Rob Johnson, executive director of the Institute for New Economic Thinking, just showed an extraordinary powerpoint slide of which I just snapped a picture (see above).
Johnson who is a former fund manager and former chief economist of the Senate Budget Committee working then for the Republican side of the aisle backed up the talking points above with a set of data sets and slides that showed how the financial performance of portfolios of Members of Congress were outproducing the best funds – even George Soros’ Quantum Fund. He showed how there has been a definitive trend in the enrichment of both Members of Congress and regulators over the regulated.
To type out what appears in the slide, Johnson’s talking points state:
Money in U.S. Politics
~ Campaign Contributions.
~ Removal of Congressional Staff Pensions.
~ Congressional members rate of return on investment portfolio significantly outperforms the market and even outperforms corporate insiders.
~ The Regulators as employment agencies for the regulated.
As Rob Johnson worked through these points, he said that legislators interests are buoyed by extraordinarily large financial sector political contributions. As a side note, I would note this story that recently appeared about the Blackstone Group’s President hosting a “private equity big-wigs” fundraiser for House Speaker Nancy Pelosi.
Johnson also noted that the Reagan administration’s suspension of Congressional staff pensions have resulted in post-job directed rent-seeking from the richly endowed interests they help regulate.
Again, Johnson mentioned the staggering profit rates of investment funds holding the assets of Congressional Members.
And like think tanks are often homes for governments in exile, Johnson suggests that there is employment/enrichment collusion between regulated financial institutions and their regulators.
Fascinating. Simon Johnson, author of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, is speaking now — and is brilliant. He finished with a call for another “Theodore Roosevelt moment” to break up the largest banks and financial institutions and to definitively unplug the problem of “banks too big to fail.”
More on Simon Johnson talk and more later.
— Steve Clemons