Rare is the day when the U.S. Senate Ag Committee lands on the front page of the New York Times. That day, however, came April 20 when the Times, in its running coverage of financial reform in the Senate, highlighted the aggies’ role in that effort: regulation of casino-like derivatives.
The story centered on committee chair Blanche Lincoln, a two-term Dem from Arkansas in a tough, May primary battle for re-election.
Lincoln introduced a bill April 16 that bans banks from trading derivatives directly and forces trading onto open markets overseen by third-party “clearinghouses.”
The Times‘ piece also noted that “more than 1,500 lobbyists, executives, bankers and others have made their way to the Senate committee that on [April 21] will take up legislation to rein in derivatives…”
That’s about 70 full- or part-time arm twisters per aggie. They are there because they paid for the access. In fact, they paid millions.
According to the Times story, “Agriculture Committee members have received $22.8 million in this election cycle from people and organizations affiliated with financial, insurance and real estate companies — two and a half times what they received from agricultural donors, according to the Center for Responsive Politics.”
That loot might seem like a bundle to our senators but to Wall Street banksters it’s chickenfeed. Less than chickenfeed, really, because on April 20, Goldman Sachs reported a quarterly profit of $3.5 billion. The next day, Citigroup, another banking powerhouse, pocketed $4.4 billion in quarterly profit while Morgan Stanley, the third of the Giant Six Too Big To Fail posted $1.8 billion in profit.
Feeling like a sucker because less than two years ago you bailed out these ATMS? Well, you and I are suckers, according to Simon Johnson and James Kwak.
Johnson, the former chief economist of the International Monetary Fund, and Kwak, a co-founder of software company Guidewire, are authors of 13 Bankers: The Wall Street Takeover and The Next Financial Meltdown, a current Times bestseller.
In it they explain how six Wall Street banks used the 2008 bank bailout to strengthen their political stranglehold on Washington to lay the foundation for today’s growth and profits. In a recent televised interview, Kwak and Johnson called these six — Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo — “oligarchs” whose combined assets are equal to 60 percent of America’s gross national product.
These banks aren’t too big to fail, Johnsons said, they are too big to save should they dig themselves into another hole. And they will, he suggested, because “The way it works in modern finance is when the rules favor you, you go out and you take a lot of risk… because it’s not your problem. When it blows up, it’s the taxpayer… that has to sort it out.”
On their blog, http://baselinescenario.com/, Johnson and Kwak endorse tough reforms. For example, neither believes there is any “social value” to a bank with more than $100 billion in assets. As such, they believe the Big Six should be deeply pared.
Main Street bankers — the nearly-5,000 members of the Independent Community Bankers of America — said on April 19 that they want tough, new reforms, too.
“(W)e support strong reforms that hold accountable Wall Street and systemically dangerous financial firms and unregulated entities whose risky behaviors led to this crisis,” ICBA noted in a press release.
Senate Ag Chair Lincoln’s derivative regulation proposal is just such a reform. Moreover, the best part of it might be that she and her aggie colleagues can do to the big banks what the big banks have been doing to us for years: take their money and laugh all the way to the bank
(Alan Guebert’s Farm and Food File is published weekly in more than 75 newspapers in North America. He can be contacted at email@example.com.)
2010 ag comm