What bailed-out banks spend on lobbying

What bailed-out banks spend on lobbying

THE BALANCE OF INFLUENCE Lobbying expenses for the first nine months of 2008 by some banks receiving government help: Company Lobbying amount Government investment Merrill Lynch{*} $4.6 million $25 billion Bank of America{*} $4.7 million $25 billion Citigroup $5.6 million $25 billion JPMorgan Chase $5 million $25 billion Wells Fargo $2 million $25 billion Goldman Sachs $4.2 million $10 billion Morgan Stanley $2.4 million $10 billion PNC Bank $320,000 $7.7 billion U.S. Bancorp $290,000 $6.6 Capital One $920,000 $3.6 * — Merrill Lynch is being taken over by Bank of America, and the merged bank will receive $25 billion Sources: Lobbying disclosure reports, U.S. Senate Office of Public Records, Financial Services Roundtable

Sickening. Disheartening. How can we the people compete with these types of resources? It appears that lobbying "investment" of at least $4.5 million nets a bank about $25 billion worth of bailout money. My math may be off, but I think that calculates to a return on investment (ROI) of a staggering 555456%. Unsurprisingly, members of both houses of Congress that received more money from Wall Street towards their campaigns also tended to support bailout legislation. (see here, here, here, and here).

Kevin Zeese, director of Democracy Rising and co-founder of Voters For Peace, asks:

What do Americans get in return? The deals Paulsen is making with his former Wall Street colleagues do not ask for much. Paulsen is evidently no Warren Buffet when it comes to negotiating deals but maybe that is because Paulsen is not using his own money but the taxpayers. While Buffett received a 10% dividend on his $5 billion investment in Goldman Sachs, Paulsen only got 5% for his. While the UK was able to get a seat at the board table for their injection of cash into banks, Paulsen didn’t. Nor did Paulsen demand any more stringent banking regulations or greater transparency going forward.

Nor did Paulson ensure that banks would do any lending with the money, which was the stated aim.

On top of all of this, Bloomberg reported yesterday that multiple-bailout recipient AIG will be unable to repay their bailouts under current circumstances:

``It may make sense and be pragmatic for the government to renegotiate,'' said David Havens, a UBS AG credit analyst in Stamford, Connecticut. The loan's interest rate ``makes it extraordinarily difficult for AIG to fix itself,'' he said.

What's the crippling interest rate, you ask? A whopping 14%. Boo-fucking-hoo. So you can see why they'd have problems making their payments. Of course, in 2005 this great nation of ours also passed the bankruptcy reform bill, which now protects hapless credit card issuers from well-off consumers who were taking advantage of loopholes to rack up large balances and walk away from them, at least if you believe the industry's line of bullshit. Tamara Draut, director of the economic program at Demos think tank, saw it differently and argued that "The legislation would do nothing to rein in credit card solicitations or put caps on interest rates or late fees, over-the-limit fees and other penalties" which were some of the biggest reasons consumers were forced into bankruptcy to begin with.

So to recap: if you're a consumer and have not spent millions of dollars lobbying Congress, you get no bailout, no help if you're facing foreclosure, and it's now harder for you to declare bankruptcy if you need to get a fresh start. If you're in the finance and banking industry and DID spend millions lobbying Congress, you get billions in bailout money, you get to keep issuing outsized bonuses and dividends, you get to use taxpayer money to fund your mergers and acquisitions, you get to write new "regulations" to prevent this from happening again, plus help in recouping balances from those deadbeat consumers who are having a hard time repaying your usurious loans at 30% interest. Absolutely sickening.