[Corp. Watch] Wall Street using tax dollars to maintain its impunity

[Corporation Watch]

How You and I Are Paying Wall Street to Lobby Congress to Go Easy on  
Wall Street

  By Robert Reich

(TalkingPointsMemo.com, Jan. 26) -- The new administration and  
Congress are busy preparing the second tranche of bail-out money for  
Wall Street -- TARP II -- at the same time they're developing a new  
set of regulations to make sure Wall Street doesn't get into this kind  
of mess again. But will the old politics intrude?
	Wall Street is one of the biggest campaign contributors to both  
parties, and the Street's contributions have increased considerably  
over the last several election cycles. According to the Center for  
Responsive Politics, by the 2006 elections, Wall Street contributions  
to the Democratic Party had caught up with its contributions to  
Republicans.

	For years, Wall Street lobbyists have been among the most aggressive  
on Capitol Hill. They're the ones who pushed Congress and the Clinton  
administration to tear down the wall that had separated commercial  
banking from investment banking since in the 1930s, when the Great  
Crash and the Depression revealed how important it was to keep the two  
distinct.

	In subsequent years, as Wall Street created ever fancier derivatives,  
it lobbied against regulating the new instruments -- and its  
arguments, backed by the campaign contributions, won the day. The  
Street lobbied against giving the Securities and Exchange Commission  
the power and resources needed to oversee what was going on. Again,  
they won.

	They lobbied against raising taxes on hedgefund and private equity  
managers whose gigantic incomes, they said, were nothing but capital  
gains and therefore should be taxed at 15 percent -- lower than the  
marginal rate paid by most Americans. Again, they won.

	They lobbied against better oversight of credit-rating agencies, and  
against changing the way those agencies were paid. They said there was  
no fundamental conflict of interest when rating agencies were  
compensated by the very firms whose securities they were rating.  
Again, they won.

	When all of this led, as many knew it would, to a speculative bubble  
of proportions never before seen -- and as Wall Street traders and  
executives took home more money than anyone had ever before seen -- a  
crash was all but inevitable.

	Yet what's happened to the Wall Street campaign contributions and to  
the lobbyists? They're still going strong. We now know that many of  
the financial giants that have been bailed out by taxpayers continue  
to finance a platoon of Washington lobbyists, who are at this moment  
trying to influence TARP II and the next attempt to regulate Wall  
Street.

	In effect, your money and mine, and that of all other taxpayers, is  
paying these lobbyists to push Congress in a direction we have every  
reason to believe is not in our interests, but in the continued  
interests of Wall Street.

	Citigroup, the recipient of $45 billion of taxpayer money so far, is  
still fielding "an army" of Washington lobbyists, according to the New  
York Times. Its lobbyists are working on a host of issues, including  
the bail-out. In the fourth quarter of 2008, when it got its first  
infusion of bail-out money, Citi spent $1.77 million on lobbying fees.

	During the last three months of 2008, at least seven other firms  
receiving bail-out funds (American Express, Capital One, Goldman  
Sachs, KeyCorp, Morgan Stanley, PNC and Bank of New York Mellon)  
lobbied the government about the bail-out.

	Would it not be a reasonable condition for receiving additional bail- 
out funds from TARP II that a firm cease its lobbying activities and  
campaign contributions (as well as any contributions it makes  
indirectly through its executives) at least until it fully compensates  
taxpayers what we have provided it?