Strictly Business: Wall Street shenanigans hit home
Sunday, February 3, 2013
You've probably never heard of Jeff Connaughton.
Neither had I.
That is, until I read some blog buzz about his 2012 book, "The Payoff: Why Wall Street Always Wins."
And then I read his book.
It'll floor you.
Connaughton, a former Clinton White House attorney and self-described former "Professional Democrat," moves you through a no-punches-pulled account of the war he and the senator for whom he was the top aide -- Ted Kaufman -- waged to genuinely rein in Wall Street in the aftermath of the crash.
Two villains loom large in Connaughton's book. One is Chris Dodd, the former U.S. Democratic senator from Connecticut, whose modus operandi largely was to ask "How high?" when Wall Street said, "Jump."
The other is what Connaughton describes as "The Blob," which refers "to the government entities that regulate the finance industry," including the U.S. Securities and Exchange Commission, and the "army of Wall Street representatives and lobbyists that continuously surrounds and permeates them."
Suffice it to say, The Blob smothers true financial-industry reform -- the kind that helps average people, also known as "consumers" -- wherever it dares to pop up.
Meanwhile, top congressional Republicans did nothing, according to Connaughton, instead waiting for the shock of the economic spiral to wear off so they could grab more campaign cash from Wall Street for the next elections. (Connaughton, by the way, doesn't have kind words for the Obama administration, either).
To be sure, Kaufman and Connaughton won personal and moral victories. Kaufman -- who was filling the newly minted Vice President Joe Biden's former Delaware Senate seat for two years -- showed what a politician could be: someone who actually cares about the public interest and who refuses to back down from The Blob.
But who actually won? Connaughton is blunt: The watered-down legislation Dodd favored, do-nothing Republicans and The Blob, that's who.
What does any of this have to do with Southwest Washington residents and businesses?
Thousands of people were thrown out of work, local companies (small- to medium-size businesses in particular) got slammed with tight credit and low economic demand -- all largely because Wall Street and the too-big-to-fail banks opened up the casino and gambled like an addict whose night is never going to end.
And, yeah, it ended -- with the rest of us, also known as taxpayers, stuck footing the bill in the form of the Troubled Asset Relief Program, and with many of us devoid of jobs.
And, presently, salt keeps pouring into the wound: As The Washington Post reported last week, "a watchdog says the U.S. Treasury Department disregarded its own guidelines and allowed large pay increases for executives at (American International Group Inc., General Motors Corp. and Ally Financial Inc.) that had received taxpayer-funded bailouts during the financial crisis."
At the end of his book, Connaughton calls for big change, including reinstating Glass-Steagall (which separated commercial and investment banking and kept Wall Street from opening a casino), and ending money's stranglehold on politics.
And he asks, I think, a question people should consider deeply: "When will the Tea Party and Occupy Wall Street realize that, when it comes to (fighting) crony capitalism, they share common ground?"