously large, accord­ing to the for­mer Spe­cial Inspec­tor Gen­eral for the Trou­bled Asset Relief Pro­gram. Neil Barof­sky tells Cor­po­rate Crime Reporter that “[t]he largest banks are now 20 per­cent larger today than they were going into the cri­sis.” He blames Trea­sury Sec­re­tary Tim Gei­th­ner (who has inti­mate Wall Street ties) for lob­by­ing Sen­a­tors against a bill that would have lim­ited bank size.

Ms. War­ren Goes To Washington

Bank­ing lob­by­ists and allied politi­cians have attempted to brand finan­cial con­sumer advo­cate Eliz­a­beth War­ren an enemy to busi­ness for suc­ceed­ing in her push to cre­ate a Con­sumer Finan­cial Pro­tec­tion Bureau. At a House hear­ing last month, Rep. Patrick McHenry (R-NC) effec­tively called War­ren a liar over a sched­ul­ing dis­pute. This came two weeks after the House Finan­cial Ser­vices Com­mit­tee passed three bills aimed at weak­en­ing the CFPB before the agency even gets off the ground. Warren’s oppo­nents are deter­mined to keep her out as the agency’s head. Whether Mr. Obama nom­i­nates her or not, War­ren has become of a hero of pro­gres­sives and has been urged to con­sider a Sen­ate run in Mass­a­chu­setts next year.

The Revolv­ing Door Goes Round and Round.…

Last month came word that for­mer New Hamp­shire Sen­a­tor Judd Gregg (and TARP nego­tia­tor) would be join­ing Gold­man Sachs as an “inter­na­tional advi­sor”. Gold­man touted Gregg’s rel­e­vant “expe­ri­ence” — which isn’t in finance, of course, but in the halls of Con­gress. He was rank­ing Repub­li­can on Appro­pri­a­tions, Bank­ing, and other com­mit­tees. Gregg fol­lows for­mer Obama bud­get direc­tor Peter Orszag, who joined Cit­i­group late last year — proof that Wall Street is keen on col­lect­ing influ­en­tial oper­a­tors from both par­ties. And research described this week by the Huff Post’s Dan Froomkin shows why finan­cial firms seek out insid­ers — from top play­ers to lower-level staffers. He cites recent work by IMF econ­o­mists Deniz Igan and Prachi Mishra, who found that when it came to water­ing down finan­cial reg­u­la­tion lead­ing up to the crash, “what mat­tered even more than the amount of lob­by­ing was whether leg­is­la­tors were being lob­bied by for­mer mem­bers of their own staff.” In other words, when a firm like Gold­man offers high salaries for highly-connected Wash­ing­ton staffers, or bet­ter still, for­mer Sen­a­tors like Judd Gregg, it is money very well spent.

Later this month, a few miles uptown from Gold­man head­quar­ters, the pres­i­dent will report­edly gather for a meal with Wall Street donors. Daniel has a menu with things like “Crispy Scot­tish Lan­goustines” and “A Trio of Milk-Fed Pig from Que­bec”, the kind of place where a sin­gle din­ner can cost more than some strug­gling fam­i­lies spend on food in a whole month. While aver­age cit­i­zens sit around their din­ner table talk­ing about unem­ploy­ment, the finance folks who dine reg­u­larly at Daniel are typ­i­cally far more con­cerned about, say, hedge fund reg­u­la­tion and cap­i­tal gains tax rates. Wall Street — and cyn­i­cal pol­i­tics — wins again.

By Linda Keenan and Janine Wedel.

Pub­lished in The Huff­in­g­ton Post, June 15, 2011.

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