Having already proven that their institutions are above the law in the aftermath of the financial crisis, executives at the “Too Big to Fail and Jail” banks have decided it’s time to teach Senate Democrats a lesson. Not being content with trillions in taxpayer backed bailouts to protect and further consolidate virtually all wealth within their oligarch fiefdoms, these bankers are irate at the notion that a commoner would dare criticize their unassailable crony privilege.
However, the worst part of this story, is that while Warren is harsher than most of her completely bought and paid for colleagues, she is still pretty meek when it comes to the big bank oligopoly. In her most misguided position, she doesn’t even support an audit of the largest organized crime institution operating within these United States, the Federal Reserve. Oh and for those of you who will claim the Fed is already audited, think again. Read: The Fed Impedes GAO Audits by Destroying Source Documents.
Thus it seems even Warren’s meager push for reform is simply too much for the thin skinned bailout baby banks to handle. From The Hill:
Four major banks are threatening to withhold campaign donations to Senate Democrats in anger over Sen. Elizabeth Warren’s (D-Mass.) attacks on Wall Street.
Representatives from financial powerhouses Citigroup, JPMorgan, Goldman Sachs and Bank of America recently met in Washington and discussed the growing hostility towards big business within the Democratic ranks, according to a Reuters report Friday.
Bank officials cited Warren and Senate Banking Committee ranking member Sherrod Brown (Ohio) as the two main lawmakers leading the charge against them. But the banks have not agreed on how to respond together, with each firm making its own decision on donations, Reuters reported.
Naturally, leading the charge is the biggest financial welfare recipient, monstrosity of them all: Citigroup.
Citigroup representatives said their firm is already withholding donations to the Democratic Senatorial Campaign Committee (DSCC) to avoid boosting Warren and other progressives critical of Wall Street.
JPMorgan, meanwhile, has so far given Democrats only a third of its annual contribution. Sources there said company representatives have urged Democrats to soften their attacks on the financial sector. The bank has typically donated one lump sum in past years.
Yves Smith at Naked Capitalism had some interesting thoughts on the matter:
As much as the Warren attack might not seem like much of a victory, it’s important to understand what she and the other bank opponents are achieving. The banks count on the public not understanding and not caring about the more arcane aspects of finance, and furthermore assuming that bank reform is settled. On the political front, the power of the financiers doesn’t lie simply with their lavish campaign donations; it also lies in the perception that opposing them is a political death sentence.
The Administration (remember that Obama is still very much the party leader) again got too clever by half. It decided to exploit Warren as a major fundraiser. But that gave her an independent power base. And given the carnage in the Congressional midterms, the wisdom of following Democratic party dictates isn’t looking too hot for individual Congresscritters, unless they hail from conservative districts. The public is waking up to the party’s limousine liberalism, and voters who care about economic fairness are increasingly staying home on election days.
What Wall Street wants is one hundred Chucky Schumers in the Senate. To see what I mean, simply read this very interesting article published by the New York Times in 2008 titled: A Champion of Wall Street Reaps Benefits. Here are some choice excerpts to give you an idea of exactly what a good Wall Street lackey looks like:
WASHINGTON — As the financial crisis jolted the nation in September, Senator Charles E. Schumer was consumed. He traded telephone calls with bankers, then became one of the first officials to promote a Wall Street bailout. He spent hours in closed-door briefings and a weekend helping Congressional leaders nail down details of the $700 billion rescue package.
The next day, Mr. Schumer appeared at a breakfast fund-raiser in Midtown Manhattan for Senate Democrats. Addressing Henry R. Kravis, the buyout billionaire, and about 20 other finance industry executives, he warned that a bailout would be a hard sell on Capitol Hill. Then he offered some reassurance: The businessmen could count on the Democrats to help steer the nation through the financial turmoil.
“We are not going to be a bunch of crazy, anti-business liberals,” one executive said, summarizing Mr. Schumer’s remarks. “We are going to be effective, moderate advocates for sound economic policies, good responsible stewards you can trust.”
The message clearly resonated. The next week, executives at firms represented at the breakfast sent in more than $135,000 in campaign donations.
But Mr. Schumer, a member of the Banking and Finance Committees, repeatedly took other steps to protect industry players from government oversight and tougher rules, a review of his record shows. Over the years, he has also helped save financial institutions billions of dollars in higher taxes or fees.
He succeeded in limiting efforts to regulate credit-rating agencies, for example, sponsored legislation that cut fees paid by Wall Street firms to finance government oversight, pushed to allow banks to have lower capital reserves and called for the revision of regulations to make corporations’ balance sheets more transparent.
While Mr. Schumer has taken some pro-consumer stances, his critics fault him for tilting too far toward Wall Street in balancing his responsibilities.
“He is serving the parochial interest of a very small group of financial people, bankers, investment bankers, fund managers, private equity firms, rather than serving the general public,” said John C. Bogle, the founder and former chairman of the Vanguard Group, the giant mutual fund house. “It has hurt the American investor first and the average American taxpayer.”
Mr. Schumer became a magnet for campaign donations from wealthy industry executives, including Jamie Dimon, now the chief executive of JPMorgan Chase; John J. Mack, the chief executive at Morgan Stanley; and Charles O. Prince III, the former chief executive of Citigroup. And he was not at all reluctant to ask them for more.
As a result, he has collected over his career more in campaign contributions from the securities and investment industry than any of his peers in Congress, with the exception of Senator John F. Kerry of Massachusetts, the Democratic nominee for president in 2004, according to the Center for Responsive Politics, which analyzed federal data. (By 2005, Mr. Schumer had so much cash in reserve that he shut down his fund-raising efforts.)
Lee A. Pickard, a lawyer representing clients including the Bank of New York, whose employees have been significant donors to Mr. Schumer and other Senate Democrats, turned to Mr. Schumer last year to successfully beat back a regulatory initiative by the Securities and Exchange Commission. “If you get Chuck Schumer on your side, you are O.K.,” he said.
Richard Y. Roberts, a former S.E.C. commissioner, said the amendment Mr. Schumer won was troubling, adding that it could block the S.E.C. from punishing a credit-rating agency that consistently issued unreliable ratings.
Sean J. Egan, managing director of a small Pennsylvania agency, Egan-Jones Ratings, and a proponent of the tougher regulations, was more blunt. “The bill was eviscerated,” he said. “You have stripped away basic safeguards for the investors.”
At times in Congress, Mr. Schumer has teamed up with Republicans, like former Senator Phil Gramm of Texas, who aggressively promoted a free-market agenda. Mr. Schumer pushed for the Gramm-Leach-Bliley law, passed in November 1999, which knocked down the walls between investment banks and commercial banks and allowed financial supermarkets to flourish. The law also weakened regulatory oversight by fracturing it among different agencies.
In 2001, Mr. Schumer and Mr. Gramm jointly proposed legislation that would cut fees paid by Wall Street firms and others to the S.E.C. in half, or by $14 billion, over the coming decade. Their proposal included some extra money for salaries of commission employees.
Mr. Schumer’s argument prevailed, and the fee cut passed overwhelmingly.
“He built his career in large part based on his ties to Wall Street,” said Christopher Whalen, managing director of Institutional Risk Analytics, which advises investors on the regulatory system. “And he has given the Street what it wanted.”
And he is seeking some regulatory concessions for some Wall Street supporters. He has proposed, for example, that the government lift a cap on how big the giant banks can get, an issue important to institutions like JPMorgan Chase. Lifting the cap would allow the biggest banks to absorb weaker ones, but it would also limit competition and increase the risks to the financial system posed by failure of one of the giants.
Wow, this guy is even more shameless than I thought.
Mr. Schumer is also calling for the adoption of European-style regulations that impose far fewer rules and instead require banks to meet certain performance standards, a system institutions generally prefer but some banking experts criticize as not rigorous enough.
In recent weeks, Mr. Schumer has listened to Wall Street leaders for advice on what should come next. At a dinner at Morgan Stanley’s headquarters the night before the presidential election, John Mack, the chief executive, and a dozen top hedge fund officials talked with Mr. Schumer about possible changes affecting their industry.
Read that again. In late 2008, as the U.S. economy was on fire, Chucky Schumer was busy asking the arsonists what to do next. Needless to say, they got what they wanted.
It now becomes crystal clear why Schumer is the likely successor to Harry Reid as the Democratic leader in the Senate. He’s been a very loyal puppy dog to Wall Street.