The Table to the left lists the top campaign contributors to President Obama’s 2008 election campaign. You’ll note that the campaign received almost $1 million from Goldman Sachs (with whom Secretary Geithner has very close ties). Citigroup gave over $700,000. JPMorgan Chase is run by longtime Democrat Jamie Dimon (who built Citigroup before being somewhat forced out by longtime mentor, Sandy Weill), and they gave almost $700,000. UBS & Morgan Stanly also make the list with a combined $1 million in donations.
To summarize, President Obama’s campaign received over $3.4 million from “fat cat bankers”.
Truth is that I really don’t care. The employees and management of these companies acted in their own self interest when they gave to the Obama campaign as did GE (run by Jamie Dimon classmate, Jeff Immelt), IBM, Google, Skadden Arps, etc. But what does irk me is when the President pretends like he isn’t in their hip pocket.
I fully agree that many, many Republicans are also in their hip pockets, and the combination is the real problem.
So, let’s look at banking oversight and industry reform… We know that the regulators failed. We know that congressional oversight of the industry and the regulators failed. We know that Presidents Clinton, Bush, & Obama have failed controlling the financial services sector. So, why does anyone believe that additional regulation or oversight will make any difference?
There is a solution, however. Wall Street is full of greedy people. That’s OK. But how do we use their innate greed to eliminate “too big too fail” as well as eliminate corporate bankruptcies? Simple…
My proposal: Any person who earns $1 million or more (whether through, for example but not exclusively, direct compensation, stock options, stock, debt instruments, guarantees, etc) in any given 12 month period of time working for a company in any industry that is currently regulated by the SEC, FDIC, or the Federal Reserve during the 36 months prior to that company’s bankruptcy is personally liable for the bankruptcy.
Think about this for a second. If I work at Citigroup and I know that my house in the Hamptons, the ski lodge, my yacht, my stock holdings, my personal assets will all be taken from me should my company tank, I will be sure to make sure that my company doesn’t tank. I won’t let the CDO guys lever the company up 30-to-1 just to make a quick buck. Many of these guys lost their jobs, but they have a $50 million nest egg to comfort them in their sadness. Let’s let the greed on Wall Street work for us not just try to create more bureaucracy.
(Oh, and the real Wall Street bailout? 0% interest rates from the Fed. The big money center banks are borrowing money for free, and loaning it at 3.5% making millions and millions on the carry trade. They’re using this money to rebuild their balance sheets and pay big bonuses – not to extend credit into an idling economy. That is the real scandal.)