THIS year will produce a perfect storm in U.S. politics through the confluence of the need to achieve regulatory reform of America's financial institutions and what is promising to be a vigorous congressional political campaign, opening wide the mouths of candidates to be influenced by contributions from lobbyists and special interests.
As of now, the same banks and financial institutions that wrecked the U.S. economy, with the chickens coming home to roost in 2008 and last year, are still at it. They took risks which were, to the disadvantage of the rest of the population, highly profitable to their enterprises.
When the globqal financial market realized that it had been scammed, it was determined - first by the Bush administration and others, including then-New York Federal Reserve Chairman Timothy F. Geithner - that the perpetrators of the scam, the American International Group, et al, were "too big to fail." This is a contention that Mr. Geithner, now President Obama's Treasury secretary, and others still maintain, citing the failure of Lehman Brothers as evidence of the awful fate that was awaiting the rest of us if taxpayers did not rescue big firms such as AIG.
Now, here we are in the time of year when Wall Street and other financial pirates in question hand out bonuses to the imaginative devils who pulled off - and continue to pull off - the scam in question. The scam is, by the way, to take big, dangerous but profitable chances, knowing that if things get rough taxpayersa will save your bacon rather than let you go under.
What - to their expectant and our wondering - eyes should appear than indications that the bonuses will run to seven or eight figures in cash or stock. The companies, bailed out by taxpayers, handing out the rewards include Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, and Morgan Stanley.
On the regulatory front, in Congress, where the money that the financial institutions have at their disposal and those who should be putting in place regulations to stop their looting of the economy cross paths, here is where matters stand:
The House of Representatives has passed what could be a decent financial regulatory reform bill. It includes means to put to an end the "too big to fail" argument for saving these institutions the next time they get themselves into trouble; regulation of the complicated "securities" that no one even understood, much less regulated, and measures to require banks to maintain enough reserves to cover their operations and to give stockholders a means of keeping the bankers' compensation from reaching obscene levels.
But now the legislation must be passed by the U.S. Senate, which is a happy hunting ground for the financial industry's lobbyists and campaign contributors. They lie in wait for the Senate to return from its 26-day holiday break.
The Senate, and the House for that matter, which, if the Senate passes a bill, will have another shot at it with hands outstretched in the conference period, will be in dire need of campaign financing for the 2010 midterm elections. The frantic flapping of wings that ensued when Sen. Christopher J. Dodd of Connecticut and Sen. Byron L. Dorgan of North Dakota said they intend not to run again, thus putting control of their seats in question, gave a signal of the state that members of Congress will be in as Nov. 2 approaches. Unfortunately for Americans, the congressmen's anxiety about their futures means major augmentation of their felt need for cash to fuel campaigns.
So what can Americans do?
First, there will be a vital need to keep close track of which candidates accept contributions and how much from financial institutions. That will provide a clear guide to whether these legislators represent taxpayers or financial institutions.The second means of tracking what is going on is up to citizens and the media. Each candidate for national office must be asked if he is taking money from financial interests and what his position is on the regulatory legislation.
An answer that he is on the "take" from one or more of them or that he opposes the regulatory legislation should serve as a reason to vote against him. America has to bring these people under control or they will wreck the economy again.
Dan Simpson, a retired diplomat, is a member of the editorial boards of The Blade and Pittsburgh Post-Gazette.
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