A new report released by Essential Information and the Consumer Education Foundation found that Wall Street invested more than $ 5 billion over the past decade into campaign contributions and lobbying Washington for the deregulation that led to the collapse of the financial system.
“The report details, step-by-step, how Washington systematically sold out to Wall Street,” says Harvey Rosenfield, president of the Consumer Education Foundation, a California-based non-profit organization. “Depression-era programs that would have prevented the financial meltdown that began last year were dismantled, and the warnings of those who foresaw disaster were drowned in an ocean of political money. Americans were betrayed, and we are paying a high price — trillions of dollars — for that betrayal.”
According to the report titled Sold Out: How Wall Street and Washington Betrayed America, “From 1998-2008, Wall Street investment firms, commercial banks, hedge funds, real estate companies and insurance conglomerates made $1.725 billion in political contributions and spent another $3.4 billion on lobbyists, a financial juggernaut aimed at undercutting federal regulation.” You may be thinking to yourself, damn corrupt Republicans, but it turns out that the corruption was bi-partisan, 55% of the money went to Republicans, and 45% went to Democrats. Banks spent over a half a billion dollars in campaign contributions and lobbying. Insurance companies and securities firms each spent over a billion dollars in contributions and lobbying, while accounting firms spent just under $200 million.
The report points to 12 legislative areas which were targeted for deregulation. The rule changes included allowing
commercial and investment banks to merge, the SEC’s adoption of voluntary regulation rules for investment banks, and the abandonment of anti-trust regulations which paved the way for the creation of the mega banks.
“Congress and the Executive Branch,” says Robert Weissman of Essential Information and the lead author of the report, “responded to the legal bribes from the financial sector, rolling back common-sense standards, barring honest regulators from issuing rules to address emerging problems and trashing enforcement efforts. The progressive erosion of regulatory restraining walls led to a flood of bad loans, and a tsunami of bad bets based on those bad loans. Now, there is wreckage across the financial landscape.”
This report is more evidence as to why we need campaign finance reform. Politicians of both parties always campaign on cleaning up the system, until they become a part of the system. Obama is different because he doesn’t need the special interest money, but he is trying to lead in a town that lives on campaign contributions.
In some ways, I doubt if moving the money out of the system would have mattered over the past ten years. Presidents Bill Clinton and George W. Bush were both Wall St. friendly presidents, and for the Republican Party there is no such thing as a good regulation. Ideology and money combined to form a lethal cocktail of delusion that benefitted everyone except the investor, and the American taxpayer.