As she bulldozes her way to the Democratic presidential nomination, former First Lady, New York Senator and Secretary of State Hillary Clinton is leaving no gold nugget unturned as she finances her campaign. Having amassed a wide variety of very wealthy friends throughout the global community, she is in an excellent position to call in favors and promise new ones in return for their financial assistance, as she purchases a four-year lease on the most exclusive real estate in the world.
One recent donation, not directly to her campaign, that has raised some eyebrows, although not in Democratic circles, where Mrs. Clinton, who has done little right can do nothing wrong, is money the Clinton Foundation accepted from a company owned by the government of Morocco. One might ask what the problem with such a donation might be. Cannot a foreign government donate funds to a charitable organization based in the United States?
Unfortunately, it isn’t quite as simple as that. This is not the American Red Cross we are talking about, but an organization operated by one of the most politically active and connected families in U.S. history. As late as 2011, when Mrs. Clinton was Secretary of State, the State Department accused the government of Morocco of ‘arbitrary arrests and corruption in all branches of government’. Now, we could discuss the concept of the kettle calling the pot black in terms of government corruption, but we’ll leave that for a later essay. Let’s look at some detail from the State Department report:
“The most significant, continuing human rights problems were the lack of citizens’ right to change the constitutional provisions establishing the country’s monarchical form of government, arbitrary arrests, and corruption in all branches of government.
“Other human rights problems reported during the year included police use of excessive force to quell peaceful protests, resulting in dozens of injuries and at least four deaths; torture and other abuses by the security forces; incommunicado detention; poor prison and detention conditions; political prisoners and detainees; infringement of freedom of the press; lack of freedom of assembly; lack of independence of the judiciary; discrimination against women and girls; trafficking in persons; and child labor, particularly in the informal sector.”
Following the announcement of the $1 million donation from the government-owned Office Cherifien des Phosphates (OCP), Mrs. Clinton announced that the money would be used to sponsor a conference for the Clinton Foundation in Marrakech. She called Morocco “a vital hub for economic and cultural exchange”, eliminating any mention of political prisoners, police violence or human trafficking. Might that sum of money have been sufficient to blind the former Secretary of State to facts she was aware of when she had that job?
The donation was made, and the conference announced, prior to Mrs. Clinton’s long-expected declaration of candidacy for president. But still one wonders what possible benefit there could be for the OCP in making this donation? Is this anything more than a sincere desire to help those who might benefit from the Clinton Foundation largesse?
Well, yes, there may be another beneficiary. The OCP is involved in the extraction of mineral resources from the Western Sahara, disputed territory often referred to as the ‘last colony in Africa’, that Morocco controls. It is illegal under international law for an occupying or controlling power to extract for profit the natural resources of the country in dispute. The OCP is owned by the Moroccan government. The U.S. has a long history of allowing occupying powers to exploit, in violation of international law, the natural resources of their victims: note Israel’s extraction of resources from the Dead Sea. The money that the American Israel Political Affairs Committee (AIPAC) funnels to U.S. politicians is sufficient to cause the U.S. to look the other way; there is no equivalent lobby group representing Morocco, so perhaps this donation will suffice.
Money talks in U.S. governance. The same State Department report that detailed Moroccan abuses also commented on Israel. The influence of AIPAC is clear in these so-called ‘findings’:
* “The law prohibits arbitrary arrest and detention, and the government generally observed these prohibitions for all citizens.” This, despite the almost constant arrests without charge and detention of countless Palestinian men, women and children, both in Palestine and those living in Israel.
* “Criminal suspects are apprehended with warrants based on sufficient evidence and issued by an authorized official. Authorities generally informed such persons promptly of charges against them.” See above.
* “Defendants enjoy the right to presumption of innocence and the right to consult with an attorney, or if indigent, to have one provided at public expense.” This, of course, does not apply to Palestinians.
* “Arbitrary Interference with Privacy, Family, Home, or Correspondence. The law prohibits such actions, and the government generally respected those prohibitions in practice.” Israel Defense Forces (IDF; read: Terrorists) break into Palestinian homes at any time of the day or night, search the homes, steal valuables and generally terrorize the residents. Palestinian homes are arbitrarily bulldozed to make room for illegal and internationally-condemned settlements.
The list goes on, but this should suffice to indicate the degree to which money runs roughshod over human rights in U.S. governance. One thinks that the executives of the OCP can now sleep peacefully, confident that there will be no U.S. interference in their rape of the Western Sahara.
What other foreign governments may see benefit to themselves in a future Hillary Clinton presidency? Since the U.S. is always ready to invade a nation that displeases it, often by some perceived threat to U.S. economic dominance, one would think that most nations will be running to Mrs. Clinton with checkbook in hand, wanting to please the fairy queen and appease the economic gods so worshiped by the U.S. Additionally, such homage would enable them to ignore human rights and exploit the poor for the benefit of the rich, without the U.S. complaining about such abuses. And who will the presumptive Democratic nominee turn away? Anyone? After all, with an alleged target of $2 billion dollars for her campaign, there really are no human rights abuses that can’t be overlooked. Perhaps Syria will make a substantial donation, and thus end U.S. aggression against it.
But are there not built-in protections against this sort of thing, government ‘watchdogs’, if you will, to assure that no such collusion exists? In an article published in The New York Times on May 3, Federal Election Commission (FEC) chairwoman Ann M. Ravel said that “…her organization is powerless to safeguard against misconduct in 2016 presidential campaign fundraising and spending”, mainly due to partisan gridlock. So no, there is nothing to stop Mrs. Clinton, and any and all other candidates, from taking donations from whomever and wherever those donations are offered. And it is unlikely that any of those proffering untold amounts of money have the best interest of the common U.S. citizen at heart. No, they will be foreign governments who wish to begin or continue the exploitation of oppressed people without interference from the U.S., or domestic corporations seeking to continue the vast profits their shareholders earn from war, or from manufacturing products with limited safety or environmental restrictions.
As each presidential election approaches, pundits from the right and left proclaim that this is the most important in the history of the U.S., and that the very survival of the country depends on the outcome. Yet following each election, the nation does not implode in a ball of flames, but continues on, mainly with business as usual. That business is war, disregard for human rights at home and abroad and the worship of the almighty dollar. Mrs. Clinton will usher in no change; her every action speaks volumes to that fact.
Robert Fantina’s latest book is Empire, Racism and Genocide: a History of US Foreign Policy (Red Pill Press).
The Wall Street Connection (1992 to 2016)
[This piece has been adapted and updated by Nomi Prins from chapters 18 and 19 of her book All the Presidents’ Bankers: The Hidden Alliances that Drive American Power, just out in paperback (Nation Books).]
The past, especially the political past, doesn’t just provide clues to the present. In the realm of the presidency and Wall Street, it provides an ongoing pathway for political-financial relationships and policies that remain a threat to the American economy going forward.
When Hillary Clinton video-announced her bid for the Oval Office, she claimed she wanted to be a “champion” for the American people. Since then, she has attempted to recast herself as a populist and distance herself from some of the policies of her husband. But Bill Clinton did not become president without sharing the friendships, associations, and ideologies of the elite banking sect, nor will Hillary Clinton. Such relationships run too deep and are too longstanding.
To grasp the dangers that the Big Six banks (JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley) presently pose to the financial stability of our nation and the world, you need to understand their history in Washington, starting with the Clinton years of the 1990s. Alliances established then (not exclusively with Democrats, since bankers are bipartisan by nature) enabled these firms to become as politically powerful as they are today and to exert that power over an unprecedented amount of capital. Rest assured of one thing: their past and present CEOs will prove as critical in backing a Hillary Clinton presidency as they were in enabling her husband’s years in office.
In return, today’s titans of finance and their hordes of lobbyists, more than half of whom held prior positions in the government, exact certain requirements from Washington. They need to know that a safety net or bailout will always be available in times of emergency and that the regulatory road will be open to whatever practices they deem most profitable.
Whatever her populist pitch may be in the 2016 campaign — and she will have one — note that, in all these years, Hillary Clinton has not publicly condemned Wall Street or any individual Wall Street leader. Though she may, in the heat of that campaign, raise the bad-apples or bad-situation explanation for Wall Street’s role in the financial crisis of 2007-2008, rest assured that she will not point fingers at her friends. She will not chastise the people that pay her hundreds of thousands of dollars a pop to speak or the ones that have long shared the social circles in which she and her husband move. She is an undeniable component of the Clinton political-financial legacy that came to national fruition more than 23 years ago, which is why looking back at the history of the first Clinton presidency is likely to tell you so much about the shape and character of the possible second one.
The 1992 Election and the Rise of Bill Clinton
Challenging President George H.W. Bush, who was seeking a second term, Arkansas Governor Bill Clinton announced he would seek the 1992 Democratic nomination for the presidency on October 2, 1991. The upcoming presidential election would not, however, turn out to alter the path of mergers or White House support for deregulation that was already in play one iota.
First, though, Clinton needed money. A consummate fundraiser in his home state, he cleverly amassed backing and established early alliances with Wall Street. One of his key supporters would later change American banking forever. As Clinton put it, he received “invaluable early support” from Ken Brody, a Goldman Sachs executive seeking to delve into Democratic politics. Brody took Clinton “to a dinner with high-powered New York businesspeople, including Bob Rubin, whose tightly reasoned arguments for a new economic policy,” Clinton later wrote, “made a lasting impression on me.”
The battle for the White House kicked into high gear the following fall. William Schreyer, chairman and CEO of Merrill Lynch, showed his support for Bush by giving the maximum personal contribution to his campaign committee permitted by law: $1,000. But he wanted to do more. So when one of Bush’s fundraisers solicited him to contribute to the Republican National Committee’s nonfederal, or “soft money,” account, Schreyer made a $100,000 donation.
The bankers’ alliances remained divided among the candidates at first, as they considered which man would be best for their own power trajectories, but their donations were plentiful: mortgage and broker company contributions were $1.2 million; 46% to the GOP and 54% to the Democrats. Commercial banks poured in $14.8 million to the 1992 campaigns at a near 50-50 split.
Clinton, like every good Democrat, campaigned publicly against the bankers: “It’s time to end the greed that consumed Wall Street and ruined our S&Ls [Savings and Loans] in the last decade,” he said. But equally, he had no qualms about taking money from the financial sector. In the early months of his campaign, BusinessWeek estimated that he received $2 million of his initial $8.5 million in contributions from New York, under the care of Ken Brody.
“If I had a Ken Brody working for me in every state, I’d be like the Maytag man with nothing to do,” said Rahm Emanuel, who ran Clinton’s nationwide fundraising committee and later became Barack Obama’s chief of staff. Wealthy donors and prospective fundraisers were invited to a select series of intimate meetings with Clinton at the plush Manhattan office of the prestigious private equity firm Blackstone.
Robert Rubin Comes to Washington
Clinton knew that embracing the bankers would help him get things done in Washington, and what he wanted to get done dovetailed nicely with their desires anyway. To facilitate his policies and maintain ties to Wall Street, he selected a man who had been instrumental to his campaign, Robert Rubin, as his economic adviser.
In 1980, Rubin had landed on Goldman Sachs’ management committee alongside fellow Democrat Jon Corzine. A decade later, Rubin and Stephen Friedman were appointed cochairmen of Goldman Sachs. Rubin’s political aspirations met an appropriate opportunity when Clinton captured the White House.
On January 25, 1993, Clinton appointed him as assistant to the president for economic policy. Shortly thereafter, the president created a unique role for his comrade, head of the newly created National Economic Council. “I asked Bob Rubin to take on a new job,” Clinton later wrote, “coordinating economic policy in the White House as Chairman of the National Economic Council, which would operate in much the same way the National Security Council did, bringing all the relevant agencies together to formulate and implement policy… [I]f he could balance all of [Goldman Sachs’] egos and interests, he had a good chance to succeed with the job.” (Ten years later, President George W. Bush gave the same position to Rubin’s old partner, Friedman.)
Back at Goldman, Jon Corzine, co-head of fixed income, and Henry Paulson, co-head of investment banking, were ascending through the ranks. They became co-CEOs when Friedman retired at the end of 1994.
Those two men were the perfect bipartisan duo. Corzine was a staunch Democrat serving on the International Capital Markets Advisory Committee of the Federal Reserve Bank of New York (from 1989 to 1999). He would co-chair a presidential commission for Clinton on capital budgeting between 1997 and 1999, while serving in a key role on the Borrowing Advisory Committee of the Treasury Department. Paulson was a well connected Republican and Harvard graduate who had served on the White House Domestic Council as staff assistant to the president in the Nixon administration.
Bankers Forge Ahead
By May 1995, Rubin was impatiently warning Congress that the Glass-Steagall Act could “conceivably impede safety and soundness by limiting revenue diversification.” Banking deregulation was then inching through Congress. As they had during the previous Bush administration, both the House and Senate Banking Committees had approved separate versions of legislation to repeal Glass-Steagall, the 1933 Act passed by the administration of Franklin Delano Roosevelt that had separated deposit-taking and lending or “commercial” bank activities from speculative or “investment bank” activities, such as securities creation and trading. Conference negotiations had fallen apart, though, and the effort was stalled.
By 1996, however, other industries, representing core clients of the banking sector, were already being deregulated. On February 8, 1996, Clinton signed the Telecom Act, which killed many independent and smaller broadcasting companies by opening a national market for “cross-ownership.” The result was mass mergers in that sector advised by banks.
Deregulation of companies that could transport energy across state lines came next. Before such deregulation, state commissions had regulated companies that owned power plants and transmission lines, which worked together to distribute power. Afterward, these could be divided and effectively traded without uniform regulation or responsibility to regional customers. This would lead to blackouts in California and a slew of energy derivatives, as well as trades at firms such as Enron that used the energy business as a front for fraudulent deals.
The number of mergers and stock and debt issuances ballooned on the back of all the deregulation that eliminated barriers that had kept companies separated. As industries consolidated, they also ramped up their complex transactions and special purpose vehicles (off-balance-sheet, offshore constructions tailored by the banking community to hide the true nature of their debts and shield their profits from taxes). Bankers kicked into overdrive to generate fees and create related deals. Many of these blew up in the early 2000s in a spate of scandals and bankruptcies, causing an earlier millennium recession.
Meanwhile, though, bankers plowed ahead with their advisory services, speculative enterprises, and deregulation pursuits. President Clinton and his team would soon provide them an epic gift, all in the name of U.S. global power and competitiveness. Robert Rubin would steer the White House ship to that goal.
On February 12, 1999, Rubin found a fresh angle to argue on behalf of banking deregulation. He addressed the House Committee on Banking and Financial Services, claiming that, “the problem U.S. financial services firms face abroad is more one of access than lack of competitiveness.”
He was referring to the European banks’ increasing control of distribution channels into the European institutional and retail client base. Unlike U.S. commercial banks, European banks had no restrictions keeping them from buying and teaming up with U.S. or other securities firms and investment banks to create or distribute their products. He did not appear concerned about the destruction caused by sizeable financial bets throughout Europe. The international competitiveness argument allowed him to focus the committee on what needed to be done domestically in the banking sector to remain competitive.
Rubin stressed the necessity of HR 665, the Financial Services Modernization Act of 1999, or the Gramm-Leach-Bliley Act, that was officially introduced on February 10, 1999. He said it took “fundamental actions to modernize our financial system by repealing the Glass-Steagall Act prohibitions on banks affiliating with securities firms and repealing the Bank Holding Company Act prohibitions on insurance underwriting.”
The Gramm-Leach-Bliley Act Marches Forward
On February 24, 1999, in more testimony before the Senate Banking Committee, Rubin pushed for fewer prohibitions on bank affiliates that wanted to perform the same functions as their larger bank holding company, once the different types of financial firms could legally merge. That minor distinction would enable subsidiaries to place all sorts of bets and house all sorts of junk under the false premise that they had the same capital beneath them as their parent. The idea that a subsidiary’s problems can’t taint or destroy the host, or bank holding company, or create “catastrophic” risk, is a myth perpetuated by bankers and political enablers that continues to this day.
Rubin had no qualms with mega-consolidations across multiple service lines. His real problems were those of his banker friends, which lay with the financial modernization bill’s “prohibition on the use of subsidiaries by larger banks.” The bankers wanted the right to establish off-book subsidiaries where they could hide risks, and profits, as needed.
Again, Rubin decided to use the notion of remaining competitive with foreign banks to make his point. This technicality was “unacceptable to the administration,” he said, not least because “foreign banks underwrite and deal in securities through subsidiaries in the United States, and U.S. banks [already] conduct securities and merchant banking activities abroad through so-called Edge subsidiaries.” Rubin got his way. These off-book, risky, and barely regulated subsidiaries would be at the forefront of the 2008 financial crisis.
On March 1, 1999, Senator Phil Gramm released a final draft of the Financial Services Modernization Act of 1999 and scheduled committee consideration for March 4th. A bevy of excited financial titans who were close to Clinton, including Travelers CEO Sandy Weill, Bank of America CEO, Hugh McColl, and American Express CEO Harvey Golub, called for “swift congressional action.”
The Quintessential Revolving-Door Man
The stock market continued its meteoric rise in anticipation of a banker-friendly conclusion to the legislation that would deregulate their industry. Rising consumer confidence reflected the nation’s fondness for the markets and lack of empathy with the rest of the world’s economic plight. On March 29, 1999, the Dow Jones Industrial Average closed above 10,000 for the first time. Six weeks later, on May 6th, the Financial Services Modernization Act passed the Senate. It legalized, after the fact, the merger that created the nation’s biggest bank. Citigroup, the marriage of Citibank and Travelers, had been finalized the previous October.
It was not until that point that one of Glass-Steagall’s main assassins decided to leave Washington. Six days after the bill passed the Senate, on May 12, 1999, Robert Rubin abruptly announced his resignation. As Clinton wrote, “I believed he had been the best and most important treasury secretary since Alexander Hamilton… He had played a decisive role in our efforts to restore economic growth and spread its benefits to more Americans.”
Clinton named Larry Summers to succeed Rubin. Two weeks later, BusinessWeek reported signs of trouble in merger paradise — in the form of a growing rift between John Reed, the former Chairman of Citibank, and Sandy Weill at the new Citigroup. As Reed said, “Co-CEOs are hard.” Perhaps to patch their rift, or simply to take advantage of a political opportunity, the two men enlisted a third person to join their relationship — none other than Robert Rubin.
Rubin’s resignation from Treasury became effective on July 2nd. At that time, he announced, “This almost six and a half years has been all-consuming, and I think it is time for me to go home to New York and to do whatever I’m going to do next.” Rubin became chairman of Citigroup’s executive committee and a member of the newly created “office of the chairman.” His initial annual compensation package was worth around $40 million. It was more than worth the “hit” he took when he left Goldman for the Treasury post.
Three days after the conference committee endorsed the Gramm-Leach-Bliley bill, Rubin assumed his Citigroup position, joining the institution destined to dominate the financial industry. That very same day, Reed and Weill issued a joint statement praising Washington for “liberating our financial companies from an antiquated regulatory structure,” stating that “this legislation will unleash the creativity of our industry and ensure our global competitiveness.”
On November 4th, the Senate approved the Gramm-Leach-Bliley Act by a vote of 90 to 8. (The House voted 362–57 in favor.) Critics famously referred to it as the Citigroup Authorization Act.
Mirth abounded in Clinton’s White House. “Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the twenty-first century,” Summers said. “This historic legislation will better enable American companies to compete in the new economy.”
But the happiness was misguided. Deregulating the banking industry might have helped the titans of Wall Street but not people on Main Street. The Clinton era epitomized the vast difference between appearance and reality, spin and actuality. As the decade drew to a close, Clinton basked in the glow of a lofty stock market, a budget surplus, and the passage of this key banking “modernization.” It would be revealed in the 2000s that many corporate profits of the 1990s were based on inflated evaluations, manipulation, and fraud. When Clinton left office, the gap between rich and poor was greater than it had been in 1992, and yet the Democrats heralded him as some sort of prosperity hero.
When he resigned in 1997, Robert Reich, Clinton’s labor secretary, said, “America is prospering, but the prosperity is not being widely shared, certainly not as widely shared as it once was… We have made progress in growing the economy. But growing together again must be our central goal in the future.” Instead, the growth of wealth inequality in the United States accelerated, as the men yielding the most financial power wielded it with increasingly less culpability or restriction. By 2015, that wealth or prosperity gap would stand near historic highs.
The power of the bankers increased dramatically in the wake of the repeal of Glass-Steagall. The Clinton administration had rendered twenty-first-century banking practices similar to those of the pre-1929 crash. But worse. “Modernizing” meant utilizing government-backed depositors’ funds as collateral for the creation and distribution of all types of complex securities and derivatives whose proliferation would be increasingly quick and dangerous.
Eviscerating Glass-Steagall allowed big banks to compete against Europe and also enabled them to go on a rampage: more acquisitions, greater speculation, and more risky products. The big banks used their bloated balance sheets to engage in more complex activity, while counting on customer deposits and loans as capital chips on the global betting table. Bankers used hefty trading profits and wealth to increase lobbying funds and campaign donations, creating an endless circle of influence and mutual reinforcement of boundary-less speculation, endorsed by the White House.
Deposits could be used to garner larger windfalls, just as cheap labor and commodities in developing countries were used to formulate more expensive goods for profit in the upper echelons of the global financial hierarchy. Energy and telecoms proved especially fertile ground for the investment banking fee business (and later for fraud, extensive lawsuits, and bankruptcies). Deregulation greased the wheels of complex financial instruments such as collateralized debt obligations, junk bonds, toxic assets, and unregulated derivatives.
The Glass-Steagall repeal led to unfettered derivatives growth and unstable balance sheets at commercial banks that merged with investment banks and at investment banks that preferred to remain solo but engaged in dodgier practices to remain “competitive.” In conjunction with the tight political-financial alignment and associated collaboration that began with Bush and increased under Clinton, bankers channeled the 1920s, only with more power over an immense and growing pile of global financial assets and increasingly “open” markets. In the process, accountability would evaporate.
Every bank accelerated its hunt for acquisitions and deposits to amass global influence while creating, trading, and distributing increasingly convoluted securities and derivatives. These practices would foster the kind of shaky, interconnected, and opaque financial environment that provided the backdrop and conditions leading up to the financial meltdown of 2008.
The Realities of 2016
Hillary Clinton is, of course, not her husband. But her access to his past banker alliances, amplified by the ones that she has formed herself, makes her more of a friend than an adversary to the banking industry. In her brief 2008 candidacy, all four of the New York-based Big Six banks ranked among her top 10 corporate donors. They have also contributed to the Clinton Foundation. She needs them to win, just as both Barack Obama and Bill Clinton did.
No matter what spin is used for campaigning purposes, the idea that a critical distance can be maintained between the White House and Wall Street is naïve given the multiple channels of money and favors that flow between the two. It is even more improbable, given the history of connections that Hillary Clinton has established through her associations with key bank leaders in the early 1990s, during her time as a senator from New York, and given their contributions to the Clinton foundation while she was secretary of state. At some level, the situation couldn’t be less complicated: her path aligns with that of the country’s most powerful bankers. If she becomes president, that will remain the case.
Nomi Prins is the author of six books, a speaker, and a distinguished senior fellow at the non-partisan public policy institute Demos. Her most recent book, All the Presidents’ Bankers: The Hidden Alliances that Drive American Power (Nation Books) has just been released in paperback and this piece is adapted and updated from it. She is a former Wall Street executive.
Copyright 2015 Nomi Prins
Richard Cordray (former Attorney General of Ohio), the head of the Consumer Finance Protection Bureau (CFPG) and Gary Gensler (a former disaster under Bill Clinton and Goldman Sachs) have been the two great appointments by President Obama in the field of finance. Obama’s other appointments at Treasury, the financial regulatory agencies, and the (non) prosecutors who are supposed to specialize in financial prosecutions have been nightmarishly bad.
Gensler was another Rubinite from Goldman Sachs who, under Bill Clinton, helped destroy Brooksley Born’s effort to protect the nation from the financial derivatives that blew up AIG and much of the financial world through passage of the infamous Commodity Futures Modernization Act of 2000. As Obama’s appointee to chair the Commodity Futures Trade Commission (CFTC), however, Gensler justly earned praise for attempting to restore effective regulation. Gensler was a grave disappointment to Obama’s administration, which thought it was sending a reliably pro-finance Rubinite to run a fairly obscure agency he had helped emasculate. When Gensler showed a spine Obama refused to reappoint him and replaced Gensler with Timothy G. Massad, a Timothy Geithner minion noted for his pro-industry views. Massad’s claim to fame was being one of the principal unprincipled architects of the failed homeowner relief programs. As I pointed out in my first Bill Moyers interview, failing (for the right political reasons) proves you are a reliable “team player” and gets you promoted in Washington, D.C. As Geithner found out, succeeding gets you your walking papers. Jesse Eisinger, as his norm, wrote a great piece about Massad when Obama nominated him in November 2013. An alternative view can be found in the American Banker, which gave prominently space to an op ed praising Massad’s nomination written by the head of a firm that trains CFTC staff.
Massad’s tenure represents a regulatory retreat at the CFTC, but in fairness, as bad as Obama is on financial regulation the Republicans are vastly worse. They are trying to force the wholesale repeal the Dodd-Frank protections on financial derivatives and they have waged an unholy war on the CFTC’s budget to try to make it impossible for the agency to protect the public. The GOP also fought hard to prevent Cordray’s appointment because they (more precisely, their donors), rightly, feared his integrity and skills.
One might think that Obama, and Democratic Party candidates for the presidential nomination would be campaigning on the issue of Republicans being in the pocket of the industry and trying to recreate Bush’s anti-regulatory “Wrecking Crew” (as Tom Frank aptly labeled it) that produced the financial crisis. But leaders of the Democratic Leadership Council (DLC) (aka “new Democrats,” which include both Clintons and Obama – by his own words) cannot bring themselves to channel their inner FDR and take on big finance. (The DLC is defunct as a formal organization, but its political leaders and pro-finance and anti-regulatory dogmas remain intact.) Big finance is the DLC’s financial base. Senator Bernie Sanders may run. If he does the Republican Party’s unholy war on regulation will be one of his primary issues.
Hillary Clinton’s Successful Gensler Gambit
The financial media is abuzz today with the leaked news that Hillary Clinton is hiring Gensler as a senior campaign staffer. From H. Clinton’s perspective, the media buzz was perfect. Bloomberg’s article bears this gushing one sentence summary: “Hillary Clinton will bring on one of Wall Street’s fiercest critics to oversee her campaign’s finances.” The article explains the politics.
“For Clinton, who has been fighting her left flank’s concern that she is too cozy with Wall Street, Gensler is a notable hire. He became known as someone with sharp elbows —even during his negotiations within the Obama administration—in his push for tighter regulation.”
In short, H. Clinton’s campaign got the ideal spin from what could have been a very hostile financial media. Hiring, and leaking, Gensler’s hire was a very smart political move.
Just One Little Catch
But here’s the catch. Gensler is being hired for a job that will take 150% of his available time given H. Clinton’s ability to raise money and the obscene rules that make modern campaign finance a sport in which both parties routinely devise “black box” funding devices to allow the wealthy to rule American politics secretly. This has two critical implications. Gensler will not be working to block the power of the secretive wealthy – he will be doing the opposite, at least 16 hours a day. It also means that he was not hired to advise H. Clinton on the crimes of Wall Street banksters and the vital need for vigorous regulation and prosecutions. Even if he had the desire to fill that role he will have no time to do so and he will be busy secretly catering to the needs of the wealthy and politically dominant criminal class.
Gensler Was No Godzilla When He Led the CFTC
Gensler’s stint at the CFTC is a nice story of redemption. He did try to be a vigorous regulator over great opposition from the industry, much of Congress (including many House Democrats), and Treasury. Gensler’s desire to be an effective regulator was unacceptable to Obama, who in another act of “revealed preferences” refused to reappoint Gensler.
But Gensler is not, remotely, “one of Wall Street’s fiercest critics.” Quick: memory association: what’s Gensler’s “fiercest” criticism of Wall Street? You came up blank, didn’t you? I checked the Wall Street Journal and did a more general web search. The WSJ was happy to see that Obama refused to reappoint him (the cover story is that Gensler did not want to serve another term) and it criticized him as harsh – but I could not find a story quoting any harsh denunciation of Wall Street by Gensler. Given that even life-long banking apologists like Geithner’s replacement as President of FRBNY now routinely refer to the corrupt culture of Wall Street, Geithner is not even one of the harsher critics of Wall Street within the none-too-critical Obama administration.
The “sharp elbows” claim is pure invention by Geithner’s worse than useless minions. Anyone who refused to brownnose the finance industry was considered far too aggressive by Geithner. Geithner and his team launched the same smear at Sheila Bair (FDIC chair) and Neil Barofsky (SIGTARP). We (the S&L regulators) were routinely referred to as “Nazis,” the “Gestapo,” and the “KGB.” The political, dirty tricks, and litigation attacks on us were far more severe and consequential because our actions were sending elites to prison and humiliating their political patrons who rushed to return campaign contributions from those we exposed as frauds.
Back in the S&L days under the team assembled by Federal Home Loan Bank Board Chairman Edwin Gray, the Reagan administration detested us precisely because Gensler (in his CFTC incarnation) would have been somewhere in the middle of the distribution of regulatory vigor. The comparison is conjectural because under Gray’s leadership, which generally became so supportive of regulatory vigor, and the tutelage of Joe Selby and Mike Patriarca (the Nation’s consensus choices as the most effective and vigorous financial regulators), Gensler might have developed into a far more effective regulator. Gensler’s mentor, Robert (“Bob”) Rubin, inflicted a severe impediment to regulatory effectiveness that Gensler had to struggle to try to overcome.
Ignore the media crush on Gensler’s appointment. As campaign CFO for H. Clinton his job is the care and feeding of the DLC’s financial base – the finance industry. H. Clinton’s Gensler gambit is smart politics, but if you think it means she is seeking progressive advice you are being played – successfully.
The mainstream U.S. news media is lambasting the Europeans for failing to stop the humanitarian crisis unfolding in the Mediterranean Sea as desperate Libyans flee their war-torn country in overloaded boats that are sinking as hundreds drown. But the MSM forgets how this Libyan crisis began, including its own key role along with that of “liberal interventionists” such as Hillary Clinton and Samantha Power.
In 2011, it was all the rage in Official Washington to boast about the noble “responsibility to protect” the people of eastern Libya who supposedly were threatened with extermination by the “mad man” Muammar Gaddafi. We also were told endlessly that, back in 1988, Gaddafi’s agents had blown Pan Am 103 out of the skies over Lockerbie, Scotland.
The R2Pers, led by then-National Security Council aide Power with the backing of Secretary of State Clinton, convinced President Barack Obama that a “humanitarian intervention” was needed to prevent Gaddafi from slaughtering people whom he claimed were Islamic terrorists.
As this U.S.-orchestrated bombing campaign was about to begin in late March 2011, Power told a New York City audience that the failure to act would have been “extremely chilling, deadly and indeed a stain on our collective conscience.” Power was credited with steeling Obama’s spine to press ahead with the military operation.
Under a United Nations resolution, the intervention was supposed to be limited to establishing no-fly zones to prevent the slaughter of civilians. But the operation quickly morphed into a “regime change” war with the NATO-led bombing devastating Gaddafi’s soldiers who were blown to bits when caught on desert roadways.
Yet, the biggest concern in Official Washington was a quote from an Obama aide that the President was “leading from behind” – with European warplanes out front in the air war – when America’s war hawks said the United States should be leading from the front.
At the time, there were a few of us who raised red flags about the Libyan war “group think.” Though no one felt much sympathy for Gaddafi, he wasn’t wrong when he warned that Islamic terrorists were transforming the Benghazi region into a stronghold. Yes, his rhetoric about exterminating rats was over the top, but there was a real danger from these extremists.
And, the Pan Am 103 case, which was repeatedly cited as the indisputable proof of Gaddafi’s depravity, likely was falsely pinned on Libya. Anyone who dispassionately examined the 2001 conviction of Libyan agent Ali al-Megrahi by a special Scottish court would realize that the case was based on highly dubious evidence and bought-and-paid-for testimony.
Megrahi was put away more as a political compromise (with a Libyan co-defendant acquitted) than because his guilt was proven beyond a reasonable doubt. Indeed, by 2009, the conviction was falling apart. Even a Scottish appeals court expressed concern about a grave miscarriage of justice. But Megrahi’s appeal was short-circuited by his release to Libya on compassionate grounds because he was suffering from terminal prostate cancer.
Yet the U.S. mainstream media routinely called him “the Lockerbie bomber” and noted that the Libyan government had taken “responsibility” for the bombing, which was true but only because it was the only way to get punitive sanctions lifted. The government, like Megrahi, continued to proclaim innocence.
A Smirking MSM
During those heady days of bombing Libya in 2011, it also was common for the MSM to smirk at the notion that Megrahi was truly suffering from advanced prostate cancer since he hadn’t died as quickly as some doctors thought he might. Then, in September 2011, after Gaddafi’s regime fell, Megrahi’s family invited the BBC and other news organizations to see Megrahi struggling to breathe in his sick bed.
His son, Khaled al-Megrahi, said, “I know my father is innocent and one day his innocence will come out.” Asked about the people who died in the Pan Am bombing, the son said: “We feel sorry about all the people who died. We want to know who did this bad thing. We want to know the truth as well.”
But it was only after Megrahi died on May 20, 2012, that some elements of the MSM acknowledged grudgingly that they were aware of the many doubts about his conviction all along. The New York Times’ obituary carried a detailed account of the evidentiary gaps that were ignored both during the trial in 2001 and during the bombing of Libya in 2011.
The Times noted that “even some world leaders” saw Megrahi “as a victim of injustice whose trial, 12 years after the bombing, had been riddled with political overtones, memory gaps and flawed evidence. … Investigators, while they had no direct proof, believed that the suitcase with the bomb had been fitted with routing tags for baggage handlers, put on a plane at Malta and flown to Frankfurt, where it was loaded onto a Boeing 727 feeder flight that connected to Flight 103 at London, then transferred to the doomed jetliner.”
Besides the lack of proof supporting that hypothesis was the sheer implausibility that a terrorist would assume that an unattended suitcase could make such an unlikely trip without being detected, especially when it would have been much easier to sneak the suitcase with the bomb onto Pan Am 103 through the lax security at Heathrow Airport outside London.
The Times’ obit also noted that during the 85-day trial, “None of the witnesses connected the suspects directly to the bomb. But one, Tony Gauci, the Maltese shopkeeper who sold the clothing that forensic experts had linked to the bomb, identified Mr. Megrahi as the buyer, although Mr. Gauci seemed doubtful and had picked others in photo displays. …
“The bomb’s timer was traced to a Zurich manufacturer, Mebo, whose owner, Edwin Bollier, testified that such devices had been sold to Libya. A fragment from the crash site was identified by a Mebo employee, Ulrich Lumpert. Neither defendant testified. But a turncoat Libyan agent testified that plastic explosives had been stored in [Megrahi’s co-defendant’s] desk in Malta, that Mr. Megrahi had brought a brown suitcase, and that both men were at the Malta airport on the day the bomb was sent on its way.”
In finding Megrahi guilty, the Scottish court admitted that the case was “circumstantial, the evidence incomplete and some witnesses unreliable,” but concluded that “there is nothing in the evidence which leaves us with any reasonable doubt as to the guilt” of Megrahi.
However, the evidence later came under increasing doubt. The Times wrote: “It emerged that Mr. Gauci had repeatedly failed to identify Mr. Megrahi before the trial and had selected him only after seeing his photograph in a magazine and being shown the same photo in court. The date of the clothing sale was also in doubt.” Scottish authorities learned, too, that the U.S. Justice Department paid Gauci $2 million for his testimony.
As for the bomb’s timer, the Times noted that the court called Bollier “untruthful and unreliable” and “In 2007, Mr. Lumpert admitted that he had lied at the trial, stolen a timer and given it to a Lockerbie investigator. Moreover, the fragment he identified was never tested for residue of explosives, although it was the only evidence of possible Libyan involvement.
“The court’s inference that the bomb had been transferred from the Frankfurt feeder flight was also cast into doubt when a Heathrow security guard revealed that Pan Am’s baggage area had been broken into 17 hours before the bombing, a circumstance never explored. Hans Köchler, a United Nations observer, called the trial ‘a spectacular miscarriage of justice,’ words echoed by [South African President Nelson] Mandela.”
In other words, Megrahi’s conviction looked to have been a case of gross prosecutorial misconduct, relying on testimony from perjurers and failing to pursue promising leads (like the possibility that the bomb was introduced at Heathrow, not transferred from plane to plane to plane). And those problems were known prior to Megrahi’s return to Libya in 2009 and prior to the U.S.-supported air war against Gaddafi in 2011.
Yet, Andrea Mitchell at MSNBC and pretty much everyone else in the MSM repeated endlessly that Megrahi was “the Lockerbie bomber” and that Libya was responsible for the atrocity, thus further justifying the “humanitarian intervention” that slaughtered Gaddafi’s soldiers and enabled rebel militias to capture Tripoli in summer 2011.
Similarly, there was scant U.S. media attention given to evidence that eastern Libya, the heart of the anti-Gaddafi rebellion, indeed was a hotbed for Islamic militancy, with that region supplying the most per-capita militants fighting U.S. troops in Iraq, often under the banner of Al-Qaeda.
Despite that evidence, Gaddafi’s claim that he was battling Islamic terrorists in the Benghazi region was mocked or ignored. It didn’t even matter that his claim was corroborated by a report from U.S. analysts Joseph Felter and Brian Fishman for West Point’s Combating Terrorism Center.
In their report, “Al-Qaeda’s Foreign Fighters in Iraq,” Felter and Fishman analyzed Al-Qaeda documents captured in 2007 showing personnel records of militants who flocked to Iraq for the war against the Americans. The documents showed eastern Libya providing a surprising number of suicide bombers who traveled to Iraq to kill American troops.
Felter and Fishman wrote that these so-called Sinjar Records disclosed that while Saudis comprised the largest number of foreign fighters in Iraq, Libyans represented the largest per-capita contingent by far. Those Libyans came overwhelmingly from towns and cities in the east.
“The vast majority of Libyan fighters that included their hometown in the Sinjar Records resided in the country’s Northeast, particularly the coastal cities of Darnah 60.2% (53) and Benghazi 23.9% (21),” Felter and Fishman wrote, adding that Abu Layth al‐Libi, Emir of Libyan Islamic Fighting Group (LIFG), “reinforced Benghazi and Darnah’s importance to Libyan jihadis in his announcement that LIFG had joined al‐Qa’ida.”
Some important Al-Qaeda leaders operating in Pakistan’s tribal regions also were believed to have come from Libya. For instance, “Atiyah,” who was guiding the anti-U.S. war strategy in Iraq, was identified as a Libyan named Atiyah Abd al-Rahman.
It was Atiyah who urged a strategy of creating a quagmire for U.S. forces in Iraq, buying time for Al-Qaeda Central to rebuild its strength in Pakistan. “Prolonging the war [in Iraq] is in our interest,” Atiyah said in a letter that upbraided Jordanian terrorist Abu Musab al-Zarqawi for his hasty and reckless actions in Iraq.
After U.S. Special Forces killed Al-Qaeda founder Osama bin Laden on May 2, 2011, in Pakistan, Atiyah became al-Qaeda’s second in command until he himself was reportedly killed in a U.S. drone strike in August 2011. [See Consortiumnews.com “Time Finally Ran Out for Atiyah.”]
However, to most Americans who rely on the major U.S. news media, little of this was known, as the Washington Post itself acknowledged in an article on Sept. 12, 2011, after Gaddafi had been overthrown but before his murder. In an article on the rise of Islamists inside the new power structure in Libya, the Post wrote:
“Although it went largely unnoticed during the uprising that toppled Gaddafi last month, Islamists were at the heart of the fight, many as rebel commanders. Now some are clashing with secularists within the rebels’ Transitional National Council, prompting worries among some liberals that the Islamists — who still command the bulk of fighters and weapons — could use their strength to assert an even more dominant role.”
On Sept. 15, 2011, the New York Times published a similar article, entitled “Islamists’ Growing Sway Raises Questions for Libya.” It began: “In the emerging post-Qaddafi Libya, the most influential politician may well be Ali Sallabi, who has no formal title but commands broad respect as an Islamic scholar and populist orator who was instrumental in leading the mass uprising. The most powerful military leader is now Abdel Hakim Belhaj, the former leader of a hard-line group once believed to be aligned with Al Qaeda.”
Belhaj was previously the commander of the Libyan Islamic Fighting Group, which was associated with Al-Qaeda in the past, maintained training bases in Afghanistan before the 9/11 attacks, and was listed as a terrorist organization by the U.S. State Department.
Belhaj and the Libyan Islamic Fighting Group denied continued allegiance to Al-Qaeda, but Belhaj was captured during George W. Bush’s post-9/11 “war on terror” and was harshly interrogated by the CIA at a “black site” prison in Thailand before being handed over to Gaddafi’s government which imprisoned and – Belhaj claims – tortured him.
The Times reported that “Belhaj has become so much an insider lately that he is seeking to unseat Mahmoud Jabril, the American-trained economist who is the nominal prime minister of the interim government, after Mr. Jibril obliquely criticized the Islamists.”
The Times article by correspondents Rod Nordland and David D. Kirkpatrick also cited other signs of growing Islamist influence inside the Libyan rebel movement: “Islamist militias in Libya receive weapons and financing directly from foreign benefactors like Qatar; a Muslim Brotherhood figure, Abel al-Rajazk Abu Hajar, leads the Tripoli Municipal Governing Council, where Islamists are reportedly in the majority.”
It may be commendable that the Post and Times finally gave serious attention to this consequence of the NATO-backed “regime change” in Libya, but the fact that these premier American newspapers ignored the Islamist issue as well as doubts about Libya’s Lockerbie guilt – while the U.S. government was whipping up public support for another war in the Muslim world – raises questions about whether those news organizations primarily serve a propaganda function.
Gaddafi’s Brutal Demise
Even amid these warning signs that Libya was headed toward bloody anarchy, the excited MSM coverage of Libya remained mostly about the manhunt for “the madman” – Muammar Gaddafi. When rebels finally captured Gaddafi on Oct. 20, 2011, in the town of Sirte – and sodomized him with a knife before killing him – Secretary of State Clinton could barely contain her glee, joking in one interview: “We came, we saw, he died.”
The months of aerial slaughter of Gaddafi’s soldiers and Gaddafi’s own gruesome death seemed less amusing on Sept. 11, 2012, when Islamic terrorists overran the U.S. consulate in Benghazi, killing U.S. Ambassador Christopher Stevens and three other U.S. diplomatic personnel. In the two-plus years since, Libya has become a killing ground for rival militias, including some now affiliated with the Islamic State.
As the BBC reported on Feb. 24, 2015, the Islamic State “has gained a foothold in key towns and cities in the mostly lawless North African state [Libya], prompting Egypt – seeing itself as the bulwark against Islamists in region – to launch air strikes against the group. …
“IS has launched its most high-profile attacks in Libya, bombing an upmarket hotel in the capital, Tripoli, in January, and releasing a video earlier this month showing the beheading of 21 Egyptian Coptic Christians it had kidnapped. On 20 February, it killed at least 40 people in a suicide bombing in the eastern town of al-Qubbah.”
Now, the chaos that the U.S.-sponsored “regime change” unleashed has grown so horrific that it is causing desperate Libyans to climb into unseaworthy boats to escape the sharp edges of the Islamic State’s knives and other depredations resulting from the nationwide anarchy.
Thus, Libya should be a powerful lesson to Hillary Clinton, Samantha Power and the other R2Pers that often their schemes of armed “humanitarianism” can go badly awry and do much more harm than good. It should also be another reminder to the MSM to question the arguments presented by the U.S. government, rather than simply repeating those dubious claims and false narratives.
But neither seems to be happening. The “liberal interventionists” – like their neoconservative allies – remain unchastened, still pumping for more “regime change” wars, such as in Syria. Yet, many of these moral purists are silent about the slaughter of ethnic Russians in eastern Ukraine, Palestinians in Gaza, or now Houthis and other Yemenis dying under Saudi bombs in Yemen.
It appears the well-placed R2Pers in the Obama administration are selective in where that “responsibility to protect” applies.
Samantha Power, now serving as U.S. ambassador to the UN, remains the same self-righteous scold denouncing human rights abuses in places where there are American-designated “bad guys” while looking the other way in places where the killing is being done by U.S. “allies.” As for Hillary Clinton, she is already being touted as the presumptive Democratic nominee for President.
Meanwhile, the MSM has conveniently forgotten its own propaganda role in revving up the war on Libya in 2011. So, instead of self-reflection and self-criticism, the mainstream U.S. media is filled with condemnations of the Europeans for their failure to respond properly to the crisis of some 900 Libyans apparently drowning in a desperate attempt to flee their disintegrating country.
Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his latest book, America’s Stolen Narrative, either in print here or as an e-book (from Amazon and barnesandnoble.com).
The Clintons’ Unlearned Lessons of the Keating Five Meeting
On April 9, 1987, twenty-eight years ago today, my colleagues and I from the Federal Home Loan Bank of San Francisco (FHLBSF) met with five senators at the behest of the most notorious savings and loan (S&L) fraud – Charles Keating. Keating was looting Lincoln Savings through classic “accounting control fraud” techniques. Our examiners and enforcement investigation led by Anne Sobol (detailed from Litigation Division) had discovered and documented some of Keating’s worst frauds. Keating, desperate to prevent our recommendation that the federal agency place Lincoln Saving into conservators (removing Keating from power), used the five senators to try to pressure us into taking no enforcement action against Lincoln Savings and its officers for the largest violation of rules in the history of our agency.
The agency’s statutory authority to place a state-chartered S&L like Lincoln Savings into conservatorship had lapsed so Bank Board Chairman Edwin Gray could not act on our recommendation until Congress passed legislation restoring our power. The five Senators, of course, would have a great deal to say about whether and when that legislation was passed. Because we refused to give in to their intimidation, the Keating Five helped ensure that the power to remove Keating from power was not passed until after Gray’s term ended – and President Reagan’s cynical secret deal with Speaker of the House James Wright ensured that Reagan would not reappoint Gray.
Gray’s successor, M. Danny Wall, was a Republican political staffer whose boss, Senator Jake Gran, after a single meeting with Keating had his number and refused to ever meet with him again. But the lesson Wall took from seeing Gray reduced to roadkill at the hands of Speaker Wright and the Keating Five was to never block the road when powerful thieves and their political cronies are racing down that road and eager to run you over.
Wall first took the unprecedented step of removing our (the FHLBSF) jurisdiction over Lincoln Savings and gave Keating a sweetheart deal. Wall’s critical, Neville Chamberlain-like order to his senior staff to reach an “amicable resolution” with Keating (which, given Keating, meant “surrender”) occurred immediately after a meeting with Keating. Wall’s meeting with Keating, in turn, occurred immediately after Keating met with Senator Glenn and Speaker Wright. Keating and Wright used their after-lunch meeting to plot how to get me fired and sued. Keating hired private investigators twice that we know of to try to find dirt on me. Fortunately, I live a very Midwestern personal life. Keating eventually sued me for $400 million.
Keating, being Keating, started his meeting with Wall by noting that he had just met with Speaker Wright and Senator Glenn. Keating was capable of being subtle, but he preferred smash mouth football, so his next line, referring to the Speaker, was that “There’s someone you would have much better relationships with if you took care of your red-headed lawyer in San Francisco.” I still had bright red hair (and beard) at that time.
After getting rid (he thought) of the accursed FHLBSF regulators, Wall proceeded to force Joe Selby, the Nation’s most respected financial regulator, to resign as our top supervisor for Texas. Selby’s sin was being a vigorous regulator. The Texas frauds targeted him for removal and successfully enlisted Speaker Wright’s enthusiastic support through contributions and by telling Wright that Selby was gay. Bank Board Chairman Gray, who personally recruited Selby and Mike Patriarca because of their reputations as the Nation’s best financial regulators, had placed Selby and Patriarca in charge of the two states with the worst fraud problems (Texas and California). Wall, while still a congressional aide, had urged Gray to fire Selby to placate the Speaker. Gray refused. Wall now publicly took “credit” for forcing Selby to resign or be fired. Within months, Wall had removed or sidelined the Nation’s best financial regulators.
Keating’s successful extortion of Wall to remove the FHLBSF’s jurisdiction over Lincoln Savings did not work out well for Wall and the Keating Five for Keating used the sweetheart deal to intensify his looting of Lincoln Savings and its customers which led it to become the most expensive financial institution failure in U.S. history (at what now seems a quaint $3.4 billion), to sell worthless (and uninsured) junk bonds of Lincoln Savings’ insolvent holding company, and to target tens of thousands of widows for those sales. My extensive notes of the Keating Five meeting led to a Senate ethics investigation of the Keating Five. The Democratic Party Senate Committee colleagues on that investigation spent most of their energy attacking us, the regulators, for the high crime of criticizing Senators for aiding the Nation’s most notorious fraud loot the S&L and rip off widows. (Senators Cranston, Riegle, Glenn, and DeConcini were Democrats. Senator McCain was the lone Republican.)
The type of violations we had documented were invariably fatal. Keating had recruited the Keating Five through political contributions and through hiring Alan Greenspan as a lobbyist. Greenspan also served Keating as his outside economist to attempt to prevent the agency from adopting effective regulations to restrain looting by the Keatings of the world. In that capacity Greenspan had famously claimed that Lincoln Savings posed no foreseeable risk of loss to the FSLIC insurance fund. Greenspan was slightly (as in 180º) off as I just explained.
But here’s the thing – given their ages, the lessons of the S&L debacle should have been the formative experiences for everyone involved in the most recent crisis. Wall resigned in disgrace in December 1989 after months of House hearings. The Senate ethics committee hearings on the “Keating Five” took place in 1990 and 1991.
“These [Senate ethics committee] hearings would take place from November 15 through January 16, 1991. They were held in the Hart Senate Office Building‘s largest hearing room. They were broadcast live in their entirety by C-SPAN, with CNN and the network news programs showing segments of the testimonies. At the opening of the hearings, as The Washington Post would later write, ‘the senators sat dourly alongside one another in a long row, a visual suggestive of co-defendants in a rogues’ docket.’ Overall, McCain would later write, ‘The hearings were a public humiliation.’
The committee reported on the other four senators in February 1991, but delayed its final report on Cranston until November 1991.”
Greenspan’s role was discussed in both the House and Senate hearings.
“Progressives” tend to roll their eyes in disgust at the entire “Whitewater” investigation, but two points are worth noting in terms of what the scandal should have taught the Clintons and their appointees. First, James McDougall, the CEO, looted Madison Guaranty through classic accounting control fraud techniques. (He was acquitted by a jury of one series of alleged bank frauds and convicted subsequently of other band frauds.)
James Clark, the Bank Board examiner-in-charge (EIC) of the 1986 examination of Madison Guaranty, testified in front of Congress about McDougall’s domination of the S&L and his massive multiple frauds. Clark’s testimony is devastating.
Second, McDougall’s frauds were made possible by the criminogenic environment created by the three “de’s” – deregulation, desupervision, and de facto decriminalization – and McDougall was brought to book when the regulators and prosecutors learned their lessons and got rid of the three “de’s.” The FSLIC was appointed the conservator for Madison Guaranty in February 1989.
Then first lady Hillary Clinton received substantial adverse publicity about her role not simply as an investor with but also as an attorney for the S&L. She and her husband were publicly humiliated by the sex aspects of the investigation. Both Clintons, therefore, would logically have come out of the experience with a strong appreciation of how dangerous accounting control frauds are, why bank CEOs pose by far the greatest risk of fraud and do so through accounting fraud techniques (the fraud “recipe” for a lender) that require the lender to intentionally make large numbers of bad loans. This, in turn, requires the CEO to suborn the underwriting and internal controls. The Clintons should have had an acute appreciation of how critical underwriting is to avoiding banking crises. They observed first hand that the S&L debacle was driven by an epidemic of accounting control fraud.
Bill Clinton announced his candidacy for the Democratic Party’s nomination for President on October 2, 1991 – while the Senate Ethics committee was still wrapping up its investigation of the Keating Five. The S&L debacle was the defining scandal of the Clinton’s era and it was fresh in their minds as they made the run for the nomination and the presidency. We were convicting several hundred banksters and their cronies annually as Clinton prepared to run and actually ran his first campaign for the nomination and the presidency.
The same logic applies to Greenspan. He had to read our examination report and my report on why Lincoln Savings would be a disaster. My report emphasized the key role of its deliberately pathetic underwriting. Similarly, our presentation to the Keating Five emphasized the non-existent nature of Lincoln Savings’ underwriting on multi-million dollar loans. This was reprised in our testimony before the House and the Senate about Keating’s looting of Lincoln Savings.
But we know what the Clintons, their appointees, and Greenspan (originally a Bush I appointee) learned from the S&L debacle – nothing, or worse than nothing. Greenspan told the sycophantic author of Maestro that he would have done, said, and wrote the same things for Keating now that he did then based on the “facts.” I discuss later Greenspan’s actual approach to the “facts.”
Clinton’s Goal: Destroy the “Culture of Regulation”
But the Clintons and their bankster allies learned something far worse – the need to push the three “de’s” to ensure that never again would banksters and their political cronies be prevented from looting “their” banks or be held accountable for their looting. Bill Clinton, in his first major meeting with financial regulators (from the Office of the Comptroller of the Currency (OCC)) as President, chose to make these revealing remarks. One part of government most upset Clinton – the examiners who checked for threats to the safety and soundness of banks and businesses.
“The federal government to many people is not the President of the United States, it’s the person who shows up on the doorstep to check out the bank records, or the safety in the factory, or the integrity of the workplace, or how the nursing home is being run. I believe that we have a serious obligation in this administration to work with the Congress to reduce the burden of regulation and to increase the protection to the public. And we have an obligation on our own to do what we can to change the destructive elements of the culture of regulation that has built up over time….”
The federal examiners that expose the banks, workplaces, and nursing homes that engage in fraud or abuse provide a vital and unique service not only to the public, but also to honest competitors by blocking the “Gresham’s” dynamic that “control fraud” produces (bad ethics drives good ethics out of the markets). Clinton, however, is unaware of this dynamic. This type of regulation does not (net) “burden” honest businesses – it makes it possible for them compete by relieving them of the impossible burden of competing with control frauds. Clinton sees regulation not as episodically failing, but as the inherently flawed product of a “destructive” “culture of regulation.” He started the process that replaced a “culture of regulation” with what even the anti-regulators now concede is the “culture of corruption” that dominates Wall Street and the City of London.
Clinton then singled out the worst examiners – bank regulators.
“When I was out in New Hampshire in 1992, I heard more grief about the regulation of the private sector by the Comptroller of the Currency than any other single thing. And now every time I go to New England, they say, we’re making money, we’re making loans, and we can function, because we finally got somebody down there in Washington who understands how to have responsible and safe banking regulations, and still promote economic growth. I hear it every time I go up there, and I thank you, sir, for what you’ve done on that. (Applause.)”
Vice-President Gore had already praised the OCC head, Gene Ludwig, for embracing the three “de’s.” Gore was particularly impressed that the bankers’ lobbyists were praising Ludwig. Readers will vary on what they infer from that praise, but Gore thought the only possible inference was that Ludwig’s deregulatory policies were superb. When the bank lobbyists are praising you as a financial regulator you know you are on a path to disaster for the industry and the public. Bank lobbyists do not represent the interests of “banks” or their shareholders. They represent the interests of the banks’ controlling officers and when those CEOs create a culture of corruption the lobbyists will push policies that will make it easy for the CEOs’ to loot “their” banks with impunity through the “sure thing” of accounting control fraud.
Clinton launched an unholy war against effective financial regulation. He began the process, and bragged about, the massive cuts in the FDIC staff that eventually (Bush made it worse) led to the FDIC losing over three-quarters of its total staff and the OTS over half of its staff. FBI agents were reassigned from prosecuting the S&L frauds and such prosecutions largely ended in 1993. Clinton’s “reinventers” ordered us to refer to the industry as our “customer” and to treat them as if they were our “customer.” Clinton’s reinventers eliminated the most important rule – the underwriting rule. They replaced it with a deliberately unenforceable “guideline” that was exceptionally criminogenic and would greatly intensify the epidemic of liar’s loans. This rule change was actually far more damaging than the more infamous statutory acts of deregulation that Bill Clinton, Rubin, and Greenspan pushed in order to essentially repeal the Glass-Steagall Act and pass the Commodities Futures Modernization Act of 2000 to not only kill Brooksley Born’s effort to protect the Nation and the world from financial derivatives, but ensure that no regulator in America would have any ability to regulate effectively massive classes of derivatives.
Clinton’s key economic appointees, and Gore, were fervent proponents of the three “de’s.” They came from banking and represented the interests not of banks, but of the banksters. Robert Rubin, the former head of Goldman Sachs and Clinton’s Treasury Secretary exemplified the bankster representing the interests of his peers. In particular, they pushed the global regulatory “race to the bottom” – warning that any effective financial regulation would drive the bankers to relocate to the City of London.
While anyone open to reality would have learned the grave dangers of the three “de’s” and the enormous value of effective regulation, there were three excellent reasons for the Clinton/Gore administration to be closed to reality and to embrace the three “de’s” and the banksters. First, it is not pleasant to be the subject of a government investigation and a conservatorship for your friend, business partner, and legal client’s S&L. It is perfectly human to react by being enraged at regulators. It was effective banking examiners who stopped McDougall’s frauds, conducted the bulk of the investigations that led to McDougall being convicted, and led to the exposure of the “Whitewater” “scandal.” From the Clintons’ perspective, that represented “Strike One, Strike Two, Strike Three – You’re Out!”
Second, the Clintons and Gore were leaders of the Democratic Leadership Council (DLC). The DLC’s creed was that the three “de’s” were divinely inspired. It was revealing that Clinton chose Gore as his running mate. Gore provided neither geographic nor ideological diversity to the ticket. Clinton did not want ideological diversity. He wanted a loyal junior partner who shared his disdain for regulators. It would require unusual independence of thought for Clinton and Gore, in their moment of electoral triumph, to say: “we’ve been observing the S&L debacle and thinking hard about its implications for our anti-regulatory policies and we have been forced to conclude that the DLC dogmas we have long championed about the virtues of the three ‘de’s’ are not simply incorrect but dangerous to the Nation.” Humans are more likely to do what Clinton and Gore did – religiously ignore the lessons of the S&L debacle and surround themselves with zealous advocates of the three “de’s.”
Third, the DLC had a special place in its heart for big finance. Big finance had the big money to make contributions, but it also had CEOs who were often at least moderate on social issues. These big contributors had been there in the DLC’s corner since its founding in 1985. How likely was it that Clinton and Gore, its two greatest DLC beneficiaries, would turn on big finance in their moment of triumph?
Hillary Clinton Learned the Same Perverse Lessons as Bill about Financial Regulation
I thank Samantha Lachman for her April 9, 2015 column entitled “As Clinton Tries To Win Over Progressives, She Might Want To Distance Herself From This Economic Adviser.” I hope that my column will not seem too harsh, but I feel the need to point out the key ways in which my analysis differs from Lachman’s – each of which adds to her thesis.
Lachman’s column explains that Hillary Clinton chose Robert Hormats as one of her most prominent economic advisors. Lachman points out that Hormats is a rabid deficit (and war) hawk, wants to cut the safety net, supports the faux “free trade” agreements that the Rubin-wing of the Democratic Party constantly seeks to inflict on the Nation, and favors aggressive deregulation. Lachman warns that this will cause progressives to wonder whether they should support Hillary Clinton. Lachman’s sole substantive argument against Hormats’ support for deregulation is that if she were to adopt his policy recommendations it would inhibit efforts were H. Clinton to be elected to reduce inequality.
“Hormats, who was the undersecretary for economic, energy and environmental affairs from 2009 to 2013, has advocated for the deregulatory approach that was begun by the Reagan administration and continued by former President Bill Clinton. Progressives say this deregulatory strategy contributed to widening income inequality….”
Lachman is correct about the content of Hormats’ policy positions. But here are the key factors I would urge readers (and potential campaign supporters and voters) to consider that arise from these positions.
- The problem with Hormats is not that he will upset “progressives.” The problem is that he is incompetent, dishonest, and supports policies that have devastated and will continue to devastate our Nation and the people of the world. Hormats has been wrong on every important economic issue – for decades. That should upset everyone regardless of their politics.
The insoluble problem is that every time Hormats’ policies cause a disaster and his dogmas are falsified he doubles-down on his failures. He does so because he is so dogmatic and intellectually dishonest that he refuses to learn from even his most catastrophic mistakes – and because his policy disasters enrich him and his peers – the elite banksters.
The enormous problem with Hormats’ policies is not that his policies “contributed to widening income inequality” (though they did) – but that they blew up the financial system, our Nation’s economy, and the global economy. In the U.S. 9.3 million Americans lost their jobs and roughly six million jobs that would have been created absent the Great Recession were not created. The leading economic estimate is that the U.S. will lose $24 trillion in GDP as a result. The job and GDP losses are far larger in Europe due to the insanity of self-inflicted austerity. If Hormats had been able to secure his desire to inflict austerity on America our job and GDP losses would have at least doubled.
Worse, Hormats’ policies blew up the financial system because they made it so “criminogenic” that it produced the three great fraud epidemics by bankers (appraisal, “liar’s” loans, and secondary market fraud) that hyper-inflated the bubble and caused the catastrophic fraud losses that drove the financial crisis.
Worse still, while he had a front row seat to these frauds epidemics as Goldman Sach’s Vice Chairman, he not only failed to warn the Nation about them but encouraged ever more criminogenic heapings of the three “de’s” – deregulation, desupervision, and de facto decriminalization.
And, still worse, Hormats continues to push for those same policies because while they were a catastrophic failure for our Nation and the world, they make him and his peers (many of them criminals) immensely wealthy – and will do so in the future when his policies again crush our Nation in an orgy of fraud by the banksters. Hormats doubtless supports (formal) legal civil rights (as opposed to the reality), which makes him a member in good standing of the Rubin-wing of the Democratic Party, but his economic policies are to the right of the UK Tories’ policies that Paul Krugman correctly eviscerates for their economic illiteracy.
I will discuss only two examples of Hormats’ incompetence as an economist, neither of which Lachman explores. First, he championed and aided the “Scandalous Seven.”
- Hormats’ continuing support for the three “de’s” and his support for President Clinton’s reappointment of Alan Greenspan and President Obama’s reappointment of Ben Bernanke to head the Fed. There are seven U.S. public officials who embraced the three “de’s” and are most culpable for creating and refusing to stop the criminogenic environment that produced the three most destructive epidemics of financial fraud in history. Those fraud epidemics hyper-inflated the bubbles, drove the financial crisis, and caused the Great Recession. Clinton, Gore, Rubin (with a dishonorable mention to his protégé Larry Summers), Greenspan, President George W. Bush, Bernanke, and Timothy Geithner are the U.S. officials who failed so spectacularly in the run-up to the crisis that they deserve their inclusion on my list of the Scandalous Seven. I am talking here about the public sector. The elite bankers who led the fraud schemes are even more culpable for they were made wealthy by their fraud schemes.
The terrible thing about the seven officials is that none of them had to be bribed in any overt fashion that could ever lead to even an investigation much less a prosecution. (The finance industry, of course, finds ways to richly reward its political cronies.) The Scandalous Seven felt wonderful about their actions in creating and then ignoring the criminogenic environment. Like Hormats, their embrace of the three “de’s” was open, not furtive. Three of the officials were Republicans and four were from the Rubin-wing of the Democratic Party. Geithner is a special case who became a nominal Rubin-Democrat to get his position as Treasury Secretary in the Obama administration.
Lachman’s discussion of the Hormats’ support for Greenspan and deregulation emphasizes that Greenspan “is loathed by progressives.”
“Similarly, in a discussion of whether former Federal Reserve Chairman Alan Greenspan should be reappointed by then-President George W. Bush, Hormats said Greenspan, who is loathed by progressives, had done ‘a terrific job.’
‘He enjoys respect on both Main Street and Wall Street,’ Hormats said. ‘In short, he’s really been one of the great financial leaders in American history.’
In the same conversation, Hormats argued that while Greenspan had facilitated a positive economic climate, other factors, including deregulation, were also responsible for private sector growth.
‘[Greenspan] has power, but what’s really driving this economy is the dramatic change that’s taking place in the private sector in this country,’ he continued. ‘We’ve had government deregulation, which has held.’”
A technical note, Lachman is quoting from an NPR transcript and the audio is no longer available on the web site. I suspect that the last word, “held,” should read “helped.” Lachman does not explain why “progressives” loath Greenspan – or why such loathing should be limited to “progressives.” If “progressives” loath Greenspan for bad reasons then this represents a defect on their part, not a failure by Greenspan or Hormats. In the same interview Lachman is quoting, Robert Reich issued a vibrant endorsement of Greenspan’s reappointment by Clinton that included one of the funniest (unintentional) descriptions of Greenspan: “Alan Greenspan is a pragmatist, an empiricist.” When it came to regulation to stop the fraud epidemics, I show below that Greenspan was still Ayn Rand’s faithful cultist. He was dogmatic and rather than an “empiricist” he religiously refused to allow real data to be presented.
Here are the primary reasons Greenspan (and Bernanke) make my list of the Scandalous Seven.
- The Fed had the unique authority under HOEPA (enacted in 1994 under Clinton) to ban all “liar’s” loans – regardless of whether they were originated by federally insured lenders. As the name implies, such loans were known to be pervasively fraudulent and it was known that lenders and loan brokers overwhelmingly put the lies in liar’s loans. Greenspan, and then Bernanke, refused to use this authority to stop an obvious, massive epidemic of “accounting control fraud. The FBI’s senior agent in charge of dealing with mortgage fraud, Chris Swecker, warned in September 2004 that there was an “epidemic” of mortgage fraud developing and predicted that it would cause a financial “crisis” – and Greenspan refused to stop the fraud epidemic. Greenspan’s colleague, Governor Gramlich, warned Greenspan of the developing epidemic of bad loans and urged him to send the Fed examiners in to the sleazy bank holding company affiliates that were pumping out hundreds of thousands of fraudulent loans. Greenspan refused not only to stop the fraudulent loans – he refused to send the examiners in to find the facts. When Richard Spillenkothen, the Fed’s top supervisor, requested to brief the full Fed board on the fact that every major bank involved with Enron had eagerly aided and abetted Enron’s accounting fraud and tax evasion the senior leadership of the Fed was enraged – at its supervisors! While Spillenkothen does not name individual names, this could not have occurred without Greenspan’s active support.
When another Fed supervisor, Sabeth Siddique, several years later presented the Fed board and Regional Bank Presidents with data from the Nation’s largest banks showing that they were moving massively into making loans that were known to be pervasively fraudulent and exceptionally likely to default the Fed split into a civil war in which the supervisor was subjected to “personal” attacks – for providing data from the banks to the Fed!
“Some people on the board and regional presidents . . . just wanted to come to a different answer. So they did ignore it, or the full thrust of it,” [Federal Reserve Governor Bies] told the Commission.
Within the Fed, the debate grew heated and emotional, Siddique recalled. “It got very personal,” he told the Commission. The ideological turf war lasted more than a year, while the number of nontraditional loans kept growing….” (FCIC 2011: 20-21).
This is significantly insane. The Fed leadership, under Greenspan and Bernanke, was so dogmatic and passionate in its hatred for regulation, supervision, enforcement, and prosecution and so rabid in its faith in “markets” and the inherent sainthood of financial CEOs that it conducted an unholy war against its own supervisors and reality. Simply providing data from the industry to the leaders of your agency became a CLG for Fed supervisors (“career limiting gesture”).
It is important to recall four other matters in this context. We (OTS-West Region) figured out liar’s loans in 1991 – and drove them out of the S&L industry, which was the limits of our statutory powers (unlike the Fed after the passage of HOEPA in 1994). We got it right because unlike Greenspan and Bernanke we were reality-based regulators eager to get the facts. So we listened to our examiners (as we had in 1984 about prior epidemics of accounting control fraud). The loans were not yet called “liar’s” loans by the industry and there was very limited experience with “low documentation” loans but our examiners realized that failing to underwrite the borrower’s income had to lead to “adverse selection” and produce severe losses. We realized that only fraudulent CEOs running accounting control frauds would make liar’s loans. Greenspan and Bernanke had no need to reinvent the supervisory wheel and the disastrous loss data on the 1990-1993 experience with liar’s loans was available to them. Banning liar’s loans was one of the easiest calls any regulatory could make. There was zero upside to liar’s loans – they harmed every honest borrower.
The second fact is that Greenspan was no virgin when it came to accounting control fraud. As I explained above, Charles Keating, the most notorious S&L fraud, used him as a lobbyist to recruit the five U.S. Senators who became known as the “Keating Five” when they met with us on April 9, 1987.
The third fact is that in addition to the FBI’s 2004 warning that the developing mortgage fraud “epidemic” would cause a financial “crisis” if it were not stopped the appraisers had created an extraordinary warning in the form of a public petition explaining that fraudulent lenders were deliberately creating a “Gresham’s” dynamic (in which bad ethics drives good ethics from the markets and professions) by extorting appraisers’ to inflate the value of homes pledged as collateral – something only a fraudulent bank or loan broker officer would do. The following astonishing fact is revealed (but also buried) well into the report of the Financial Crisis Inquiry Commission (FCIC): “Swecker, the former FBI official, told the Commission he had no contact with banking regulators during his tenure” (FCIC 2011: 164, emphasis added). As a former financial regulator I am almost reduced to tears every time I read that sentence.
- Put yourself in the position of Greenspan, Bernanke, Geithner, and Bush – all in office when Swecker made his very public warnings in the media and his Congressional testimony in 2004. There is no possible excuse for their total refusal to act against a crime wave led by elite banksters. Worse, their obscene attacks on supervisors to prevent them from presenting these senior officials with the reality of the three raging fraud epidemics demonstrates that they were not simply cowards unwilling to stop a wave of crime by their powerful cronies. These four officials’ war on the facts was so intense because they knew that if they ever let reality intrude it would falsify their ideological dogmas and render disgraceful their slavish lifetime devotion to the banksters.
The fourth fact is that within months of Bernanke’s ascendancy to running the Fed he knew from the MARI/MBA report that the available data showed that 90% of liar’s loans were fraudulent. He refused to use HOEPA to ban liar’s loans.
- Greenspan also makes the list for his dogmatic position expressed to CFTC Chair Brooksley Born that preventing fraud was never a legitimate basis for regulation.
- The real problem is the Clintons.
First, H. Clinton chose Hormats – in 2009 – to be her key economic adviser at State at a time when, for the reasons I just explained, it was inescapable that he three “de’s” (championed by Hormats) had produced the three most damaging financial fraud epidemics in world history, destroyed the global financial system (it was resurrected only by massive public bailouts by the Treasury and the Fed), and caused the Great Recession.
Hormats was still pushing the three “de’s” under H. Clinton. She knew this before she recruited him to be one of her top lieutenants at State. Hormats proceeded to continue to shill for the three “de’s” at State – with no known reprimands from H. Clinton. As I have often noted, economics has the very useful concept of “revealed preferences.” Lachman’s focus is on Hormats’ revealed preferences, but the key is that we are observing H. Clinton’s true preference. She picked a known, serial incompetent who was a disaster in his supposed area of expertise (finance) and so dogmatic, intellectually dishonest, and dedicated to the interests of his fellow 1% that he continues to double-down on his failures. Lachman warns H. Clinton that to curry favor with progressives “She Might Want To Distance Herself From This Economic Adviser.” But that is not what any progressive should want. Progressives (and everyone else) should be demanding that she repudiate, not merely “distance herself from” Hormats’ dogmas. It does nothing good for the world if H. Clinton is able to deceive people by making it appear that she has ditched disastrous deregulatory dogmas by keeping Hormats at a “distance” while she actually maintains those same dogmas.
What H. Clinton should be doing, in alliance with Senator Warren, is leading the charge demanding that the Obama Administration honor the whistleblowers who made public the massive frauds by Citi, JPM, and Bank of America’s senior managers and prosecute the banksters. That would be great substantively for America and smart politics. The Clintons have been conspicuously silent about the banksters and the fraud epidemics they led that drove our crises. She could fix that in 15 minutes – if she wished to.
Second, as I explained above, the Clinton administration enthusiastically embraced the three “de’s” through the “Reinventing Government” movement. Al Gore led the charge. I have written about this extensively. Reinventing government was expressly designed not to prosecute elite corporate criminals. Yes, the Bush administration that followed was even worse, but it was Clinton who began what Tom Frank aptly terms The Wrecking Crew. I got out as a regulator when the “Reinventers” ordered us to refer to the industry we were supposed to regulate as our “customer” – and to treat banks and bankers as if they were “customers.” I personally witnessed this directive, and the administration’s chief goon in charge of its oxymoronic “Reinvention” proudly cites that directive as one of his top accomplishments and prints praise of his supposed bravery in insisting on that directive.
Hormats was not a powerful adviser to the Clinton administration. Bob Rubin, Goldman Sachs’ CEO, was the paramount adviser on economic matters. Hormats is simply one of dozens of Rubinites that infested the Clinton and Obama administrations. But blaming the three “de’s” on Rubin is unfair, for B. Clinton and Gore were sincerely and zealously committed to deregulation, desupervision, and the de facto decriminalization of elite white-collar crime. Neither was seduced by Rubin. H. Clinton knows as much as any person alive about the Rubinites’ pathologies. She recruited Hormats because he was a Rubinite, not because he deceived her.
At one point, all six of Obama’s most senior economic advisers where Rubinites. (They are still overwhelmingly Rubinites.) Obama and H. Clinton have chosen Rubinites as their dominant economic advisers not through some sinister, secret infiltration engineered by Rubin, but because Obama and the Clinton represent the Rubin-wing of the Democratic Party.
Third, H. Clinton chose Hormats as a top adviser not because of his “expertise” – she knows he has been consistently, horrifically wrong about every important economic policy issue on which he has opined in the last 20 years – but as a signal to the donors, the elite bankers. The signal is that I have always been with you and will always be with you, regardless of the bleating of the Democratic-wing of the Democratic Party.
I have explained Hormats’ incompetence when it came to regulation. I will add briefly related displays of incompetence in what he purports to be his fields of expertise. First, he wants to cut the already inadequate safety net for the purpose of reducing budget deficits. Consider his testimony before the House Budget Committee on June 26, 2007. The setting was a friendly one. The Democrats controlling the Committee held a hearing to embarrass the Bush administration. The Democratic meme was that unlike virtuous Clinton, Bush had taken us deep into deficit – and much of our national debt was owed to the Chinese (cue dramatic, pulsating minor key music foreshadowing disaster). I know that many “progressives” would think that such a hearing was fantastic – good politics plus hoisting the Republican’s fiscal conservatives on their own petard.
I’ll simply refer readers to my colleagues’ explanations of why the “Red Peril” fearmongering is nonsense. It is terrible economics and Democrats shouldn’t try to score political points by spreading economic lies – even if the Democrats are right that the Republicans do so routinely.
I think that the hearing and Hormats’ testimony demonstrated the idiocy and dishonesty of many Democrats. Recall the date of the hearing – the U.S. was racing into the Great Recession. It officially began in the Fourth Quarter of 2007. By the time Hormats testified roughly five nonprime lenders were failing every week and housing prices had been falling for over a year in many markets. The U.S. needed to be running far larger federal budget deficits to begin to counter the coming recession. Instead, we had Hormats testifying that July 26, 2007 would be a great time for the U.S. to simultaneously “boost savings at home,” cut safety net payments (Social Security, Medicare, and Medicaid), and return the federal budget to surplus. Each of these actions would have further reduced already inadequate demand and caused the Great Recession to come sooner, be deeper, and last far longer – because that is what austerity does when you add it to a recession.
Hormats: Not Cutting Grandmother’s Social Security Will Get Her Nuked
Hormats was just getting started with his plan to ruin America. He claimed that we had to adopt these three self-destructive policies that would hurl us into an earlier, deeper, and longer recession (and therefore increase the budget deficit) to protect ourselves from a terrorist WMD attack.
“Because we know that one of the stated objectives of terrorists is to cause massive disruption in the U.S. economy, such financial vulnerabilities could lead potential perpetrators to feel that they can do a great deal of damage not simply by their initial act, but also because of the secondary and tertiary economic disruptions that would occur because of the subsequent turmoil in a more vulnerable financial environment. In finances as in military affairs, vulnerability frequently invites aggression.”
Hormats’ position was refuted by an earlier speaker that looked a whole lot like Hormats who only about 30 seconds earlier testified that “It is worth recalling that the country had recorded four years of budget surplus before 9/11….” Indeed, it would have been “worth recalling” by Hormats who only 30 seconds later claimed that we could greatly reduce the risk of terrorist attacks if we ran budget surpluses. Hormats displayed at this hearing that he is not simply incompetent, he is a shill willing to say anything, no matter how loony, to please the Democratic politicians who might again make the mistake of appointing him to office.
In the same testimony, Hormats also indicated that he is a “finance expert” who is clueless about the actual financial system of a nation with a sovereign currency, i.e., the U.S.
“Alexander Hamilton recognized from the very beginning that America’s financial strength was vital to its security. If the country did not manage its finances well, he reasoned, it would not have the resources needed to defend itself in time of war and it would lose credibility in the eyes of creditors, making borrowing in time of war or other national emergency all the more difficult.
Over two centuries have passed since Hamilton held office, but these principles are just as relevant today.”
Well, no, not even close. On a more technical detail, his “Red Peril” scenarios assume that the U.S. can only fund itself through issuing bonds. My colleagues have explained in loving detail in NEP why Hormats’ claims demonstrate that he does not understand even the most basic aspects of how money actually works. I do not demand that Hormats agree with MMT, but he does have to understand the actual operations by which money can be created to be minimally competent in his field. As I explained, one does not make a Rubinite an adviser because one is seeking competence.
Hillary Clinton was widely quoted telling a handful of Iowans on April 14: “We need to fix our dysfunctional political system and get unaccountable money out of it once and for all — even if it takes a constitutional amendment.” The Washington Post identified this statement as “one of several pillars of her 2016 presidential campaign.” CBS based its headline for this Clinton story on the quote that this pillar represented one of “four big fights that I think we have to take on.” Her communications director, elaborating on the transcript of Clinton’s spare comments on the subject, added “It’s something she’s really concerned about.”
It is safe to assume that after months crafting the four policy pillars of her candidacy, and the way the message itself was tightly controlled from Iowa, that Clinton’s particular phrasing for her “unaccountable money” pillar was precisely as intended by her campaign team.
The Post’s headline writers and others converted Clinton’s hypothetical statement, “if it takes a constitutional amendment,” into a far more definite “support for a constitutional amendment,” as if Clinton is expected to propose or endorse a constitutional amendment during her campaign.
Slate‘s dog-whistle headline, relying on nothing more than the above quote in the Post, transformed her statement even further: “Hillary Clinton Hints at Support for Constitutional Amendment to Overturn Citizens United.” The Post, and presumably Clinton in Iowa, said nothing at all about Citizens United, let alone support for any “amendment to overturn” it. What Clinton did say is closer to the opposite of either of those two concepts.
Clinton’s statement “supports” not getting all or any part of interested money out of politics, which is what people advocating an “Amendment to Overturn Citizens United” think they are supporting. Clinton is speaking solely about “unaccountable money.” Such money can become fully “accountable” without being excluded from the pay to play system of US politics. Clinton is simply advocating its disclosure.
Under her proposal the embarrassing flood of money into US politics, anticipated to explode even further in her own campaign, will not be stanched. It would be accounted for by disclosing its provenance, which is now often left undisclosed by use of 527s and other IRS conduits. She considerately wants Americans to know who is buying the power to operate their erstwhile democracy against their every interest. There is no assurance that such disclosure would have any significant impact on the pervasive corruption of U.S. politics.
Under systemic corruption, disclosure actually can help circumvent one of the few remaining inconveniences to plutocrats. Plutocrats who feel their “freedom of speech” constrained by new $5 million contribution limits per person per election cycle jointly endorsed by Congress and the Supreme Court can spend as much as they want on “independent” electioneering provided, so the cover story goes, they do not “coordinate” their expenditures with the campaigns. But to buy influence the candidate needs to know who is paying them off. By bridging this inconvenient gap in the system, formal disclosure required for everyone by law is a perfect solution for legalized coordination. Accordingly, disclosure is the reform that Democrats and their allies are selling to their supporters, and the reform the plutocrat justices of the Roberts Court also promote with no fear of significantly upsetting the corrupt political system they maintain.
Where corruption is systemic, Clinton’s proposition that actual “accountability” is even possible, other than in the sense of mere disclosure, is itself highly dubious. When the system requires all competitors to be on the take, disclosure alone fails to create any effective new options for making politicians actually accountable to voters. In this system where the Supreme Court legalizes corruption and the mass media collects a toll to mediate their messages, only the proxies of plutocrats are on offer to voters.
As a lawyer, Clinton must already understand that no constitutional amendment is required to accommodate a legislative remedy for her “unaccountable money” pillar. Laws under the existing Constitution can require all the additional disclosure that she could possibly want. Disclosure requirements for campaign contributions have existed in federal law since the Progressive Era’s Publicity of Political Contributions Act of 1910, 36 Stat. 822. The constitutionality of such disclosure laws has never been doubted.
In Ex Parte Curtis (1882) (8-1) the Supreme Court ruled, without even bothering to argue the point, that the power of Congress to prohibit political corruption outweighs any asserted First Amendment interest in allowing political donations. If the First Amendment argument made by the petitioner in Curtis, and dismissed by the government’s brief as unworthy of serious attention, albeit accepted by a lone dissenter, could not legalize money in politics against a total ban, then certainly requirements that political investments merely be disclosed could have raised no conceivable objection before the Nixon Court reversed the Curtis rule without mentioning it nearly a century later.
The Supreme Court held disclosure laws to be constitutional in Burroughs v. United States (1934) (9-0) when it upheld the strengthened disclosure requirements of the 1925 Federal Corrupt Practices Act. As that Court explained, disclosure requirements are “calculated to discourage the making and use of contributions for purposes of corruption.” This most conservative of any Supreme Court majority prior to the current Roberts 5 resoundingly rejected the very idea that disclosure requirements might be constitutionally invalid, calling the “proposition so startling as to arrest attention.” Quoting from another deeply conservative Gilded Age Court lineup in Ex parte Yarbrough, 110 U.S. 651 (1884), the 1934 Court explained that “government … must have the power to protect the elections on which its existence depends from violence and corruption … the two great natural and historical enemies of all republics.”
Later in United States v. Harriss, 347 U.S. 612, 625 (1954) the Supreme Court again expressly approved mandatory disclosure of political investments connected with some actual speech in the context of lobbying. See also National Association of Manufacturers v Taylor (D.C. Cir. 2009) (upholding lobbying disclosure under Honest Leadership and Open Government Act of 2007). Chief Justice Warren held in Harriss that,
the voice of the people may all too easily be drowned out by the voice of special interest groups seeking favored treatment while masquerading as proponents of the public weal. This is the evil which the Lobbying Act was designed to help prevent… Congress… is not constitutionally forbidden to require the disclosure of lobbying activities. To do so would be to deny Congress in large measure the power of self-protection.
Since the outset of the current era of systemic corruption of politics the Supreme Court responsible for making that corruption systemic has nevertheless, without reservation, reaffirmed the same principles. Disclosure was endorsed by Buckley v Valeo (1976), the judicial mother lode for legalizing systemic corruption, and again by Citizens United (2010), the bete noir of all professional activists working the campaign finance silo. When the Roberts Court overturned aggregate limits for political investors in McCutcheon (2014) , Justice Roberts lauded this “less restrictive alternative” which also “given the Internet, … offers much more robust protections against corruption” than ever.
Though the constitutionality of disclosure laws has for a century been of little or no demonstrable utility in preventing the current systemic levels of political corruption, it is nevertheless regularly trotted out in this manner as a cure-all by politicians and other operatives of this corrupt system. Clinton has built her “unaccountable money” pillar on this well-worn tradition, and nothing more. Current disclosure laws are certainly inadequate. But this is because Congress is now too mired in systemic corruption, and the FEC too deadlocked, to enact even tepid and marginal reforms necessary to make disclosure even potentially more effective.
Clinton surely knows the Supreme Court’s historic, consistent, and virtually unanimous, rulings make clear that there is no need for a constitutional amendment to require full disclosure of currently “unaccountable” or “dark” money. She must have spent some tiny fraction of what has been projected to be an over $2 billion campaign to do some elementary initial research and strategy development about one of her expensive campaign’s four basic policy pillars – which she offers as her reason for running. Her issues team must have advised her to use the hypothetical “if” when mentioning an amendment because they know that an amendment is not necessary to accomplish the limited Clinton disclosure agenda. Hypothetical mention of an amendment does helps obfuscate the limited nature of her agenda. Besides, mentioning the Constitution makes her proposal sound more important. Amendment advocacy, however hypothetical in the case of the “unaccountable money” pillar, does help distract constituents’ political energies to futile pursuits, while also deflecting responsibility to others. This is the strategy that has worked for Democrats on the corruption issue.
The rush to enlist Clinton in their cause by the Democrats’ professional activist allies who have committed themselves to an amendment approach suggests that they either do not know, or do not care, that no amendment is necessary to achieve the mostly useless “accountability” for money in politics that Clinton supports. Clinging to their futile amendment approach such activists mistakenly insist there is “no question that an amendment will be needed.” They do not know or care that it would be a counter-productive waste of time to confirm, by constitutional amendment, the validity of general powers of Congress which have never been seriously questioned on constitutional grounds and only recently exalted by the defender of plutocracy himself, Chief Justice Roberts. Presumably at the behest of such mistaken activists, Bernie Sanders has proposed an amendment that does include such a provision that risks not just wasteful but also counterproductive results.
Given the uninformed quality of the constitutional amendments that have been proposed on this subject by Democrats and their professional activist allies, one can easily imagine that an amendment for this purpose, although unnecessary, could well do more harm than good. The close parsing by a hostile Roberts Court of any particular new constitutional text on this subject could be turned on its head to reduce Congress’ current unrestricted authority to mandate all the disclosure of money in politics they may desire.
Clinton’s mention of the amendment should be no surprise. The constitutional amendment idea has been used as a theatrical prop to give cover to Democrats who are mired in the corrupt system as deeply as Republicans. Republicans embrace plutocracy as some surreal 21st century manifestation of the founders concept of “freedom of speech,” a notion formed long before there was a mass broadcast media to be bought for the political propaganda of marketing specialists. Accepting the Republican’s game, Democrats misleadingly propagate the idea that a constitutional amendment is the sole means by which they could limit money in politics. The resulting stalemate from this diversion absolves Democrats’ failure to advance far more effective and available legislative measures. By such deceit about their support for a futile amendment, a majority of Senate Democrats in the 113th Congress were empowered to vote on behalf of Wall Street in December 2014 to increase, by an order of magnitude, the money that plutocrats can give to buy political parties. Democratic support for the “CRomnibus” Act betrayed the notion that Democrats’ professed commitment to “campaign finance reform” meant that they would seek laws mandating less, not considerably more, money in politics. But the betrayal met with little, if any, protest from their activist allies who keep their eyes safely diverted to the futile amendment approach that would not even have stopped Congress from increasing money in politics as they did in 2014 even if it had been adopted.
Amendment advocacy has served to divert attention from corrupt Democrats for five years. The eventual, and inevitable, collapse, on September 11, 2014, of the Democrats anti-”Citizens United” constitutional amendment theatrics caused those professional activists who got the memo to pivot to a new advertising slogan for 2015. Their new advertising campaign promotes disclosure of “Dark Money,” while attempting to make that slogan sound even worse than their “Citizens United” soundbite. This latest piecemeal fad by non-profit fundraisers for what is actually a much reduced new demand ignores Justice Elena Kagan’s koanic axiom: “Simple disclosure fails to prevent shady dealing…. So the State remains afflicted with corruption.” But it serves Clinton’s straddle between disclosure and amendment.
The recent solicitations from political non-profits have reduced expectations so far as to ask that you send them money to help eliminate Dark Money electioneering by government contractors. This is a reform Obama could accomplish on his own, as a matter of seeing that the law are executed, and should have long ago when the subject first arose in 2011. The activists scrambled on board after the New York Times recently approved this approach. This reform would, they say, “unmask major corporate political donors with a simple executive order.” Of all the plutocrats and their corporate agents who make political investments, this reform would only reach the subset of government contractors. Instead of demanding mere disclosure of political investments from government contractors, activists should at the very least demand policies for this subset that would totally abolish political kickbacks from the procurement system. Their demand should be for strengthening and robust enforcement of — while disqualifying any federal contractor that “directly or indirectly … make[s] any contribution …to any person for any political purpose or use” in violation of — 2 U.S. Code § 441c (“Contributions by government contractors”). Demanding mere disclosure in this context, as it usually does, serves to divert attention from more meaningful reform.
Even this anti-corruption best-practice no-brainer for disclosure, let alone disqualifying firms with a history of conflict of interest electioneering expenditures, has been too much for a Democratic President. Obama uses highly contingent and distancing language whenever he mentions money in politics, such as his statement (emphasis added) about: the “need to seriously consider mobilizing a constitutional amendment process to overturn Citizens United (assuming the Supreme Court doesn’t revisit it). Even if the amendment process falls short, it can shine a spotlight on the super-PAC phenomenon and help apply pressure for change.”
The multiple italicized contingencies Obama employed indicate that he understood an amendment to be little more than political theatrics. By mentioning Citizens United, not Buckley, and Super-PACs instead of the whole corrupt system, he slices and dices the problem into its manageable but piecemeal soundbites. As a former constitutional law lecturer and record-setting fundraiser, Obama must know that the independent corporate electioneering legalized by Citizens United had very little to do with Super-Pacs, which are overwhelmingly funded by a handful of rich individuals and their non-profit proxies, with very little (only 12%) coming from for-profit corporations. Moreover Super-Pacs already have adequate spotlights on them from a largely outraged public. If in any event the “amendment process” is expected by him to “fall short,” then exactly what is the “change” that Pres. Obama believes can be obtained by “pressure” that might arise from this failure?
Failure due to misdirection usually depletes energy, causes frustration, and alienates voters, which only relieves the “pressure” on politicians. But Obama presumably knows that. His latest tepid statement, sounding like a bystander to the process of policy making, was that he would “love to see some constitutional process that would allow us to actually regulate campaign spending the way we used to, and maybe even improve it.” This could mean almost anything while committing Obama to nothing. One suspects that Obama’s “love” will not give birth to any effective strategy; nor will Clinton.
By mentioning a constitutional amendment without endorsing anything specific Clinton is doing little more than what Obama and his party has done. In formulating her disclosure pillar, Clinton adopted similar language to, while cleverly promising considerably less than, the commitment made in the 2012 Democratic Party platform: “We support campaign finance reform, by constitutional amendment if necessary.” The rubric of “campaign finance reform” could include disclosure of “unaccountable” money as one tactic. But that would need to be accompanied by a more comprehensive legislative package to accomplish any actual “reform.”
By mentioning a constitutional amendment in this context, although the inadequacy of disclosure laws has nothing to do with the text of the Constitution, Clinton not only blows the dog-whistle for those diverted to that futile approach by professional activists for the past five years, but also prepares a convenient exit for herself from even the truncated “dark money” issue. As one commenter observed, she can “endorse the concept without too many expectations about personally making an amendment happen.” A president has no formal role in adopting an amendment so it serves to shift responsibility for the issue away from her, as it has done for Obama.
Clinton should be asked to disclose her legislative plan, since in fact no amendment is necessary, whether to force disclosures of money in politics, or to enact far more robust prohibitions than any amount of disclosure could possibly accomplish. It is those other, strategic legislative solutions for banning money from politics, such as strengthened conflict of interest recusal rules, and Exceptions Clause or Eleventh Amendment jurisdiction-stripping, that Clinton, along with the Democratic Party, can be safely expected to avoid at all costs.
Democrats using effective strategy to get money out of politics would be even less likely than landing a gyrocopter on the White House lawn by a “showman patriot” would dramatize the issue effectively in the complicit mass media. The Wall Street masters would not consent to any effective strategy to restrain their plutocracy.
Rob Hager is a public interest litigator who filed an amicus brief in the Montana sequel to Citizens United and has worked as an international consultant on anti-corruption policy and legislation.
One longs for a candidate for president of the United States possessing those rare traits of statesmanship, honesty and integrity. One looks back in vain to see such an example, and the near and far horizons offer no such hope, either.
We will take no time looking at the GOP (Generally Opposed to Progress) candidates, either announced or still keeping everyone on the edge of their seats as they ‘decide’ whether or not to toss their hat into the soon-to-be-crowded ring. Most, including Florida Governor and brother of one of the nation’s worst presidents ever, Jeb Bush, and New Jersey Governor, the obnoxious blowhard Chris Christie, have already decided, but enjoy the spectacle of endless conjecture. So they wait.
But on the Democratic side, no less a worthy than Hillary Rodham Clinton, lawyer, former First Lady, former senator, former Secretary of State, has slow-balled her tattered hat into an otherwise empty ring. Her handlers claim, disingenuously, that she expects competition, and a hard-fought primary campaign. Who, one wants to know, is going to take her on? She has a war chest rumored to hold $2.5 billion, more than twice what Republican Mitt Romney and Democrat Barack Obama each spent on their campaigns in 2012; the total is more than their campaign expenditures combined. The only other potential candidate with anything close to her name recognition is Vice President Joe Biden, and it will be impossible for him to generate the puzzling enthusiasm that seems to follow Mrs. Clinton. And there does not appear to be anyone waiting in the wings to grab the spotlight from her, as Mr. Obama did in 2008.
So, while her various aides struggle to avoid any appearance of invincibility, let us all make the assumption that Mrs. Clinton will be the nominee, and work from there. What possible objections can anyone from the moderate to liberal political philosophy spectrum have to her nomination? Well, this writer asks: how much time do you have?
In the interest of time, let’s just look at a single area; there will be plenty of time to discuss others as the relentless torture session known as a U.S. political campaign drags on.
One of the most horrific oppressions of people currently happening in the world today is being perpetrated by Israel on the people of Palestine. Now, before anyone says that this is a complex, decades-old problem, and Mrs. Clinton can’t be blamed for not solving it, we question these statements, and at the same time object to her worsening of the situation. And, when one looks at her four years as Secretary of State, one can, indeed, blame her for not resolving the situation. Some facts:
* Clinton is beholden to AIPAC (American Israel Political Affairs Committee), and takes her disgraceful, self-appointed obligation to that lobby group more seriously than she does human rights. During her stint as Secretary of State, she blocked every effort Palestinians made at the United Nations to achieve recognition; these successful efforts to thwart the self-determination of an oppressed people win the kudos of AIPAC. She has spoken of Israel in almost romantic terms: “Protecting Israel’s future is not simply a question of policy for me, it’s personal,” she said in 2013, discussing various visits she has made to that apartheid land. She regularly worships at the AIPAC altar.
* In 2014, as Israel was using U.S.-provided weaponry, some of it illegal under international law, to carpet-bomb the beleaguered and blockaded Gaza Strip, Mrs. Clinton had nothing but praise for Israeli Prime Murderer Benjamin Netanyahu. She further echoed the tired old line about Israel’s ‘right to defend itself’ from rocket fire, as if an occupied nation does not have an internationally-recognized right to fight its occupier. One must note that, during 55 days in the summer of 2014, Israel fired more rockets into the Gaza Strip than Gaza fired into Israel in the previous 14 years. Additionally, Dr. Norman Finkelstein, the son of Holocaust survivors and an outspoken critic of Israel (he is no longer allowed in that country), calls those ‘rockets’ fired from Gaza ‘enhanced fire works’. No one refers to the advanced weaponry the U.S. gives to Israel in such terms.
*During her last campaign for the presidency, she stated that, if Iran attacked her beloved Israel with nuclear weapons, the U.S., under her presidency would attack Iran and could ‘totally obliterate’ it. One must take her at her word, since she voted to authorize the invasion of Iraq, a nation that in no way threatened the U.S., and in which over half the population was under the age of 15. So she would, one assumes, not hesitate to invade Iran, a nation with twice the population of Iraq, if it, too, did nothing to threaten the U.S.
So why, one wonders, is there so much enthusiasm among Democrats for a woman who, by all accounts, is a hypocritical war-monger, who is more motivated to enhance her own bottom line than to serve the cause of human rights? What is it that draws adoring crowds to her? Perhaps people are seduced by the idea of another first: they elected the first African-American president, so why not follow it up with the first woman president? Maybe it is her resume, which is, indeed, impressive. But any job-seeker will highlight notable job titles on their resume, but once at the interview, may have difficulty pointing to any real accomplishments. The voters, as interviewers, should take a close look at what achievements, if any, Mrs. Clinton has to support those remarkable job titles. They will find little.
But what is all this, when the candidate is surrounded by the magic of invincibility, the aura of newness, and represents the final shattering of the glass ceiling? Does she not deserve the presidency, for all her hard work, regardless of the lack of any real accomplishment? Don’t we, the voters, owe her this?
No, we don’t. She isn’t fit to serve in any capacity in government, due to the reasons detailed above, in addition to many others (stay tuned). In this case it is the empress, not the emperor, who has new clothes, only seen by Democrats stricken with some sudden myopia that prevents them from seeing the reality of her accomplishments which, like the new clothes, simply don’t exist.
One can generally rely on the Republicans to nominate a worse candidate than the Democrats; one hesitates to say the Democrat is usually better, since we are not operating in a ‘good, better, best’ zone here; far beneath it, unfortunately. But this time around, there may simply be no ‘lesser of two evils’ choice to make. And the U.S. will provide yet another tragedy for the country, and the world.
Robert Fantina’s latest book is Empire, Racism and Genocide: a History of US Foreign Policy (Red Pill Press).
Hillary Clinton just announced that she’s running for president. However, this commentary is not really about her. It’s about a nation of more than 300 million people in which politics has become the sole property and domain of the rich. The rich decided some time ago that Hillary Clinton would be the virtually unchallenged presidential candidate of the Democratic Party. The 48 percent of Americans that express an affinity with the Democratic Party have not yet chosen Clinton. There has been no primary election in any state. But, that does not matter because the selection process that counts occurs in the boardrooms and mansions and private clubs and getaways of the rich. Hillary Clinton and her husband, Bill, have spent virtually their entire adult lives on the millionaires’ campaign circuit, the rich man’s primary. In the process of pleasing the rich, they have become rich, themselves.
Hillary hopes to spend two and a half billion dollars of – mostly – rich people’s money in the 2016 campaign. Wealthy people will be just as generous with the Republican candidate. The outcome on Election Day is absolutely certain: the rich man’s candidate will definitely win, and the people will lose – because they have no candidate in the major parties.
The people are not even in the game; the contest is over before the Democratic Party’s formal selection process even begins. And, when primary season does arrive, it will only be a formality. The menu has already been printed, and Hillary will be the main course for Democrats next year.
Democratic voters can say “Yes” to Hillary, but they can’t say “No,” because the party machinery and the rich men who pay for that machinery will crucify and expel any Democrat who seriously challenges her from the Left.
The Democratic Party’s apologists like to call it a big tent with room for Blacks and browns and gays and labor and peace-loving people. But it’s actually a huge trap designed to contain and politically neutralize the folks who might otherwise turn against the rich. The Party has always been a scam, but at least in the old days it put on a populist show to fool the rank and file into believing that they could actually influence the party’s direction. However, Wall Street is determined that there will be no serious Democratic deviation from the corporate agenda set by Bill Clinton and Barack Obama. Hillary Clinton would represent the third Clinton presidency – which, for Wall Street, is just as good as the two George Bush presidencies. Maybe better, because labor and Blacks and that fuzzy cohort called liberals will all think they won the election, when nothing could be farther from the truth. Rank and file Democrats will see the fait accompli of Hillary’s nomination as a sign of unity among Democrats, when in fact it is the triumph of filthy rich campaign contributors. The rich have shown great solidarity in uniting behind a Democratic presidential candidate. Later on, they will unite around a Republican candidate, too. After that, it won’t matter who wins.
Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com.
By John Chuckman | Aletho News | April 13, 2015
Yes, there is still bias “out there,” as some have written, about an American woman running for President, but I do not believe the bias is decisive: after all, America has broken what surely was its fiercest taboo with the election of a black man, twice. There is, however, another bias “out there,” and a decisive one: a bias against the Clintons, a ghastly pair in almost every respect, America’s contemporary version of the Borgias – both of them grasping, vicious, ruthless, two-faced, and lacking only the Borgias’ good taste in art and literature.
Among the distinguished achievements of Hillary’s husband are the bombing of Serbia’s capital, including the offices of journalists, and the bombing of a pharmaceutical plant in Sudan claimed to be a chemical weapons plant. President Clinton bragged of “ending welfare in our time,” quite the claim for a self-styled liberal. It was his blundering, belligerent FBI and ATF that committed the atrocities at Waco. He embarrassed everyone with his grotesque personal behavior, and he pardoned some ghastly criminals in return for huge contributions to his “foundation.” He is good friends with people like Jeffrey Epstein, a registered sex offender who solicited and kept underage girls to “service” guests on his private island or on the “Lolita Express,” nick-name for his private jet – both jet and island having Clinton recorded as a guest.
Bill Clinton failed every major undertaking of worth, including healthcare reform, Hillary playing a large role in that failure. Sometimes forgotten, he also frequently played the public coward, not standing behind appointments he made when they were attacked viciously in the Senate, allowing honorable people to be pilloried, then finally withdrawing their nominations. Perhaps his greatest act of cowardice involved the genocidal horrors of Rwanda. He was aware of them quite early, but his government was instructed not to use inflammatory language in public, and he made virtually no effort to save a million lives.
His contemptible behavior should, in theory, have nothing to do with Hillary, but in fact it very much does. They were the ones going around talking up the idea of getting “two for one” during his term of office. She still treats him as a confidant and advisor, having been photographed a number of times engaged in serious tête-à-têtes, and he has had several sessions with Obama, and big money sources, concerning Hillary’s ambitions.
Both Clintons have long records of chasing, indeed grovelling in much the same fashion as the smarmy Tony Blair, after big money – money for the foundation, money for elections, she having set an unenviable record for cancerous spending when running for the Senate in New York, and they have both been involved in at least as many questionable deals on the side as several former Israeli Prime Ministers combined.
I wish a woman could run for President, but must the candidate be someone who resembles Richard Nixon in drag and shares views the late ogre, J. Edgar Hoover? Everyone who doubts what a colossally unpleasant character Hillary has in private should read the memoirs of former secret service agents. Her behavior was appalling, tasking agents with things like holding her purse in public, and shouting a stream of “f–k off” invective at them if they declined.
She has always voted for war in the Senate, including the horrible war crime of invading Iraq. She goes around making speeches – at $300,000 a pop plus a whole printed list of demanded perquisites – about America’s need for a strong defense. Strong defense? America? How does one manage to spend more than America already spends on death and destruction? Park a nuclear-loaded B-52 at every civilian airport? Supply every Boy Scout troop with heavy machine guns and plenty of ammo? The woman borders on deranged here.
She has lied countless times in office and while running for office. The bloody mess at Benghazi was her baby, and she has done nothing but lie about its embarrassing and deadly failure. The last time she ran for President, in order to bolster her image for toughness, she bragged of coming under gunfire when she landed on a visit to Bosnia as First Lady, but a news video promptly appeared which showed nothing but a sweet little girl presenting flowers to her at the airport. Of course, she had to lie again when the video turned up, saying she hadn’t remembered events clearly, but no one ever forgets coming under gun fire. It is not possible unless your faculties are in such a jumbled state you should be disqualified from office.
Of course, in the end, Hillary’s mass of deceptions and terrible associations and rotten personality really do not matter because America’s real government, its ongoing unelected one, allows no President to depart much from the established script. The last one who made a serious try had half his head blasted into the streets of Dallas.
Anticipation and excitement about the first woman candidate reminds me of America’s electing and celebrating its first black – a seemingly charming and intelligent man at the time – and he has proved just another George Bush, giving ordinary Americans nothing, and especially his own people. He weekly approves extrajudicial killings in a half dozen places, behavior completely in keeping with former South American juntas who made thousands of people just disappear, and he happily does business with tyrants and absolute monarchs and madmen like Netanyahu. Hillary would do precisely the same.
In the end, the person America elects as President makes no appreciable difference to what America does in the world or how its wealthy rulers treat their own people, a presidential election being little more than the most costly theater performance in the world, “a tale / Told by an idiot, full of sound and fury, / Signifying nothing.”
Caracas – A recent report has emerged revealing that Venezuelan billionaire and media tycoon, Gustavo Cisneros, donated up to US$ 1 million dollars to the Bill, Hillary and Chelsea Clinton Foundation between 2009-2013, while Hillary Clinton served as Secretary of State for the Obama administration.
A recent review of the foundation’s disclosures, carried out by the Wall Street Journal, brings to light a number of donors that were previously unknown to the public.
The figures include Argentinian and Ukrainian businesspeople, as well as Prince Turki al-Faisal of the Saudi Arabian Royal Family, who collectively donated up to US$68 million to the organisation over the course of four years. The majority of large donations came from residents in the Ukraine (US$10 million), England (US$8.4 million) and Saudi Arabia (US$7.3 million), according to the report.
Described as Latin America’s “Berlusconi,” Gustavo Cisneros appears in the report as having donated up to US$ 1 million to the couple’s foundation between 2009 and 2013. The exact amount and number of donations that he made are still unclear, however, as the foundation’s disclosure reports only cite donations in ranges as opposed to specific amounts.
The revelation has provoked a fierce backlash from the Republican party, as well as some figures within the Democrat camp. They have cited the donations as an attempt to circumvent an agreement between President Obama and the Clintons, in which the couple vowed to reject donations from foreign governments during Hillary Clinton’s time as Secretary of State.
Designed to insulate Clinton from charges of political corruption, the agreement is reported to have been a deal breaker for her designation as chief diplomat within the Obama administration. Nonetheless, politicians from both parties have pointed out that many of the individual donors to her foundation had strong links to foreign governments and presented a clear conflict of interest with her political position.
This latest report has added to the growing scandal surrounding Clinton who has recently come under fire for using a personal e-mail instead of an official state.gov address during her time as Secretary of State. She also deleted thousands of work related emails from her private account which should have been handed over for independent review by the State Department at the end of her tenure.
The political quagmire has put a dampener on her potential 2016 bid for presidency, which she was widely expected to announce over the next few months.
Who is Cisneros?
Known as Venezuela’s “Rupert Murdoch,” Cisneros runs the Cisneros Group, one of the largest privately held media and entertainment companies in the world. He was originally linked to the Clintons back in 2010 when he was also alleged to have made a donation to their foundation, despite being a staunch supported and friend to former Republican President, George W. Bush.
His commercial empire includes property investment, Venezuela’s largest television channel, Venevision, and forays into international business ventures in the United States and Asia.
As a principle ally of former Venezuelan presidents such as Romulo Betancourt and Carlos Andrez, both tied to the country’s old political regime, Cisneros was one of the major players in the short-lived 2002 “media” coup which attempted to oust then president Hugo Chavez, famed for having brought Venezuela’s two party system to a crashing end with his election.
Cisneros met with coup ringleaders in the immediate aftermath of the putsch and prohibited the circulation of news surrounding the illegal nature of the ousting on Venevision. He also censured reports of the popular uprising which eventually returned Chavez to power.
He currently lives in the Dominican Republic.
Cisnero’s link to the Clintons has particularly angered members of the Republican National Committee, who have suggested that the business tycoon is somehow “tied” to the current Venezuelan government – despite his history of staunch opposition to the Bolivarian Revolution.
An official representative for the Clinton Foundation, however, has responded to accusations by denying any wrongdoing. In responses to press, spokesperson Craig Minassian refuted charges that donations to the organisation had been used to buy political influence or to conduct political lobbying.
“Like other global charities and nongovernmental organizations, the Clinton Foundation receives support from individuals all over the world because our programs are improving the lives of millions of people around the globe,” he asserted.
The Clinton Foundation began to accept donations from foreign governments following Hillary Clinton’s departure from office in 2013.