|January 5, 2010|
|Surprise: Shaky Banks Spent Most for Lobbying|
|By Kevin McCauley|
|Alert the media! Arouse the watchdogs! Lobbying works. It pays off big time. |
The International Monetary Fund, in what The Guardian calls a "groundbreaking study," found that bankers engaged in the most risky types of financial transactions spent the most on lobbying. Why? They wanted to keep the gravy train rolling, of course.
The IMF report is titled "A Fistful of Dollars: Lobbying and the Financial Crisis." (PDF)
Here is the Guardian's key conclusion: "The paper, written by a trio of high-profile IMF economists, established that firms who spend more on buying access to politicians are more likely to engage in risky securitization of their loan books, have faster-growing mortgage loan portfolios as well as poor share performance and larger loan defaults."
Lesson learned: a "bought" politician is a banker's best friend.
The IMF report followed 33 pieces of federal legislation designed to curb predatory lending and other abuses. And lo and behold, “efforts by banks to resist the legislation overwhelmingly succeeded” reports the British newspaper. American’s financial, insurance and real estate (FIRE) sectors accounted for 15 percent of the $4.2B spent on “targeted political activity” during the past election cycle. The IMF found the “lobbying intensity” of the FIRE companies increased faster than other parts of the private sector.
The Guardian expects "pressure on the IMF to formulate policy in response to its research." What's next? Will there be recommendations to curb advertising or PR campaigns by bankers?
Financial firms have every right to petition lawmakers on Capitol Hill. They owe it to shareholders and various stakeholder groups to protect their own hides. Congress needs show some spine. Members need to take a cue from former First Lady Nancy Reagan and "just say no" to bankers who come calling with a hatful of sweeteners.
Public shaming works. Activist groups and the media should shine a bright spotlight on members of congress suspected of being in the pocket of Big Business. Take Connecticut's two Senators, please. Democrat Chris Dodd, who spearheads financial overhaul, is too cozy with Wall Street. Ex-Democrat Joe Lieberman, who staged a hissy fit threatening to blow up healthcare reform if it had a "public option," is Big Insurance's guy on Capitol Hill.
The media did a nice job showcasing the corporate ties of both Dodd and Lieberman. Both face tough re-election bids.
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