Corporate lobbyists and other political creatures intent upon distorting our democracy are descending on the Republican National Convention and the Democratic National Convention.
Their objective is simple: To schmooze with and buy the gratitude of lawmakers who might be in power after the elections.
Most of what happens will be the (disturbingly) run-of-the-mill, “corporate corruption as usual” that happens every day in Washington, D.C. During the conventions, what so many cynically call “how Washington works” becomes “how Tampa works” and “how Charlotte works.
But some of what happens at the conventions may cross the line from everyday political corruption (outrageous as it may be) into violations of Congressional ethics rules and even outright illegal activity.
With help from citizens and journalists (and citizen journalists) attending the conventions, we’re working to hold lawmakers and special interests accountable when they cross the line. But we need your help.
Attending one of the conventions? Here’s what you need to know to keep an eye out for undue influence peddling:
1. During the conventions, all members of Congress are banned from participating in any event held in her or his honor if that event is hosted by a lobbyist (or a corporation or special interest group that employs registered lobbyists). [Paraphrased from House Rule XXV(8); Senate Rule XXXV(5)]
This rule expressly prohibits members of Congress from attending any convention party thrown by a lobbyist or lobbying organization where a specific member or members are identified by name and title as the honoree (including as a “special guest”), as well as events honoring a group composed solely of members, such as a congressional committee or congressional caucus (though the House ethics committee so far refuses to apply the rule to parties that honor groups of members).
Wall Street getting its way in Washington, D.C. That’s been the theme of a series of financial disasters, including the $5 billion-plus trading loss disclosed by JPMorgan Chase in May. After that “embarrassing” episode (so described by the company’s CEO Jamie Dimon when he testified before the Senate), the JPMorgan political action committee (PAC) suspended its political spending.
We wondered how long their embarrassment would last. Now we know: not long.
The JPMorgan PAC is once again writing checks – writing them to, among others, the same old cast of House Financial Services Committee members who have done their persistent best to both undermine the Volcker rule and block tighter derivatives regulation that would bring more transparency and accountability to the kind of deal-making that triggered the financial crisis. Of course, in strong form, the Volcker rule might have prevented the JPMorgan trading debacle.
It will take some time to digest the Supreme Court’s decision today, but it appears to have averted some terrible jurisprudence that might have very seriously restricted the government’s overall ability to regulate the economy and protect citizens.
In upholding most of the Affordable Care Act, the Supreme Court lets stand legislation that offers some important benefits, but only to a portion of those who are uninsured, and will predictably fail to solve our nation’s health care crisis.
However the health reform law ultimately plays out, we know two things for certain: Tens of millions of Americans will remain uncovered as will tens of millions of under-insured who will remain at risk of financial ruin if a major illness strikes and it will leave the private health insurance and pharmaceutical industries in charge of prices and life-and-death treatment decisions.
There is a single solution to the challenges of providing coverage to the 50 million who are uninsured that would curb out-of-control health care costs and provide a humane standard of care to all who enter the medical system. That solution is an improved Medicare-for-All, single-payer system.
The improved Medicare-for-All approach starts with the premise that health care is a critically-needed right that must be afforded to all, irrespective of any individual’s ability to pay for care. It solves the problems of 50 million uninsured Americans simply and directly by establishing that everyone is covered by the improved Medicare-for-All system. Everybody in, nobody out.
Improved Medicare-for-All would prevent the deaths of the 45,000 Americans who die every year from lack of health insurance. It would eliminate the hundreds of thousands of medical bankruptcies — affecting millions of Americans every year — that occur because people can’t pay their medical bills. These deaths and economic tragedies are entirely preventable; a system that permits them to continue is morally repugnant and must be replaced.
The improved Medicare-for-All approach would eliminate the greatest waste in the health care system: the needless costs imposed by the private health insurers. These firms impose hundreds of billions of dollars of excess cost on us via their excessive profit-taking and executive compensation, their marketing expense, their vast bureaucracies devoted to denying care and their imposition of massive paper-pushing obligations on actual health care providers.
Washington, D.C., hit near-record high temperatures on Wednesday. But that didn’t discourage more than a hundred dedicated activists from making the two-mile walk from Dupont Circle to the headquarters of Crossroads GPS, one of those outside groups spending millions of dollars to sway the elections. These brave souls were marching to demand that Crossroads co-founder and GOP strategist Karl Rove be held accountable for selling out our democracy to the highest bidder.
As we journeyed together through the streets of our nation’s capital, I heard people talking about lots of different issues—from jobs and retirement to health care and elections. Ultimately, however, most of their grievances boiled down to a single word: fairness. These folks were out in the scorching heat because they believe that American democracy is about every citizen having a voice in government. Not about how many dollars a person (real or corporate) can spend on TV and radio ads.
At our destination, all one had to do was look around to see what real democracy looks like. It’s not the small group of people who were upstairs in an air conditioned room, figuring out how to manipulate voters into favoring the candidates that corporations want in office. Democracy is those who cared about their country enough to brave the heat for a chance to shout in the streets that people, not corporations, should have the power in our system.
To JPMorgan shareholders who have witnessed a $25 billion drop in market value since the “London Whale” gambled away $2-plus billion: Look on the bright side. Think of this as a public service investment in sound financial policy education. As Congress continues with hearings on JPMorgan and CEO Jamie Dimon himself takes the stand tomorrow, many reforms now enjoy an urgent new argument. This expensive episode means we should act now on a number of reforms.
Implement a strong Volcker Rule Banks shouldn’t gamble with a taxpayer backstop. This is why a strong Volcker Rule is needed. JPMorgan’s gambling partners allowed the bank to risk so much because they knew the U.S. taxpayer would make good on extraordinary losses. Within the details of the rule, JPMorgan’s ability to continue such betting in the future boils down to the interpretation of two words in the Wall Street reform law statute: “aggregate position.” The Senate authors explain that this means the bank can hedge a specific position, such as a single bond, which the bank purchased at various times, at various prices. JPMorgan believes this means an entire portfolio, such as its ownership of 130 separate bonds. The Volcker Rule must be tightened, implemented and enforced.
Break up big banks
Failure of a bank JPMorgan’s size could cripple the economy. At some point, banks become too large to manage. Detail-focused CEO Jamie Dimon failed to catch what he subsequently called a “badly conceived” gamble. Federal Reserve Bank presidents in Dallas and St Louis have called for a break-up. Sen. Sherrod Brown (D-Ohio) introduced legislation recently to reduce bank size. The bill could even garner bipartisan support, as Sen. Richard Shelby (R-Ala.) voted for the same legislation two years ago, along with 32 other senators. In the House, Reps. Brad Miller (D-N.C.) and Keith Ellison (D-Minn.) introduced a parallel bill.
Increase bank capital
Even industry apologists who oppose reducing bank size and limiting risky activities agree that bank capital—what shareholders invest and lose when loans or gambles go bad—must be high. Fortunately, JPMorgan exceeded minimum capital standards, though many think mandatory levels should be doubled. Sen. Pat Toomey (R-Pa.) supports higher bank capital, a view he voiced at the both the May 22 and June 6 congressional hearings on the JPMorgan fiasco.
Reform banker compensation
The now-terminated chief investment officer earned 94 percent of her pay from “incentive compensation.” No wonder she swung for the fences, as Gary Gensler put it at the May 22 hearing. Gensler chairs the Commodity Futures Trading Commission, the primary financial gambling regulator. The Wall Street reform law specifically bars pay that promotes “inappropriate” risk-taking, but regulators are now more than a year late finalizing it.
Stop derivative deregulation
Wall Street shills, as Rep. John Tierney (D-Mass) labels some of his fellow members in the House, are moving nine bills. Of varying danger, one of them leaves offshore derivatives trading, such as JPMorgan’s London trades, free of basic regulation. Rep. Frank Lucas (R-Okla.), chairman of a key committee, cancelled a vote on two problem bills.
Bank officers should not oversee themselves
CEO Jamie Dimon sits on the New York Federal Reserve Bank, which supervises his bank. U.S. Sens. Barbara Boxer (D-Calif.) and Bernie Sanders (I-Vt.) introduced a bill May 22 that prevents active bankers from serving on the federal supervisory agencies. Massachusetts senatorial candidate Elizabeth Warren and former New York governor Eliot Spitzer think Dimon should step down from the New York Fed.
Good financial laws, unfortunately, require a disaster, such as the failed JPMorgan bet, or the 2008 crash, which has been an enormous cost to Main Street. That’s because of massive spending by Wall Street, which collectively spends $1.5 million a day lobbying. Let’s hope that the unintended investment by JPMorgan in reform advocacy secures substantial reform.