The Washington Post reported today that commercial banks and investment institutions are shifting their political donations towards Republicans. Apparently Democrats were garnering two-thirds of those donations as recently as the beginning of 2009 and now that is shifting to an even split despite the Democratic majority.
This can sarcastically be placed under “shocking news” of the day category but there is something even more cynical at play in this world of no shame.
While we are all adults here, it seems that the connection between campaign cash and policy formation is closer than ever. They are not even trying to pretend. Look at this line from the Post story: Republicans, meanwhile, are soliciting Wall Street for donations with the argument that Democratic proposals would hurt the bottom lines of major financial institutions. House Minority Leader John A. Boehner (R-Ohio) told reporters this month that he was urging Wall Street executives to "help our team" oppose the "bizarre policies" coming out of the Obama administration.
Eighteen months ago we were staring at a possible second Great Depression and now any effort to put restrictions on the industry largely responsible for it are referred to as “bizarre policies.”
We are also still attempting to recover from the worst recession in decades and a financial crisis that can be reasonably tied to a wave of money sent to Washington from the financial services industry over the last decade that helped to erode much of our regulatory structure that was in place since the Depression. We mentioned in a column last March the report, “Sold Out: How Wall Street and Washington Betrayed America,” which highlights how $5 billion in political contributions loosened rules and created 12 key policy decisions that led to the crisis.
And to add insult to injury the Supreme Court in January overturned a law prohibiting corporations from using money from their general treasuries to pay for campaign ads. The decision treats corporations as individuals, wipes out a 100-year precedent and opens the doors to even greater corporate influence on elections.
The Obama Administration should not be given a pass either. The Post story points out that Obama took in nearly twice as much cash from banks and brokerages as Republican nominee John McCain.
And while President Obama has had some harsh words for the banking industry in recent months, that tough talk is particularly annoying as he helped approve the Troubled Asset Relief Program (TARP). The time to put conditions on that cash was at the time the legislation was being considered. Why weren’t restrictions on bonuses written into the bill? Most people know that you get tough with negotiations before the check is cashed not after. It is downright silly for President Obama to be shaming public companies for acting in their own interest. The shame is on Congress and the prior Administration for not looking out for our interests BEFORE a dime was given out.
A moratorium on campaign contributions would have been a nice added touch to the TARP legislation.
If it wasn’t for the mountain of money coming into Washington from financial services institutions there may not have been a TARP, in fact the TARP may not have been needed.
That is not to say all new regulation is good and every alteration to a rule over the last decade was a political payoff, but it is extremely disturbing to read about how an industry that was just bailed out by taxpayers is calibrating its political donations. It is pretty clear that political contributions helped to rewrite the rules and the result of that is clear to see.