Congressional & Regulator Enrichment Over the Regulated

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Rob Johnson INET Money in US Politics TWN.jpg
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

Comments

13 comments on “Congressional & Regulator Enrichment Over the Regulated

  1. rob says:

    I’d take these claims with a grain of salt or two. James Snyder, a
    political scientist at MIT, has data that show that members of
    Congress’ investments don’t outperform those of “civilians” with
    similar age/profession/income levels. Check out his research on
    this.

    Reply

  2. jonst says:

    Maw.
    I’ve written this before Maw, and I write it again, with Nadine, whomever that is, all roads lead to one destination.
    Wig,
    You brought tears to my eyes, and warmed the cockles of my heart, with you plea for resisting “overly simplistic populist outrage”.
    I do suggest however that if so many of our govt employees, on missions of great national import, are crammed like “sardine[s]” in middle seats, they take a moment to report back to their employers about such treatment.
    You know…..to said same govt types that deregulated the airlines to allow corporations to cram us in to ever smaller spaces. With less and less decent air to breath.
    I mean there are, after all, two ways to go about solving this. We could mount a campaign to raise funds and awareness for those valiant messengers of the Empire everywhere, crammed in middle seats. Our motto could be “bureaucrats upgraded! NOW!”.
    Or we could pass legislation so all the citizens stand a chance not being crammed into seats like sardines.
    Which do I think more likely in this society? Hmmm….I have a hunch.

    Reply

  3. David says:

    It didn’t get any better than Molly Ivins. Priceless doesn’t even come close. And what’s not to love about the Unruh quote, except maybe to update it to be gender neutral, although the real players are still predominantly white males.
    Sidenote: Since I am an actual son of the Confederacy, my great-grandfather Simeon Spencer having fought on the Confederate side at the Battle of Lookout Mountain, I am sorely tempted to sign up and cause as much grief as possible for misguided bozos like the current governor of Virginia, who seems to think we descendants of Confederate soldiers are all a bunch of white supremacists.
    We have a copy of Simeon’s letter after the war ended basically wanting to know where in hell his pension was.
    My other maternal great-grandfather fought on the Union side (both were Kentuckians). After the war, if they were in the same room together, they refused to speak to each other. Ah, the Montagues and the Capulets blend with the Hatfields and McCoys, sort of.

    Reply

  4. nadine says:

    “I don’t dispute that Soros was one of the founders of J Street. That fact is certainly easy to verify. But to add that he stepped away so as not to be too obvious is a bit of editorial free-wheeling that displays a your true bias ”
    Maw, Soros’ anti-Israel positions are easy to verify too. If you are selling yourself as a pro Israel organization, do you want everybody to know how much Soros is backing you? Wouldn’t that lead to questions you don’t want asked? Which leads to a desire to be non-obvious about the backing. It hardly seems like a big leap of “editorial free-wheeling” to me, but a rather logical conclusion.

    Reply

  5. questions says:

    “”If you can

    Reply

  6. Maw of America says:

    Here I was, enjoying a little civil discussion with well-founded points of argument, when good old Nadine chimes in with what, at first, appears to be legitimate questions (which they were). But then throws in that petulant little turd of a comment:
    “He was one of the founders of J Street, then stepped away from it so as not to be too obvious.”
    I don’t dispute that Soros was one of the founders of J Street. That fact is certainly easy to verify. But to add that he stepped away so as not to be too obvious is a bit of editorial free-wheeling that displays a your true bias – not that it was all that hidden anyway.
    I think you would be better served to lay out your case and let the facts speak for themselves. These kind of throw-away slurs demean any legitimate point you’re trying to make.
    Or is this your true nature?

    Reply

  7. Sweetness says:

    Nadine, I think you either 1) remove all money from the equation
    across the board, or 2) you give as much money as you can to
    the causes you support.
    It’s something of a complex question, but I think I prefer the
    first option. But as long as that isn’t going to happen, then you
    have to go with option 2.
    Another option is to limit the amount of money that can be
    given, but that seems to redirect, rather than restrict, the money
    flow.
    The bias that Wig may be detecting in Steve’s comment–I’m not
    sure it’s there, but it may be–probably comes from the fact
    that he agrees with many of Soros’ positions and doesn’t agree
    so much with Schwartzman’s aims.
    This is a blog, so editorializing is perfectly fine and to be
    expected.
    But here’s a little trivia…Soros is also a Schwartz, man…and so
    am I! Hungarians, both!

    Reply

  8. nadine says:

    “I think it’s mostly a matter of whether one agrees with the aims of the funder in question.” (Sweetness)
    So a billionaire funding politicians and PACs on a large scale is legitimate if he’s on your side of the political aisle, but nefarious if he’s on the other side?
    One hears this logic often, but usually not stated that bluntly.

    Reply

  9. Sweetness says:

    Wig writes: ‘Do you think there is anything more nefarious about
    the President of Blackstone donating to Nancy Pelosi than it is for
    George Soros to donate to literally hundreds of democratic
    candidates and political committees?”
    I think it’s mostly a matter of whether one agrees with the aims of
    the funder in question. In Pelosi’s case, the funder seems to want
    her to go slow on financial reform. Does one think that’s good or
    bad for the country.

    Reply

  10. nadine says:

    Wig, I know Soros is a major donor for the Center for American Progress. Does he support the New America Foundation too?
    He was one of the founders of J Street, then stepped away from it so as not to be too obvious.

    Reply

  11. WigWag says:

    I hope it’s not indelicate of me to point out the irony of the juxtaposition of this post with the one right above it.
    In this post, Steve implies (although he doesn’t actually say it) that there is something nefarious about the “Blackstone Group’s President hosting a “private equity big-wigs” fundraiser for House Speaker Nancy Pelosi.”
    The post directly above this one features an attractive photograph of the learned, prolific and enormously wealthy George Soros. In the 2010 cycle alone, Open Secrets reports that Soros has donated $20,000 to the DSCC; $15,000 to the DCCC; and another $15,000 to a variety of Democrats ranging from Charles Schumer to Donna Edwards to Paul Hodes.
    Over the past 10 years, Soros has given as much or more to Democratic candidates and to 527 organizations as any man alive.
    I think Soros is brilliant and public spirited even though I frequently disagree with him. I know that Steve respects him tremendously.
    My question to Steve is this,
    Do you think there is anything more nefarious about the President of Blackstone donating to Nancy Pelosi than it is for George Soros to donate to literally hundreds of democratic candidates and political committees?

    Reply

  12. Sweetness says:

    Well put, Wig. And I’d add, “We shouldn’t assume anything about J
    Street’s independence just because a few of their donors are Arabs
    or Iranians.”

    Reply

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