Yes, we do have a problem. A very big one, and I have in mind Wall Street and its corrosive influence on politics and government. Because it has amassed so much collective wealth, aided and abetted by a compliant Congress, Wall Street calls the shots.
So, when Wall Street guessed wrong on house prices and the longs and the shorts of trading, the federal government came to its rescue, pouring hundreds of billions of dollars into reserve-starved financial institutions to restore their liquidity. The response to the collapse of Lehman Brothers was as massive as it was quick.
However, instead of gratefulness or newfound humility, the captains of Wall Street have doubled down on attempts to regulate them, seeking to denude Dodd-Frank, itself a toothless product of much compromise, and squelch the Volcker rule, a pale shadow of Glass-Steagall. Meanwhile, these casino magnates are lavishing both the Romney and Obama camps with millions of dollars in contributions.
For his part, Romney promises to gut Dodd-Frank in its entirety, reduce the marginal tax rate, kill the estate tax, and otherwise leave Wall Street to gamble with trillions of dollars while ensuring that any future losses would be covered by the Rest of Us, just as we did under TARP. In Romney’s worldview, these captains of the finance industry are the lifeblood of the U.S. economy. They should be praised rather than pilloried.
Obama chooses to treat the malefactors of great wealth with “tough love.” Writing for the New York Times, Thomas Edsall quotes Obama’s February 2009 remarks to a question about temporarily nationalizing one or more of the then-troubled financial firms.
You know, the scale of the U.S. economy and the capital markets are so vast and the problems in terms of managing and overseeing anything of that scale, I think, would — our assessment was that it wouldn’t make sense. And we also have different traditions in this country. Obviously, Sweden has a different set of cultures in terms of how the government relates to markets and America’s different. And we want to retain a strong sense of that private capital fulfilling the core — core investment needs of this country. And so, what we’ve tried to do is to apply some of the tough love that’s going to be necessary, but do it in a way that’s also recognizing we’ve got big private capital markets and ultimately that’s going to be the key to getting credit flowing again.
Edsall provides us with some truly depressing numbers about Wall Street’s campaign contributions. Wall Street has been the largest source of Romney’s campaign cash, now at $13 million. The pro-Romeny Super PAC, Restore Our Future, has so far received $24 million from financial institutions, almost half of the PAC’s total contributions.
Hedging its bets, Wall Street has also been the Democratic Party’s biggest source of dollars, contributing almost $20 million. Hollywood, famously derided by conservatives as the principal contributor to Democratic candidates, comes in at less than $8 million. Edsall:
Romney has made it very clear how he will help Wall Street if he wins. It’s President Obama who is in a conflicted position. Obama could conceivably take a more aggressive regulatory posture. The more likely scenario, given recent history, is that he would be apprehensive about the consequences of regulating hedge-fund operators and investment bankers. In the aftermath of Citizens United, Obama and the rest of the political community are aware of how dangerous the financial sector can be in the freewheeling world of campaign finance.
The Supreme Court’s awful ruling, equating money with speech, effectively silences the speech of the Rest of Us, since we ain’t got no money. Nor can we look to Obama to take up our cause. We simply don’t count.