“[Citigroup’s] grip over economic policymaking in the executive branch is unprecedented. Consider just a few examples. 3 of the last 4 Treasury Secretaries under Democratic Presidents have had close Citigroup ties. The fourth was offered the CEO position at Citigroup, but turned it down. The Vice Chair of the Federal Reserve System is a Citigroup alum. The Undersecretary for International Affairs at Treasury is a Citigroup alum. The US Trade Representative and the person nominated to be his deputy, who is currently an Assistant Secretary of Treasury are Citigroup alums. A recent Chairman of the National Economic Council at the White House was a Citigroup alum. Another recent chairman, of the Office of Management and Budget went to Citigroup immediately after leaving the White House. And another recent Chairman of the Office of Management and Budget is also a Citi alum. But I’m double counting here, because he’s now the Secretary of the Treasury. That’s a lot of powerful people, all from one bank… and it pays off. Consider a couple of facts.
Fact 1: During the financial crisis, when all the support for TARP, for the FDIC, and the Fed is added up, Citi received nearly half a trillion dollars in bailouts. That’s half a trillion, with a t. That’s almost $140 billion more than the next biggest bank got.
Fact 2: During Dodd-Frank, there was an amendment introduced by my colleagues, Sen. Brown and Sen. Kaufman that would have broken up Citigroup and the other largest banks. Now, that amendment had bipartisan support, and it might have passed, but it ran into powerful opposition from an alliance between Wall Streeters on Wall Street and Wall Streeters who held powerful government jobs. They teamed up, and they blocked the move to break up the banks, and now Citi is larger than ever. The role that senior officials from the Treasury Department played in killing the amendment wasn’t subtle. A senior Treasury official acknowledged it at the time in a background interview with New York Magazine. The Official from Treasury said, and I’m gonna quote here: ‘If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.’ That’s power.”
-Senator Elizabeth Warren, December 12, 2014
In politics, the “revolving door” between Wall Street and the executive branch refers to both the extremely high number of ex-big banking executives employed by the government and the high number of ex-government officials who are employed by such big banking firms immediately after leaving their public positions. When ex-Citi (or Goldman Sachs, or Morgan Stanley, etc.) people are thus nominated to top jobs in presidential administrations, they contribute to the inherent corruption we see in Washington today, explaining, in part, Congress’s total unwillingness to take on the financial sector.
Now, to set the record straight, the financial sector probably doesn’t need to have any sort of revolving door system in place in order to influence policy. Finance/Insurance/Real estate make up the largest interest group in terms of money spent on Capitol Hill, frequently donating millions to politicians on either side of the aisle to pass laws or amendments, frequently tacked onto must-pass spending bills, which further deregulate Wall Street and allows it to seek profits ever more recklessly. Goldman Sachs donated $1 million to President Obama’s first campaign, while backing Romney to the same tune in 2012. Even with just these types of political donations, Wall Street is the force to be reckoned with in terms of political influence.
The unbridled cronyism of the “revolving door” system only goes to exacerbate what’s already a disgusting level of corporate power over politics. Let’s say that you work for company X for a number of years. You make a lot of money and reach a high-ranking executive position, before you get tapped to join the executive branch. Company X is totally cool with that, even encourages it, and promises that if you do your job well enough, you can have an even higher-ranking position when you get back. Doesn’t that make you extremely likely to, I don’t know, consistently act in Company X’s interest? How about when Company X has hired lobbyists, ex-colleagues of yours, advising you on how to do your job, proposing better job offers if you do things a certain way?
That, functionally is what we’re dealing with here. A deep-seated, pervasive, parasitic presence in the heart of the federal government. It’s all legal, and, if some people have their way, isn’t going anywhere. Now, I promise this blog will not turn into a 24/7 Bernie Sanders lovefest, but something has to be said about Hillary Clinton here. Her campaign staff already has two ex-Goldman Sachs employees on it, one as Chief Financial Officer and the other as general Political Director. Hillary’s been doing a good job of putting pressure on Wall Street and large corporations so far this campaign, but it’s hard to believe that’s anything more than posturing for temporary political gain when she is already deeply involved with the system. Decrying corporate influence in Washington while staffing your campaign with ex-big bank employees and claiming to be able to raise $2 billion over the election cycle does have an air of hypocrisy about it.