In 2008, when it mattered to oppose bank bailouts, Senate Minority Leader Mitch McConnell, R-Kentucky, led the push to steer the spigot of federal dollars into the vaults of the biggest speculators on Wall Street.
While a number of Democrats and Republicans objected to the no-strings-attached bailout, McConnell objected to placing even the most minimal controls on the raiding of the national treasury. The Kentuckian even appeared with Senate Banking Committee chairman Chris Dodd, D-Connecticut to talk up the bailout legislation.
Now, however, McConnell is leading the fight to block even the tepid regulatory reforms proposed by Dodd.
McConnell says the proposed reforms would "allow endless taxpayer-funded bailouts for big Wall Street banks."
But didn’t McConnell back bailouts before he opposed them?
So what’s going on?
Has McConnell made a sincere shift?
McConnell’s trying to sound like a populist while he does what he always does: Represent Wall Street biggest banks.
Let’s turn to the people who know the senator best for an explanation.
No Kentucky newspaper has been more dogged when it comes to reporting on, examining and investigating McConnell during his decades of service to Wall Street than the Lexington Herald-Leader.
"McConnell’s calculus is pretty obvious," argues the Pulitzer Prize-winning editorial page of the Herald-Leader, which says that the state’s senior senator is racing "to big banks’ rescue."
"The high-stakes gamblers on Wall Street, luxuriating again in big bonuses, don’t want any new oversight or regulation. Why would they, knowing that the government would have to bail them out again if their trading of worthless financial instruments goes bust and threatens to bring on the next Great Depression?" explains the newspaper. "McConnell, unabashedly courting Wall Street bankers for political money, is happy to scratch their backs if they’ll scratch his."
There is nothing sincere about McConnell’s opposition.
He’s just delivering for his corporate paymasters.
Did McConnell go bad?
He’s been bad for a long time.
A six-month examination of McConnell’s Senate tenure by the Herald-Leader reviewed thousands of documents and interviewed dozens of industry insiders, consumer advocates and political observers. What was the determination about the senator? That there is a clear and constant "nexus between his actions and his donors’ agendas."
Of McConnell, the paper wrote in 2006: "He pushes the government to help cigarette makers, Las Vegas casinos, the pharmaceutical industry, credit card lenders, coal mine owners and others."
Is that just “the liberal media” talking?
What sort of sources did the Herald-Leader find?
Marshall Whitman, who has represented the Christian Coalition and other conservative groups on Capitol Hill, said of McConnell: "He’s completely dogged in his pursuit of money. That’s his great love, above everything else."
On the basis of such observations, the Herald-Leader investigation pointed to a growing sense that “McConnell has come to represent his affluent donors at the expense of Kentucky, the relatively poor state he is supposed to represent."
The report noted that: The senator’s critics “point, for example, to his support last year for a tough bankruptcy law, backed by New York banks that support him."
That was a reference to McConnell going out of his way to deliver for big banks in 2006.
McConnell delivered again in 2008, when he backed the bailout.
Now, the senator began a new push to protect his Wall Street clients, er, contributors.
Here is the full take from the Herald-Leader on McConnell’s recent wrongdoing:
McConnell to Big Banks’ Rescue
FOXBusiness reported on Monday that Senate Republican leader Mitch McConnell recently called on about 25 Wall Street executives, many of them hedge fund managers, to hear their complaints about proposals for regulating the financial industry.
With him was Sen. John Cornyn of Texas, chairman of the National Republican Senatorial Committee, which raises campaign money for Republican candidates for Senate.
"The undercurrent of the gathering," FOX reports, "was undeniably political. … McConnell and Cornyn made it clear they need Wall Street’s help" to defeat the reforms by electing more Republicans in November.
On Tuesday and again Wednesday, McConnell took to the Senate floor to denounce a bill sponsored by Democratic Sen. Christopher Dodd, chairman of the Senate banking committee.
Interestingly, McConnell is disparaging the proposed reforms in words recommended by a pollster.
"If the outline of his speech sounds familiar," wrote Adam Sorensen on Time’s political blog, "it’s because it is the exact argument pollster Frank Luntz urged Republicans to make earlier this year in a widely publicized memo."
(Comparisons of McConnell’s statements and the Luntz memo can be found at http://swampland.blogs.time.com/2010/04/13/a-gop-financial-reform-bellwether/.)
McConnell’s statements are perfectly calibrated to inflame the public. He insists the bill would "allow endless taxpayer-funded bailouts for big Wall Street banks."
Their resemblance to the truth is another matter.
The provision that McConnell claims would allow endless bailouts emerged from a bipartisan collaboration by Sens. Mark Warner, D-Va., and Bob Corker, R-Tenn.
Warner, who learned a thing or two about capitalism as a successful dot.com entrepreneur before becoming Virginia’s governor, told The Washington Post: "It appears that the Republican leader either doesn’t understand or chooses not to understand the basic underlying premise of what this bill puts in place."
The provision to which McConnell particularly objects creates an orderly process for letting "too big to fail" banks fail, at the industry’s expense, without taking down the entire economy.
The losers would be the management and shareholders, not the taxpayers. So onerous would this process be for failing financial institutions, says Warner, that it would serve as a deterrent to reckless decision-making.
McConnell, it should be remembered, voted for the bailout of the big investment banks in the fall of 2008, when it was the only alternative to global economic meltdown.
We have read that the Republicans have a plan for financial reform, but McConnell isn’t talking up any solutions, just trashing the other side’s ideas with no respect for the truth.
While the intricacies of financial regulation are complicated, McConnell’s calculus is pretty obvious.
The high-stakes gamblers on Wall Street, luxuriating again in big bonuses, don’t want any new oversight or regulation. Why would they, knowing that the government would have to bail them out again if their trading of worthless financial instruments goes bust and threatens to bring on the next Great Depression?
McConnell, unabashedly courting Wall Street bankers for political money, is happy to scratch their backs if they’ll scratch his.