The infamous James Carville quote, “Drag a hundred-dollar bill through a trailer park, you never know what you’ll find,” seems more applicable to official Washington than the much-maligned Paula Jones.
Ben White at Politico (hat tip Paul Tioxon) provided an update on the revolving door, Wall Street edition. It’s so mind-numbingly common for a government figure to land a job with some Big Financial Firm You Heard Of that it’s hard to keep track. Most of us notice only the really high profile examples, such as former SEC chairman Mary Shapiro taking a board seat at financial-services heavyweight General Electric.
But White tells us that a shift is underway. Major banks have intensified their search for, um, talent, as in the Washington DC insider kind. The reason for their fondness for this type is, natch, an even keener interest than before in making sure that no regulation that could interfere with their imperial right to profit goes anywhere. And it appears this change in degree is a change of kind.
Two of the biggest blue-chip firms in the industry, Goldman Sachs and Morgan Stanley, will soon have top-level executives with the ear of the CEO who once occupied senior jobs in the White House and the U.S. Treasury. Other banks including Citigroup, Credit Suisse and JPMorgan Chase also have staffed up with former political and regulatory officials…
A very short list of other top political operatives now working in and around Wall Street includes: Ed Skyler, former deputy New York City mayor for operations, who is now executive vice president for global public affairs at Citigroup; Calvin Mitchell, who ran press operations for Geithner at the New York Federal Reserve and is now global co-head of corporate communications at Credit Suisse; Jennifer Zuccarelli, formerly of the Paulson Treasury department and Mark Kornblau, a veteran of multiple Democratic presidential campaigns, who both now have senior roles at JPMorgan Chase. Andrew Williams, a former Geithner spokesman, now works for Siewert at Goldman.
And there are many more.
Even with financial firms having moderated their pay a smidge in the last year or so, the gap between major banks and government pay levels is cavernous. And in some positions, it is getting worse. For instance, the Republicans in the House have forced budget cuts on their members, which means markedly lower pay cuts for staffers. As one colleague groused, “The only people who can afford to work here are people who intend to cash out or ones with rich parents.”
Let’s look at just one member of the House, Mel Watt, a Representative from Bank of America North Carolina. Watt has a history of having overly cozy relationships with the financial sector. Per Business Week in 2007:
Created in 1979, the Fannie Mae Foundation has given out more than $1 billion….Yet that generosity came with strings attached, say some former Fannie executives, grant recipients, and nonprofit advocates. In applications for funding, nonprofits were asked to list their political contacts in a section labeled “franchise value.” Those so-called affinity contacts–a former congressional aide, a lawmaker’s barber, a senator’s pastor–helped populate a database at Fannie that at one point had roughly 4,000 people with a direct connection to a member of Congress. “They were using charitable grants to strengthen, advance, and carry out the political and lobbying agenda,” says Fred Wertheimer, president and CEO of campaign finance watchdog Democracy 21. “It was the political equivalent of a quid pro quo.”….
The Fannie Mae Foundation has, according to tax filings, donated at least $600,000 to the Congressional Black Caucus Foundation since 1989, money used in part to sponsor events like the CBCF’s golf and tennis tournament. “They’ve been an important player,” says Representative Mel Watt (D-N.C.), the past chairman of the Congressional Black Caucus and a current member of the CBCF. “[We] have worked closely with Fannie Mae or the foundation periodically to do things, sponsor housing fairs, [and] press Fannie Mae to provide support for housing initiatives in [members’] districts.”
Perhaps because Watt is a soft touch, some of his staffers have landed at major Wall Street firms. Sanders Adu. who was subcommittee staff director and chief counsel when Watt was chairman of the Financial Services Committee, now serves as a lobbyist for Wells Fargo. Joyce Brayboy, once Watt’s chief of staff, now lobbies for Goldman Sachs. Hilary West, formerly Watt’s legislative counsel, currently lobbies for JP Morgan.
And the influence game goes beyond formal lobbying. White again:
Regulatory reformers and some on Capitol Hill argue that banks have one thing in mind when making these hires: influencing the writing of Dodd-Frank rules and figuring out ways of beating back any new legislation, such as the recently introduced bill by Sens. David Vitter (R-La.) and Sherrod Brown (D-Ohio) to force banks to hold much more capital. The argument goes that while these former operatives are not registered lobbyists, they can nonetheless trade on prior relationships and inside knowledge to help banks stay ahead of policymakers.
“There is absolutely a value to banks hiring these people, and it is about connections and relationships and that opens the door to potentially inappropriate influence,” said Rep. Jim Himes (D-Conn.), who worked as an investment banker at Goldman for more than a decade.
Wall Street tries to claim otherwise, with the Goldman chief of staff contending that because 53% of the legislators who were involved in Dodd Frank are gone, relationships are too transient to be of value. That may be true for formal lobbyists, were researchers have found that their billings are very much a function of whether their former boss is still in the saddle and how powerfully he is placed. But it’s unadulterated nonsense otherwise. Noam Schreiber just released a wonderfully salacious piece titled, “Get Rich or Deny Trying:
How to make millions off Obama,” on how former Administration operatives cashed in. Ex-regulators can cash in at Promontory, particularly now that it is flush with its ill-gotten gains from the Independent Foreclosure Review.
While it seems to be impossible to curb this sort of brazen influence-peddaling, remember that the railroads once had the Federal government even more in its sway than the banks do now, and their hold was eventually broken. For now, we can at least let the perps know we are onto them and keeping track of their movements.
This piece is cross-posted from Naked Capitalism with permission.