Research Briefing

Senate Dems Pushing Permanent Bailout For Wall Street After Wall Street Has Propped Them Up With Campaign Cash

REID EXPECTS TO BRING FINANCIAL REGULATION REFORM BILL TO FLOOR THIS WEEK. “The Democratic leader in the U.S. Senate said on Thursday he is targeting next week for action by the full Senate on a bill to overhaul financial regulation. ‘We hope to get it on the floor next week,’ Reid told reporters at a briefing.” (“Sen Reid hopes for financial reform next week,” Reuters, 4/15/10)

OBAMA WILL TRY TO USE FINANCIAL REFORM BILL AS POLITICAL WEAPON AGAINST GOP

Obama Planning “Aggressive Campaign” Against Republicans On Financial Reform, Attempting To Tie GOP To Big Banks. “A Democratic party source said Thursday evening that the White House was preparing to take an ‘aggressive stance’ against Senate Minority Leader Mitch McConnell … over Senate Republicans’ vocal opposition this week to a financial regulatory reform bill set for debate on the Senate floor. ‘McConnell’s arguments … bears no reality to the legislation or Mitch McConnell and the Republican Party’s longtime efforts to shill for Wall Street and its lobbyists … If Mitch McConnell wants to look foolish and to look like the bag man for big banks that he and his colleagues are - we’re glad to help.’” (Michael O’Brien, “White House Plans ‘Aggressive’ Campaign Against McConnell And GOP On Reg Reform,” The Hill, 4/15/10)

Bipartisan Negotiations Scuttled Because Dems Want To Use Financial Regulation Debate As Political Weapon. “[S]ome Democrats believe continued action after health care reform will show real momentum for their agenda. But others argue that the White House would be better off -- politically, anyway -- if Democrats could hit the campaign trail in the fall and blame ... Republicans for blocking the reform bill.” (Manu Raju and Eamon Javers, “Dems Bristle At Reform Deadline,” Politico, 4/5/10)

BUT IT’S OBAMA, CONGRESSIONAL DEMS THAT ARE IN THE POCKETS OF BIG BANKS …

In 2008 Election Cycle, President Obama Was The Largest Recipient Of Donations From JP Morgan, Goldman Sachs, Citi Group, AIG, Morgan Stanley And Bank Of America, Raking In Over $3,456,000. (Center for Responsive Politics, OpenSecrets.org, Accessed 4/16/10)

Since His Last Election In 2004, Senate Majority Leader Harry Reid (D-NV) Has Accepted At Least $1,402,991 From The Finance And Commercial Banking Industries. (Center for Responsive Politics, OpenSecrets.org, Accessed 4/16/10)

DNC Has Accepted At Least $3,886,763 From The Finance Industry This Election Cycle. (Center for Responsive Politics, OpenSecrets.org, Accessed 4/16/10)

DSCC Has Accepted At Least $3,907,970 From The Finance Industry This Election Cycle. (Center for Responsive Politics, OpenSecrets.org, Accessed 4/16/10)

IT’S SEN. DODD, AUTHOR OF THE FINANCIAL REGULATION BILL,

THAT HAS HAD QUESTIONABLE DEALINGS WITH TWO FINANCIAL GIANTS

It’s Senate Banking Committee Chairman Chris Dodd (D-CT) That Authored, Unveiled Financial Regulation Reform Bill One Month Ago. “A new Democratic Senate bill to tame the financial markets would give the government new powers to break up firms that threaten the economy, force the industry to pay for its failures and create a consumer watchdog within the Federal Reserve. Legislation unveiled Monday by Senate Banking Committee Chairman Chris Dodd falls shy of the ambitious restructuring of federal financial regulations envisioned by President Barack Obama or contained in legislation already passed in the House.” (“Dodd Unveils Financial Market Reform Plan,” CBS News, 3/15/10)

• And It’s Dodd That Has Accepted Over $589,000 from JP Morgan, Goldman Sachs, Citi Group, AIG, Morgan Stanley And Bank Of America Since His Last Election. (Center for Responsive Politics, OpenSecrets.org, Accessed 4/16/10)

Dodd Was Aware He Received Preferential Treatment, Mortgage Discounts From Countrywide, Despite Earlier Denial. “Despite their denials, influential Democratic Sens. Kent Conrad and Chris Dodd were told from the start they were getting VIP mortgage discounts from one of the nation’s largest lenders, the official who handled their loans has told Congress in secret testimony …” (Larry Margasak, “Dodd, Conrad Told Deals Were Sweetened,” The Associated Press, 7/27/09)

• Dodd Was Part Of VIP Borrowers Program Known As “Friends Of [Countrywide CEO] Angelo” Mozilo. “Both senators were VIP borrowers in the program known as ‘friends’ of Angelo. Angelo Mozilo was chief executive of Countrywide, which played a big part in the foreclosure crisis triggered by defaults on subprime loans. The Calabasas, Calif.-based company was bought last July by Bank of America Corp. for about $2.5 billion.” (Larry Margasak, “Dodd, Conrad Told Deals Were Sweetened,” The Associated Press, 7/27/09)

After Initial Denial, Dodd Admitted His Staff Added Loophole That Allowed AIG To Award Bonuses. CNN’s Dana Bash: “Ted Barrett, asked if you knew anything about this clause being put in just yesterday and you said that you didn’t. You said you can’t point a finger at somebody who offered a change at all. The Treasury Department is saying that it was at their behest or their concerns, but you’re staff actually did do this.” Dodd: “We wrote the language in the bill, the deal with bonuses, golden parachutes, excessive compensation, executive compensation that was adopted unanimously by the United States Senate in the stimulus bill.” (CNN’s “Situation Room,” 3/18/09)

• AIG Gave $106,000 to Dodd in 2008 (Center for Responsive Politics, OpenSecrets.org, Accessed 4/16/10)

AND IT’S GOLDMAN SACHS, ONE OF DEMS’ BIGGEST BACKERS, THAT’S SUPPORTING THIS BILL

According To Center For Responsive Politics, Democrats Have Accepted At Least $7,125,624 From Goldman Sachs Since The 2006 Election Cycle. (Center for Responsive Politics, OpenSecrets.org, Accessed 4/16/10)

In Letter To Shareholders, Goldman Sachs Leaders Endorse Many Provisions Of Obama-Dodd Bailout Bill. “Given that much of the financial contagion was fueled by uncertainty about counterparties’ balance sheets, we support measures that would require higher capital and liquidity levels, as well as the use of clearinghouses for standardized derivative transactions. More broadly, we support proposals that would improve transparency for investors and regulators and reduce systemic risk, including fair value accounting.” (Lloyd Blankfein & Gary D. Cohn, Goldman Sachs 2009 Annual Report, 4/7/10)

IT’S NO SURPRISE THE OBAMA-DODD BILL INSTITUTIONALIZES “TOO BIG TO FAIL”

Obama Economic Adviser Admits Plan Could Lead To More Bailouts. “Paul Volcker, the Democrat and former Federal Reserve chairman … now leads President Obama’s Economic Recovery Advisory Board. He warned in Congressional testimony Thursday that the pending Treasury plan could lead to more taxpayer bailouts by designating even nonbanks as ‘systemically important.’“ (Editorial, “Too Big To Ignore,” The Wall Street Journal, 9/26/09)

Rep. Carolyn Maloney (D-NY) Expressed Concern That Obama’s Plan Gives Banks That Are “Too Big To Fail” An “Implicit Guarantee” Of A Bailout. “The Obama administration’s plan for ‘systemic risk’ regulation, the heart of the package, has been taking fire from an unlikely source. Manhattan Rep. Carolyn Maloney is a reliable liberal who chairs Congress’s Joint Economic Committee and is an influential member on Financial Services. ... But she’s not buying the Obama plan to give the government new authority to rescue large institutions, saying recently, ‘We now have a blueprint that in many ways looks like the problems that we confronted …An implicit guarantee that . . . too-big-to-fail banks are going to be guaranteed.’“ (James Freeman, “A Blueprint For More Bailouts,” The Wall Street Journal, 8/9/09)