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The US Senate burst forth from lethargy on Thursday, passing not one but two major bills with overwhelming bipartisan support. The STOCK Act, which prohibits insider trading by members of Congress and their staffs, passed 96-3, and the JOBS Act, which is supposed to make it easier to for small business to access investment cash, passed 73-26.
This might normally be a cause for celebration. But the details of each bill are a painful reminder of who is really in charge in Washington. While there are some important features to the STOCK Act, it purposefully leaves out any penalty for hedge funds or other Wall Street entities that trade in insider Congressional information. And the JOBS Act is simply a naked attempt to deregulate Wall Street even further.
The STOCK Act’s path to becoming a law is the stuff of high school civics textbooks. 60 Minutes did a report in November detailing how some members of Congress appeared to be trading stocks based what they—and only they—knew about pending legislation affecting particular industries. Politicians reacted to the ensuing public outrage; President Obama asked for legislation to combat it during his State of the Union speech in January, and both chambers of Congress quickly obliged.
The bill, which Obama is now expected to sign within days, bars members of Congress, their family, their staff and some federal employees from profiting from non-public information they learn while working for the government. (Take one example of this slimy practice: in 2008, Representative Spencer Bachus, a powerful member of the House Financial Services committee, sat in on a private meeting with Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke. He was warned the financial system was teetering on the brink of collapse, and then promptly bought option funds that would increase in value if the stock market went down. The Office of Congressional Ethics has found probable cause of insider trading.)
So the STOCK Act is a laudable change. But when it comes to insider knowledge from the halls of Congress, members dumping off a handful of stocks isn’t where the real money is being made. There’s a multimillion-dollar “political intelligence” industry operating in Washington, which seeks to gain knowledge of things only members of Congress and their staffs would know—and it sells that information to massive Wall Street hedge funds, which then makes bets on a far larger scale than any individual member of Congress.
Consider for example JNK Securities, a Wall Street brokerage firm that operates one of the “most aggressive” political intelligence outfits in Washington, in the words of the Wall Street Journal. As healthcare reform was being debated in December 2009, JNK Securities arranged meetings between some hedge fund managers and key members of Congress involved in the legislation. In these meetings, the hedge funds managers learned before anyone else that the government-run public option would not be included in the final bill.
News about the demise of the public option was a huge boon to health insurance industry stocks; Aetna shares rose 6 percent within days of that announcement. Viking Global, one hedge fund present at the meeting, bought 6 million shares of Aetna in the fourth quarter of 2009, according to regulatory filings examined by the WSJ. Karsch Capital, also present at the meetings, bought a half-million Aetna shares.
Ultimately the Aetna stock rose 14 percent in that quarter—and those two hedge funds presumably got in at the ground floor, getting a bottom-dollar price on the stocks before anyone else knew the public option was dead and before the price went up. (The firms won’t disclose exactly how or when they used the information gained through these Capitol Hill meetings, but it was information worth millions, and it’s extremely hard to imagine they didn’t use it.)
That’s just one example of hundreds and perhaps thousands—there are meetings set up by political intelligence firms virtually every day on Capitol Hill, as Wall Street is eager to get advance knowledge of the wide array of regulation and legislation that’s been under consideration in recent years.
The original version of the STOCK Act passed by the Senate in January included tough provisions on political intelligence outfits, forcing them to disclose virtually every meeting they had, with whom, and when. The bill seemed to be barreling towards passage in the House, much to the delight of good-government groups.
But when it reached the lower chamber, House Majority Leader Eric Cantor gutted any reference to political intelligence operations. “Think of the wording ‘political intelligence,’ ” Cantor told reporters when trying to explain why he removed those provisions. “I mean, there’s so much question about what that even means.” (We’ll leave that unintentionally self-incriminating quote alone for now).
The House passed the weakened version 417-2, and it headed back to the Senate because it had been altered. Even some Republicans there blasted Cantor. “It’s astonishing and extremely disappointing that the House would fulfill Wall Street’s wishes by killing this provision,” said Senator Chuck Grassley, an Iowa Republican.
Grassley has been fighting to get the political intelligence provision back into the final Senate version in recent weeks—but Majority Leader Harry Reid decided this week to move the House version of STOCK Act. That’s what passed Thursday, sans any check on political intelligence outfits.
While the STOCK Act ultimately avoided harming Wall Street, the JOBS Act is explicitly designed to help it, under the guise of job creation.
Cantor is once again a key player—he’s the original author of the JOBS Act, though it also enjoys broad bipartisan support in the House and Senate, particularly from New York Senator Chuck Schumer. The bill removes a wide array of SEC regulations on startup companies, with the ostensible purpose of making it easier for them to raise cash and thus create jobs. (The full name of the bill is the Jumpstarting Our Business Startups Act.)
But there’s little evidence these regulations are hampering job growth—and since they are mainly investor protection measures, the regulations are in place to stop massive, Enron-style fraud. Mary Schapiro, the SEC chairwoman, has openly criticized the JOBS Act and said it could be actually counterproductive to job growth. “Too often, investors are the target of fraudulent schemes disguised as investment opportunities,” Schapiro wrote to the Senate this week. “As you know, if the balance is tipped to the point where investors are not confident that there are appropriate protections, investors will lose confidence in our markets, and capital formation will ultimately be made more difficult and expensive.”
But nevertheless, the Senate passed the bill today, and it was lauded by politicians on both sides, and the White House this afternoon. Vermont Senator Bernie Sanders was not as pleased:
At best, this bill could make it easier for con artists to defraud seniors out of their entire life savings by convincing them to invest in worthless companies. At worst, this bill has the potential to create the next Enron or Arthur Andersen scandal or an even worse financial crisis.
Have we learned nothing? Deregulating Wall Street led to the worst financial crisis since the 1930s. Now the same people who caused this horrible recession are telling us that more Wall Street deregulation will create jobs. Give me a break. I strongly support providing small businesses with the tools they need to create jobs. Sadly, that's not at all what this bill will do.
Only in Washington could Wall Street deregulation be sold as job creation. And on the very same day, a bill to stop malevolent use of confidential Congressional information failed to include Wall Street—the biggest offender—in the prohibition. It’s their world, and we’re just living in it.
At a press briefing this morning, House Speaker John Boehner made it official: Republicans in the lower chamber will advance a bill this year to undo automatic defense cuts that were a result of the super-committee’s failure to agree on a deficit reduction plan.
If the supercommittee had not failed, there would only be one spending cap on all discretionary spending until 2021—meaning that Congress could theoretically take all the money from domestic programs and leave the Pentagon untouched in order to stay under it. But as an incentive to get Republicans on the committee to work seriously towards a deal, failure meant a separate cap for defense spending—which guarantees steep reductions.
TPM’s Brian Beutler quotes Boehner this morning pledging to undo that defense spending cap and citing presumed support from the White House:
“We should never have had the sequester. I always thought that the Super Committee had a real chance to do good work, to produce savings so that the sequester wouldn’t kick in. I think that the sequester will hurt our Department of Defense, will hurt our ability to do what Americans believe is our most basic responsibility, and that’s to provide security for the American people. I believe that Secretary Panetta believes the same thing. And for that matter, I think the White House believes that the sequester is totally unacceptable. That’s why the House will act this spring to replace that [defense] sequester.”
The reason Boehner thinks the White House is behind getting rid of the defense sequester, I have to assume, is because the White House budget advocates getting rid of the defense sequester. As we noted last month, Obama’s budget proposes a single discretionary spending cap in 2014—that is, it proposes eliminating the separate cap for defense—and even in 2013, the administration proposes around $5 billion in spending above the defense cap, and $5 billion in spending below the nondefense cap.
Republicans are seeking to back away from the debt-ceiling deal in a number of ways—Representative Paul Ryan’s budget plan comes in below the caps—and as Beutler notes, the White House is “lambasting” the GOP for backing out. That’s going to be a tougher argument to make if the administration, too, is serious about junking the defense sequester.
Outside a packed hearing room on Capitol Hill, where Representative Paul Ryan presided over a mark-up of his draconian budget bill, members of the Congressional Progressive Caucus held a press conference to announce their own plan: the “Budget for All,” which follows along the rough outlines of last year’s “People’s Budget.”
The exact details won’t be released for another day, but some broad outlines were made available by CPC staff: $2.4 trillion in job-creating investments like direct-hire programs, tax incentives and an infrastructure bank; ending the Bush tax cuts for top earners and instituting new tax brackets for millionaires and billionaires, while eliminating preferential treatment of capital gains and dividends; and dramatically reducing defense spending.
The members hope the “Budget for All” provides a substantive counterweight to the Ryan Budget as Congress hashes out a spending plan in the coming months. “What [the Ryan budget] is really all about is getting poor people to pay more, so that the wealthy can have all they have and not have to worry one single bit,” said Representative Jim McDermott. “If you $200 million out of Medicare, and put it into $200 million more military spending, you are crushing the middle class. You are taking away their security in the future. That’s why were offering this budget—we think people ought to have a choice.”
The CPC also released a video this morning, with several members touting budget features:
At the very least, the “Budget for All” will provide a useful public contrast to the harsher elements of Ryan’s plan. I asked Representative Raul Grijalva about Ryan’s deep education cuts in particular, which a projected to cut 45 percent of federal education spending within ten years. “What’s scary about it,” he said, “is that at a time when we need to make an investment for those babies and those students, we’re cutting. What scares me the most is that the Ryan budget concedes or promotes the idea that this nation of ours will have a permanent underclass with limited opportunity and limited access to education.”
Beyond the obvious budgetary moves—raising taxes on high earners, ending loopholes, investing in economic growth—there’s a trove of progressive priorities in the “Budget for All.” Representative Ed Markey spoke at he press conference about the SANE Act, which will be included in the budget and will cut $100 billion from nuclear weapons programs over the next decade.
Interestingly, the budget is also going to include “a publicly funded election system that gets corporate money out of politics for good.”
We’ll have more about the budget when explicit details become available.
House Budget Committee Chairman Representative Paul Ryan, R-WI, speaks about his budget plan on Tuesday, March 20, 2012, during a news conference on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin)
In the Wall Street Journal this morning, Representative Paul Ryan gets halfway to being honest about this year’s House GOP budget: he writes that “the contrast with our budget [and the president’s] couldn't be clearer: We put our trust in citizens, not government. Our budget returns power to individuals, families and communities.”
That’s an honest admission by Ryan that the GOP budget is a philosophical, political document: it seeks to radically alter the relationship between Americans and the federal government. Never mind that his numbers are fuzzy to the point of fantasy, nor that despite all the bombast about addressing the debt crisis, Ryan’s plan wouldn’t restore a federal surplus for nearly three decades, if it ever does—that’s all besides the point. This budget is an ideological proposition that proposes help for some and sacrifice for others in the name of a different society.
Where he’s dishonest, of course, is the “returning power to individuals” bit. That’s a common conservative trope for simply cutting government benefits—one might gain some perverse interpretation of empowerment, but practically speaking, just have less money for healthcare.
When you pick apart the House GOP budget—who gets helped, and who is asked to make sacrifices—the philosophy Ryan is advocating emerges. And it’s not pretty.
Whom the Ryan Budget Helps
A shorter version of this section might simply read “the top 1 percent.” High earners and corporations are lavished with giveaways under the Ryan plan, and the military and health insurance companies don’t do so bad either.
The very wealthy. Ryan proposes repealing the alternative minimum tax along with the investment taxes proposed under healthcare reform. Then he replaces the current six income brackets with two—and the top bracket pays only 25 percent on their income, as opposed to 35 percent now. That’s a $2 trillion gift for America’s top earners over the next ten years.
Corporations. The budget proposal also slashes the top corporate tax rate, also from 35 percent to 25 percent. (Ryan proposes also closing some loopholes that might, possibly, maybe affect corporations—but, as was true last year, he refuses to say which loopholes he would close.) For good measure, he would also allow corporations to bring massive amounts of money, earned and stored overseas, back to America tax-free. On balance, this is a $1 trillion gift to corporations over the next ten years.
The Pentagon. Paul Ryan may be a deficit hawk, but he’s apparently a military hawk first. His budget plan protects the military from planned cuts under the debt ceiling deal and ensuing sequestration, and then increases military spending $8 billion in 2013. Over ten years, the Ryan budget would spend $6.2 trillion on defense, compared to $5.97 trillion level in spending under the Budget Control Act.
Health insurance companies. While Ryan isn’t proposing a complete privatization of Medicare, as he did last year, his revised proposal is possibly even more helpful to the health insurance industry. Like last year, Ryan proposes a voucher for seniors to use for health insurance, capped at a harshly low rate—but, unlike last year, the proposal would leave Medicare in place as one option seniors could choose. This would allow health insurance companies to siphon seniors off Medicare and onto their private plans, with the help of a government subsidy—but, presumably, they’d only be interested in taking the healthy ones. The sicker seniors would then be left to Medicare, which would undoubtedly see its per capita costs skyrocket even further. This is ironically perhaps a better deal for the health insurance industry than total privatization—they don’t have to deal with the expensive, unhealthy elderly folks.
Also, on top of all this, the House GOP budget repeals many features of healthcare reform, including the establishment of health exchanges—the primary venue for the government to require that health insurance plans carry certain features, like for instance mammogram tests or birth control.
Who Sacrifices Under the Ryan Plan
Multitrillion-dollar giveaways to the wealthy and to corporations have to be paid for somehow, even in a budget that, as noted, doesn’t erase the federal deficit for another thirty years. So who has to pony up?
The poor. The House GOP budget moves Medicaid away from the current matching-grant financing structure to one that just block-grants money to states, and those block grants are not designed to keep up with increasing health care costs. In total, federal spending on Medicaid would be reduced by $810 billion over ten years. This would obviously come from health care benefits to the poor (along with the disabled and some elderly people)—the Congressional Budget Office noted that states would have to make cutbacks that “involve reduced eligibility for Medicaid and CHIP, coverage of fewer services, lower payments to providers, or increased cost sharing by beneficiaries—all of which would reduce access to care.” Estimates show that 14 million people, mainly low-income, could lose coverage under this plan.
But that’s not all. To help find money, Ryan directs six Congressional committees to find deep budget savings—including the Agriculture Committee, which is tasked with finding over $30 billion in reductions. Given that it has food stamps in its purview, that program would no doubt be in for some deep cuts.
The elderly. As noted, under the Ryan budget, elderly Americans would have a voucher that they could take to either a private health insurance company or Medicare. The caps on the voucher levels are very stingy, and CBO estimates that seniors could pay up to $1,200 more by 2030 and more than $5,900 more by 2050, above current estimates. Beyond that, the Ryan plan would raise eligibility from 65 to 67—so that’s an extra two years waiting for your paltry voucher anyhow. Seniors who already retired by 65 would have to go to Medicaid for the intervening years—and we’ve just gone over the cuts there.
The disabled. Medicaid is by far the primary health insurance provider for the disabled in the United States, and they would too be subject to whatever reductions came from over $800 billion in cuts over ten years.
The middle class: In several different ways, the House GOP budget targets federal spending that’s critical to the middle class. First off, consider the social safety net cuts that have already been described. Then the budget slashes education spending by an astonishing 45 percent, and infrastructure spending by 24 percent—both of these are crucial to the employment and advancement needs of the middle class.
In addition, the middle class would almost surely pay higher taxes under the Ryan plan. We know the very wealthy and corporations get a $3 trillion break—so who pays for the revenue goal of 18 percent laid out by Ryan? That’s $5 trillion in new revenue needed, and it’s simply inconceivable that everyone else would end up paying for those top-earners’ tax reductions. “The reality is that the only way to pay for such huge tax cuts for the 1 percent is to make the 99 percent pick up the tab,” writes Michael Linden at the Center for American Progress.
My colleague Peter Rothberg flagged an important plea this morning: a group of community activists wants a full, independent investigation from the Justice Department into the NYPD’s treatment of Occupy Wall Street protesters. Just this weekend, many people reported excessive use of force at a demonstration in Zuccotti Park and many disturbing incidents were caught on film.
But Attorney General Eric Holder will receive another letter today asking for an investigation of the NYPD: this one, signed by over 110 Muslim, faith and civil rights groups, demands an investigation into the police department’s covert surveillance of Muslim groups inside and outside of New York.
The letter, signed by Muslim Advocates, the NAACP of New York and others, notes that since the surveillance spanned several states—and since New York authorities have refused to investigate—it’s the federal government’s job to lead a comprehensive investigation:
In light of the failure of state and local officials to act in response to the NYPD’s abusive conduct, it is critically important that the federal government vindicate our society’s commitment to equal justice under the law and the prohibitions against targeting communities and individuals based solely on their religion, ethnicity, or national origin. We strongly urge the Civil Rights Division to commence an immediate investigation of the NYPD’s past and current practices to identify whether it has violated, or continues to violate, the Constitutional, federal or state law rights of Muslims, including their rights to equal protection of the law, free exercise, and association.
Potentially illegal surveillance, with taxpayer funds, are a common thread in both investigations—and Occupy Wall Street also signed the letter demanding an investigation into the Muslim surveillance.
When the federal government wants some information under Section 215 of the Patriot Act—which allows agents to access “tangible things” like business records—it goes to the Foreign Intelligence Surveillance Court. This much we know.
What we don’t know is how broadly FISA interprets Section 215—what information it allows federal agents to access, and to what extent the government must prove “relevance” to a terrorism investigation.
Two men who do know, however—Senators Mark Udall and Ron Wyden of the Senate Intelligence Committee—have consistently sounded alarms about what FISA is allowing under Section 215. While unable to reveal specifically what they have learned, the two Senators have repeatedly said that the public would be shocked if it knew what information was being collected with the help of FISA and the Patriot Act.
This week, Udall and Wyden wrote to Attorney General Eric Holder asking him to address this issue (emphasis is theirs):
We believe most Americans would be stunned to learn the details of how these secret court opinions have interpreted section 215 of the Patriot Act. As we see it, there is now a significant gap between what most Americans think the law allows and what the government secretly claims the law allows. This is a problem, because it is impossible to have an informed public debate about what the law should say when the public doesn't know what its government thinks the law says.
The two senators were spurred to write after learning the Justice Department wants to dismiss lawsuits filed by the American Civil Liberties Union and the New York Times that seek to find out exactly how the government is interpreting Section 215.
But it’s not the first time they’ve raised the issue, to Holder nor publicly—we’ve flagged it before here, and Wyden gave a dramatic speech on the Senate floor about this last year:
In 2009, the administration promised it would establish a process for “reviewing, redacting and releasing significant opinions” of FISA, but as the letter from Udall and Wyden notes, this hasn’t happened once.
One has to assume Udall and Wyden are legitimately disturbed by what they know—it’s extremely unusual for two senators to go so public about secret information they are privy to, and especially to prod a president (and former Senate colleague) from their own party. Will we ever know what has alarmed them?
It’s unlikely many Americans have heard of the Export-Import Bank of the United States, but the obscure independent federal agency serves a crucial role in boosting American exports—and is now at the heart of an intensifying funding battle in Washington.
The Ex-Im Bank, which Franklin Roosevelt created in 1934 by executive order, provides loans, guarantees and insurance for domestic exporters in order to level the trade playing field—it is essentially a job creation tool, since it finances sales of US exports to overseas buyers. Every industrialized nation has a similar export credit agency.
The agency is funded by industry fees, not taxpayer money, but Congress does have some supervision over the agency, including setting a loan limit for the Ex-Im Bank. That loan authorization expires in seventy-seven days, at which point the agency will cease to function absent Congressional action.
Far-right Republicans in the House and Senate, and pushed by the powerful Club for Growth, are contemplating not raising that limit—and perhaps junking the agency altogether. As Greg Sargent at the Washington Post’s Plum Line noted this week, it’s becoming a huge wedge issue for Republicans—the US Chamber of Commerce and many business-oriented Republicans like the agency, but anti-government ideologues do not. Democrats have been hammering at the far-right Republicans in recent days and highlighting the split.
The Ex-Im issue is currently holding up the JOBS Act in the Senate, which eases rules on small start-up companies and has broad bipartisan support—but Democrats want to attach the Ex-Im Bank loan authorization to the package, but Republicans in the House and Senate are resisting. (On the Senate floor this morning, Minority Leader Mitch McConnell accused the Democrats of “manufacturing fights” and re-stated his opposition to the Ex-Im measure).
At The Atlantic’s US Economy Summit yesterday, I asked Fred Hochberg, the head of the Ex-Im Bank, about the funding standoff. He had strong words about the implications for US companies, and thus jobs:
“If we don’t do it, it does open the door for our foreign competitors,” Hochberg said. “Our competitors are simply licking their chops and saying ‘this is great—we’ll be able to come in, steal those sales, and there won’t be an Ex-Im Bank to support those US exporters.’ So while we’re worrying what the [loan limit] number should be, our competitors are very happy watching us in this turmoil.” (Video of the exchange is here).
Hochberg noted that the limit may have to be raised before the seventy-seven days run out—the agency is at around $90 billion of indebtedness already, and “it’s more likely we’ll run out of headroom before we run out of time,” he said.
For mainly ideological reasons, conservatives argue the Ex-Im Bank is unnecessary government intervention in the marketplace—though, again, every industrialized country does this, so ideological purity on this issue would put American companies at a distinct disadvantage.
House majority leader Eric Cantor wants to raise the limit to only $113 billion, on the condition that President Obama begin negotiations with other countries to unilaterally get rid of export credit agencies. This is pure fantasy, of course. Other Republicans in the Senate, like Jim DeMint and Rand Paul, are raising nonsensical “oversight” issues.
The Ex-Im opponents, so far, seem to be getting their way, as McConnell’s comments this morning indicate. I wouldn’t bet against the US Chamber of Commerce ultimately prevailing inside the GOP, but it may be an ugly fight—and shows yet again the sway that far-right ideology has on the party.
A (now) former Goldman Sachs executive penned a much-discussed opinion piece in the New York Times this morning explaining that he’s resigning from Goldman because the environment inside the company “is as toxic and destructive as I have ever seen it.” Greg Smith, who spent twelve years at the firm, said it dramatically prioritizes profits over clients, whom are often mocked as suckers (or “muppets,” in company parlance). “It makes me ill how callously people talk about ripping their clients off,” he wrote.
At The Atlantic’s “US Economy Summit” in downtown this morning, Former Federal Reserve Chairman Paul Volcker gave the keynote remarks and sat for an interview with the magazine’s Washington editor at large, Steve Clemons. Volcker said he read the piece and that he trusted Smith’s diagnosis. “It is a reflection of a changing market mentality,” he said.
Moreover, Volcker suggested the mentality problem is one that can be solved by enacting the Volcker Rule, which would ban commercial banks from making speculative, proprietary trades.
Volcker recalled the period in the 1990s where commercial banks were allowed to buy and incorporate trading firms into their business, and diagnosed this as toxic not only to the culture at places like Goldman but to the country as a whole.
“[Trading] is a business that leads to a lot of conflicts of interest. You’re promised compensation when you’re doing well, and that’s very attractive to young people. All these firms can attract the best of American graduates, whether they’re philosophy majors or financial engineers, it didn’t make any difference,” Volcker said.
“A lot of that talent was siphoned off onto Wall Street. But now we have the question of how much of that activity is really constructive, in terms of improving productivity in the GDP,” Volcker said. “These were brilliant years for Wall Street by one perspective, but were they brilliant years for the economy? There’s no evidence of that. The rate of economic growth did not pick up, the rate of productivity did not pick up, the average household had no increase in their income over this period, or virtually no increase.”
Volcker noted that commercial banks hold the money of average Americans, and are insured by the federal government. “Should the government be subsidizing or protecting institutions that…are essentially engaged in speculative activities, often at the expense of customer relations?”
This is exactly what Smith described—it was known inside Goldman as hunting elephants. “In English [this means]: get your clients—some of whom are sophisticated, and some of whom aren’t—to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them.”
Regulators are likely to delay implementation of the Volcker Rule past the July deadline; the financial sector has been lobbying intensely on virtually every aspect and potentiality of the rule. Smith’s op-ed is a good pressure point towards a stronger rule.
Well, in the end, it wasn’t all that close after all. Representative Spencer Bachus crushed his challenger, state Senator Scott Beason, by a 59-27 margin in Alabama’s 6th Congressional district last night, with two other candidates picking up a small amount of votes.
Bachus’s Wall Street–funded, $1.5 million ad campaign apparently worked. And Beason’s rabid anti-immigrant grandstanding may have hurt him. A 76-year-old Republican voter from Beason’s hometown told the Birmingham News last night that “I don't like Beason. I just think he's a demagogue.”
Given Bachus’s long history of gutting financial regulation and executing his belief that the federal government should “serve the banks,” many will be discouraged that he pulled it out. But it’s not easy to weep for Beason, given his own xenophobic extremism, and one can certainly chuckle at what may be the saddest concession speech in history, which Beason delivered last night at the Gardendale Civic Center:
Bachus is very likely to win against the Democratic nominee this fall in the heavily Republican district.
Tonight’s primaries in Alabama and Mississippi certainly have implications for Mitt Romney in the long term, but they will be decisive for another powerful Republican: Alabama Representative Spencer Bachus, who is currently chairman of the House Financial Services Committee.
He is facing a strong primary challenge from state Senator Scott Beason, a virulent anti-immigrant grandstander and author of Alabama’s draconian H.B. 56, which caused thousands of Hispanics to flee the state. But Bachus is also being battered by ads from the Texas-based, anti-incumbent Campaign for Primary Accountability Super PAC—the same group credited with helping to oust Representatives Dennis Kucinich and Jean Schmidt in Ohio last week.
The Super PAC is pummeling Bachus for his massive Wall Street contributions—he’s received nearly half of his donations this cycle from the financial sector—and for an ongoing ethics investigation into whether Bachus profited from insider knowledge in the run-up to the financial crisis. (60 Minutes nailed Bachus on this late last year, in the same piece that led to the pending passage of the STOCK Act.) Advertisements like this one have been running in Alabama for weeks:
That ad hits Bachus for financial sector donations, but then it gets fuzzy by portraying a quid pro quo when Bachus voted for the financial sector bailout. The bailout is certainly unpopular in deeply conservative areas, but Bachus has done much more insidious tasks for Wall Street than supporting a basically necessary rescue plan.
As Pat Garofalo at ThinkProgress notes, in recent years Bachus sought to weaken the Dodd-Frank financial reforms, including gutting the Consumer Financial Protection Bureau; he’s sought to dramatically weaken the budget of financial regulators and has also sought to undermine foreclosure prevention programs. (He notoriously said before taking the chairmanship that the job of regulators is to “serve the banks.”)
Wall Street loves the guy, which is why Bachus has received funding for a final push in the past few days from Citigroup, Barclay’s and RBS, among others. He’s mounting a $1.5 million advertising counteroffensive portraying himself as a consistent opponent of the Obama administration and in particular the healthcare reform bill.
It’s going to be a nerve-wracking night for Bachus, with the race expected to be very close. Wall Street would lose a key ally in Bachus if he goes down, but let’s also be realistic—the next Republican in line on Financial Services will be lavished with the same donations, and will likely carry out the same agenda. Still, Bachus’s skill, experience and contacts will be missed by the Street.