SOLD OUT: HOW WALL STREET AND WASHINGTON BETRAYED AMERICA
Executive SummaryBlame Wall Street for the current financial
crisis. Investment banks, hedge funds and
commercial banks made reckless bets using
borrowed money. They created and trafficked
in exotic investment vehicles that
even top Wall Street executives — not to
mention firm directors — did not understand.
They hid risky investments in offbalance-
sheet vehicles or capitalized on their
legal status to cloak investments altogether.
They engaged in unconscionable predatory
lending that offered huge profits for a time,
but led to dire consequences when the loans
proved unpayable. And they created, maintained
and justified a housing bubble, the
bursting of which has thrown the United
States and the world into a deep recession,
resulted in a foreclosure epidemic ripping
apart communities across the country.
But while Wall Street is culpable for
the financial crisis and global recession,
others do share responsibility.
2For the last three decades, financial
regulators, Congress and the executive
branch have steadily eroded the regulatory
system that restrained the financial sector
from acting on its own worst tendencies.
The post-Depression regulatory system
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2 This report uses the term “Wall Street” in the
colloquial sense of standing for the big players
in the financial sector, not just those located
in New York’s financial district.
aimed to force disclosure of publicly relevant
financial information; established limits
on the use of leverage; drew bright lines
between different kinds of financial activity
and protected regulated commercial banking
from investment bank-style risk taking;
enforced meaningful limits on economic
concentration, especially in the banking
sector; provided meaningful consumer
protections (including restrictions on usurious
interest rates); and contained the financial
sector so that it remained subordinate to
the real economy. This hodge-podge regulatory
system was, of course, highly imperfect,
including because it too often failed to
deliver on its promises.
But it was not its imperfections that led
to the erosion and collapse of that regulatory
system. It was a concerted effort by Wall
Street, steadily gaining momentum until it
reached fever pitch in the late 1990s and
continued right through the first half of
2008. Even now, Wall Street continues to
defend many of its worst practices. Though
it bows to the political reality that new
regulation is coming, it aims to reduce the
scope and importance of that regulation and,
if possible, use the guise of regulation to
further remove public controls over its
operations.
This report has one overriding message:
financial deregulation led directly to the
financial meltdown.
It also has two other, top-tier messages.
SOLD OUT 15First, the details matter. The report documents
a dozen specific deregulatory steps
(including failures to regulate and failures to
enforce existing regulations) that enabled
Wall Street to crash the financial system.
Second, Wall Street didn’t obtain these
regulatory abeyances based on the force of
its arguments. At every step, critics warned
of the dangers of further deregulation. Their
evidence-based claims could not offset the
political and economic muscle of Wall
Street. The financial sector showered campaign
contributions on politicians from both
parties, invested heavily in a legion of
lobbyists, paid academics and think tanks to
justify their preferred policy positions, and
cultivated a pliant media — especially a
cheerleading business media complex.
Part I of this report presents 12 Deregulatory
Steps to Financial Meltdown. For
each deregulatory move, we aim to explain
the deregulatory action taken (or regulatory
move avoided), its consequence, and the
process by which big financial firms and
their political allies maneuvered to achieve
their deregulatory objective.
In Part II, we present data on financial
firms’ campaign contributions and disclosed
lobbying investments. The aggregate data
are startling: The financial sector invested
more than $5.1 billion in political influence
purchasing over the last decade.
The entire financial sector (finance, insurance,
real estate) drowned political
candidates in campaign contributions over
the past decade, spending more than $1.7
billion in federal elections from 1998-2008.
Primarily reflecting the balance of power
over the decade, about 55 percent went to
Republicans and 45 percent to Democrats.
Democrats took just more than half of the
financial sector’s 2008 election cycle contributions.
The industry spent even more — topping
$3.4 billion — on officially registered
lobbying of federal officials during the same
period.
During the period 1998-2008:
• Accounting firms spent $81 million
on campaign contributions and $122
million on lobbying;
• Commercial banks spent more than
$155 million on campaign contributions,
while investing nearly $383
million in officially registered lobbying;
• Insurance companies donated more
than $220 million and spent more
than $1.1 billion on lobbying;
• Securities firms invested nearly
$513 million in campaign contributions,
and an additional $600 million
in lobbying.
All this money went to hire legions of
lobbyists. The financial sector employed
2,996 lobbyists in 2007. Financial firms
employed an extraordinary number of
former government officials as lobbyists.
16 SOLD OUTThis report finds 142 of the lobbyists employed
by the financial sector from 1998-
2008 were previously high-ranking officials
or employees in the Executive Branch or
Congress.
These are the
12 Deregulatory Steps to Financial Meltdown:1. Repeal of the Glass-Steagall Act and the Rise of the Culture of RecklessnessThe Financial Services Modernization Act
of 1999 formally repealed the Glass-Steagall
Act of 1933 (also known as the Banking Act
of 1933) and related laws, which prohibited
commercial banks from offering investment
banking and insurance services. In a form of
corporate civil disobedience, Citibank and
insurance giant Travelers Group merged in
1998 — a move that was illegal at the time,
but for which they were given a two-year
forbearance — on the assumption that they
would be able to force a change in the
relevant law at a future date. They did. The
1999 repeal of Glass-Steagall helped create
the conditions in which banks invested
monies from checking and savings accounts
into creative financial instruments such as
mortgage-backed securities and credit
default swaps, investment gambles that
rocked the financial markets in 2008.
2. Hiding Liabilities: Off-Balance Sheet Accounting
Holding assets off the balance sheet generally
allows companies to exclude “toxic” or
money-losing assets from financial disclosures
to investors in order to make the
company appear more valuable than it is.
Banks used off-balance sheet operations —
special purpose entities (SPEs), or special
purpose vehicles (SPVs) — to hold securitized
mortgages. Because the securitized
mortgages were held by an off-balance sheet
entity, however, the banks did not have to
hold capital reserves as against the risk of
default — thus leaving them so vulnerable.
Off-balance sheet operations are permitted
by Financial Accounting Standards Board
rules installed at the urging of big banks.
The Securities Industry and Financial Markets
Association and the American Securitization
Forum are among the lobby interests
now blocking efforts to get this rule reformed.
3. The Executive Branch Rejects Financial Derivative Regulation
Financial derivatives are unregulated. By all
accounts this has been a disaster, as Warren
Buffet’s warning that they represent “weapons
of mass financial destruction” has
proven prescient.
3 Financial derivatives have
_______________________________________
3 Warren Buffett, Chairman, Berkshire
Hathaway, Report to Shareholders, February
21, 2003. Available at:
http://www.berkshirehathaway.com/letters
SOLD OUT 17amplified the financial crisis far beyond the
unavoidable troubles connected to the
popping of the housing bubble.
The Commodity Futures Trading Commission
(CFTC) has jurisdiction over futures,
options and other derivatives connected
to commodities. During the Clinton
administration, the CFTC sought to exert
regulatory control over financial derivatives.
The agency was quashed by opposition from
Treasury Secretary Robert Rubin and, above
all, Fed Chair Alan Greenspan. They challenged
the agency’s jurisdictional authority;
and insisted that CFTC regulation might
imperil existing financial activity that was
already at considerable scale (though nowhere
near present levels). Then-Deputy
Treasury Secretary Lawrence Summers told
Congress that CFTC proposals “cas[t] a
shadow of regulatory uncertainty over an
otherwise thriving market.”
4. Congress Blocks Financial Derivative RegulationThe deregulation — or non-regulation — of
financial derivatives was sealed in 2000,
with the Commodities Futures Modernization
Act (CFMA), passage of which was
engineered by then-Senator Phil Gramm, RTexas.
The Commodities Futures Modernization
Act exempts financial derivatives,
including credit default swaps, from regulation
and helped create the current financial
_____________________
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crisis.
5. The SEC’s Voluntary Regulation Regime for Investment BanksIn 1975, the SEC’s trading and markets
division promulgated a rule requiring investment
banks to maintain a debt-to-netcapital
ratio of less than 12 to 1. It forbid
trading in securities if the ratio reached or
exceeded 12 to 1, so most companies maintained
a ratio far below it. In 2004, however,
the SEC succumbed to a push from the big
investment banks — led by Goldman Sachs,
and its then-chair, Henry Paulson — and
authorized investment banks to develop their
own net capital requirements in accordance
with standards published by the Basel
Committee on Banking Supervision. This
essentially involved complicated mathematical
formulas that imposed no real limits,
and was voluntarily administered. With this
new freedom, investment banks pushed
borrowing ratios to as high as 40 to 1, as in
the case of Merrill Lynch. This superleverage
not only made the investment
banks more vulnerable when the housing
bubble popped, it enabled the banks to
create a more tangled mess of derivative
investments — so that their individual
failures, or the potential of failure, became
systemic crises. Former SEC Chair Chris
Cox has acknowledged that the voluntary
regulation was a complete failure.
18 SOLD OUT6. Bank Self-Regulation Goes Global: Preparing to Repeat the Meltdown?
In 1988, global bank regulators adopted a set
of rules known as Basel I, to impose a
minimum global standard of capital adequacy
for banks. Complicated financial
maneuvering made it hard to determine
compliance, however, which led to negotiations
over a new set of regulations. Basel II,
heavily influenced by the banks themselves,
establishes varying capital reserve requirements,
based on subjective factors of agency
ratings and the banks’ own internal riskassessment
models. The SEC experience
with Basel II principles illustrates their fatal
flaws. Commercial banks in the United
States are supposed to be compliant with
aspects of Basel II as of April 2008, but
complications and intra-industry disputes
have slowed implementation.
7. Failure to Prevent Predatory LendingEven in a deregulated environment, the
banking regulators retained authority to
crack down on predatory lending abuses.
Such enforcement activity would have
protected homeowners, and lessened though
not prevented the current financial crisis.
But the regulators sat on their hands. The
Federal Reserve took three formal actions
against subprime lenders from 2002 to 2007.
The Office of Comptroller of the Currency,
which has authority over almost 1,800
banks, took three consumer-protection
enforcement actions from 2004 to 2006.
8. Federal Preemption of State Consumer Protection LawsWhen the states sought to fill the vacuum
created by federal nonenforcement of consumer
protection laws against predatory
lenders, the feds jumped to stop them. “In
2003,” as Eliot Spitzer recounted, “during
the height of the predatory lending crisis, the
Office of the Comptroller of the Currency
invoked a clause from the 1863 National
Bank Act to issue formal opinions preempting
all state predatory lending laws, thereby
rendering them inoperative. The OCC also
promulgated new rules that prevented states
from enforcing any of their own consumer
protection laws against national banks.”
9. Escaping Accountability: Assignee Liability
Under existing federal law, with only limited
exceptions, only the original mortgage
lender is liable for any predatory and illegal
features of a mortgage — even if the mortgage
is transferred to another party. This
arrangement effectively immunized acquirers
of the mortgage (“assignees”) for any
problems with the initial loan, and relieved
them of any duty to investigate the terms of
the loan. Wall Street interests could purchase,
bundle and securitize subprime loans
— including many with pernicious, predatory
terms — without fear of liability for
SOLD OUT 19illegal loan terms. The arrangement left
victimized borrowers with no cause of
action against any but the original lender,
and typically with no defenses against being
foreclosed upon. Representative Bob Ney,
R-Ohio — a close friend of Wall Street who
subsequently went to prison in connection
with the Abramoff scandal — was the
leading opponent of a fair assignee liability
regime.
10. Fannie and Freddie Enter the Subprime Market
At the peak of the housing boom, Fannie
Mae and Freddie Mac were dominant purchasers
in the subprime secondary market.
The Government-Sponsored Enterprises
were followers, not leaders, but they did end
up taking on substantial subprime assets —
at least $57 billion. The purchase of subprime
assets was a break from prior practice,
justified by theories of expanded access to
homeownership for low-income families and
rationalized by mathematical models allegedly
able to identify and assess risk to newer
levels of precision. In fact, the motivation
was the for-profit nature of the institutions
and their particular executive incentive
schemes. Massive lobbying — including
especially but not only of Democratic
friends of the institutions — enabled them to
divert from their traditional exclusive focus
on prime loans.
Fannie and Freddie are not responsible
for the financial crisis. They are responsible
for their own demise, and the resultant
massive taxpayer liability.
11. Merger Mania
The effective abandonment of antitrust and
related regulatory principles over the last
two decades has enabled a remarkable
concentration in the banking sector, even in
advance of recent moves to combine firms
as a means to preserve the functioning of the
financial system. The megabanks achieved
too-big-to-fail status. While this should have
meant they be treated as public utilities
requiring heightened regulation and risk
control, other deregulatory maneuvers
(including repeal of Glass-Steagall) enabled
these gigantic institutions to benefit from
explicit and implicit federal guarantees, even
as they pursued reckless high-risk investments.
12. Rampant Conflicts of Interest: Credit Ratings Firms’ FailureCredit ratings are a key link in the financial
crisis story. With Wall Street combining
mortgage loans into pools of securitized
assets and then slicing them up into
tranches, the resultant financial instruments
were attractive to many buyers because they
promised high returns. But pension funds
and other investors could only enter the
game if the securities were highly rated.
The credit rating firms enabled these
20 SOLD OUTinvestors to enter the game, by attaching
high ratings to securities that actually were
high risk — as subsequent events have
revealed. The credit ratings firms have a bias
to offering favorable ratings to new instruments
because of their complex relationships
with issuers, and their desire to maintain
and obtain other business dealings with
issuers.
This institutional failure and conflict of
interest might and should have been forestalled
by the SEC, but the Credit Rating but the Credit Rating
Agencies Reform Act of 2006 gave the SEC
insufficient oversight authority. In fact, the
SEC must give an approval rating to credit
ratings agencies if they are adhering to their
own standards — even if the SEC knows
those standards to be flawed.
Wall Street is presently humbled, but not
prostrate. Despite siphoning trillions of
dollars from the public purse, Wall Street
executives continue to warn about the perils
of restricting “financial innovation” — even
though it was these very innovations that led
to the crisis. And they are scheming to use
the coming Congressional focus on financial
regulation to centralize authority with industry-
friendly agencies.
If we are to see the meaningful regulation
we need, Congress must adopt the view
that Wall Street has no legitimate seat at the
table. With Wall Street having destroyed the
system that enriched its high flyers, and
plunged the global economy into deep
recession, it’s time for Congress to tell Wall
Street that its political investments have also
gone bad. This time, legislating must be to
control Wall Street, not further Wall Street’s
control.
This report’s conclusion offers guiding
principles for a new financial regulatory
architecture.
Robert Weissman, Director of Essential Action and editor of the
Multinational Monitor. He is author of the new report
“Sold Out: How Wall Street and Washington Betrayed America.” [
www.wallstreetwatch.org]
AMY GOODMAN: The Obama administration officials appeared before Congress Tuesday seeking to reassure lawmakers about the economy. Treasury Secretary Timothy Geithner and Peter Orszag, the director of the Office of Management and Budget, testified before separate House committees that the President’s massive spending bill would benefit working Americans. Meanwhile, Federal Reserve Chair Ben Bernanke testified before the Senate Budget Committee about the potential impacts of stimulus.
While the Obama administration is looking to turn around the economy with its stimulus plan and budget proposal, what about the issue of financial regulation, what some people point to as the fundamental cause of the crisis? A new report points to twelve deregulatory steps that led to the financial meltdown. It also does an analysis of the amount of money Wall Street poured into Washington in campaign contributions and lobbying over the last decade. Their answer? A staggering $5.1 billion over the past decade.
Rob Weissman is the author of the report. It’s called “Sold Out: How Wall Street and Washington Betrayed America.” He is director of Essential Action, editor of the Multinational Monitor, joining us from Washington, D.C.
Good morning, Rob Weissman. Talk about what you think were the steps that brought us here.
ROBERT WEISSMAN: Well, we saw over the last decade and really the last three decades, with both parties in power in Congress and the executive branch, this long series of deregulatory moves. And as you go step-by-step through them, you see that those are the things that really paved the way for the current financial collapse.
Perhaps the signature move was the 1999 repeal of the Glass-Steagall Act, which had prevented co-ownership of commercial banks and securities firms, investment banks. That was precipitated by and directly authorized the creation of Citigroup, which is now sucking so much public taxpayer money and has really been at the cutting edge of driving the financial crisis we’re now in.
You can go forward another year and see that Congress, with the Clinton administration authorization, prohibited the executive branch agencies from regulating financial derivatives, the instruments that no one can really understand or get a handle on but which have multiplied the problem from the housing crash many-fold over. So we now have $600 trillion in financial derivatives being traded around the world, with no one having a handle on what they are, who owes whom, and all of this requiring us to pour tens of billions of more dollars more every day, it seems, into AIG.
You can step forward and look at the failure to enforce rules against predatory lending, beginning with the Clinton administration, but really accelerating in a really terrifying way with the Bush administration, so that there were about three actions taken by federal regulators in the peak period of predatory lending—three—against some of the commercial lenders and mortgage brokers who were undertaking some of the most abusive predatory lending activities. And on and on it goes.
And there was, of course, over the last three decades a real surge in deregulatory ideology. And perhaps the people who were putting this stuff forward believed in it. But it also makes sense to think that, maybe a little bit, they were influenced by the staggering amounts of money that the financial sector was pouring into Washington, as you said, more than $5 billion in campaign contributions and lobbying money. And, you know, they got a good return on investment, and it was good for them while it lasted. It’s turned out to be quite a disaster for them but, more importantly, for the rest of the country and the world.
AMY GOODMAN: Rob Weissman, I want to keep going through these steps and then talk about the money that Wall Street’s poured into Washington. The SEC’s voluntary regulation regime for investment banks?
ROBERT WEISSMAN: Yeah, there have been, for a couple of decades, a rule in place that required the big investment banks to hold onto a certain level of capital, so they couldn’t be—they couldn’t rely on too much borrowed money if they engaged in their speculative activity. In 2004, the SEC repealed that rule at the request of a consortium of the leading investment banks, led at the time by Goldman Sachs and Henry Paulson, soon-to-then-be the Treasury Secretary. And what that rule—what the new rule said was, well, let’s let the investment banks set the standards on their own for how much borrowed money they can use, based on their own internal risk assessment models, which no one could understand and turned out not to do a very good job. As a result, they were much more leveraged, that is to say, they used much more borrowed money, so they could gamble at much higher levels, and they created a much bigger house of cards, which we saw topple starting in 2007.
AMY GOODMAN: Glass-Steagall?
ROBERT WEISSMAN: Sorry?
AMY GOODMAN: Glass-Steagall?
ROBERT WEISSMAN: Glass-Steagall was this Depression-era law from 1933, adopted because of the crisis—in response to the Great Depression and the previous bubble through the 1920s. And it said commercial banks and investment banks, and then later commercial banks and other financial service entities, ought to just be separate entities. Commercial banks have too important a role. They are husbanding depositor money, and they ought not to be engaged in speculative activity. They shouldn’t be using the depositor money for high-risk gambles that could endanger the depositors and the well-being of the financial system.
Under the guise of financial modernization, there was a decade-long effort by the investment banks and the big commercial banks to repeal that law. In 1998, Citibank and Travelers Group, the insurance company, announced that they were going to merge. That was a merger that was illegal under existing law, but they got a two-year exemption under a regulatory loophole. They then proceeded to force the repeal of the law that had prohibited their merger, and then the merger was subsequently consummated. Robert Rubin, who had been the Treasury Secretary, at the time was negotiating a new deal with Citigroup and then went on to be an executive with the now-merged Citigroup, was the central player making sure the Glass-Steagall repeal took place, that Citigroup moved forward, and with all the disastrous effects we are now familiar with.
AMY GOODMAN: Close adviser, of course, to President Obama. And what about Larry Summers and Timothy Geithner in that?
ROBERT WEISSMAN: Well, Geithner didn’t have such a central role, but Summers was really involved in the Clinton administration in a lot of these key decisions. Geithner was in the Clinton administration, more focused on international issues. But Summers, for example, was a very vociferous opponent of regulating financial derivatives. There was an effort within the Clinton administration’s executive branch to impose some really modest standards on financial derivative regulations—on financial derivatives, which at the time were beginning to explode but still weren’t at the level that we’re now familiar with.
Summers, Rubin and Greenspan banded together with Republicans in Congress, led by Phil Gramm, to prevent the efforts within the executive branch to regulate derivatives, and then in 2000, they passed a law—Congress passed a law, which Clinton signed into law, prohibiting the federal government from regulating financial derivatives at all, with the result that not only are they not regulated, not only are they not required to register to show that they serve some social purpose before they’re allowed onto the market, but no one has a sense of who owes what to whom.
In the course of—we’re bailing out AIG, because they have engaged in so many of these—hundreds of billions of dollars worth of these financial derivative arrangements. It’s clear now that AIG itself did not know who they owed—who they were going to owe, who they had entered into all these contracts for. They were engaged in such a wild speculative frenzy that they’d cut a deal with anybody. It turns out that the executives at AIG literally thought they would never have to pay out any money on these whatsoever. So they thought they were being paid to do nothing. Money for nothing, we’ve called it. And that turned out to be wrong. Unfortunately, the money that’s coming is not just coming from the AIG shareholders, but now, to the tune of almost $200 billion, from the US taxpayer.
AMY GOODMAN: I brought up Glass-Steagall again, because, well, I think it was seventy years ago—it was on this date that—or seventy-five years ago—that FDR was inaugurated and gave his “nothing to fear but fear itself " address. Rob Weissman, your current piece that talks about the amount of money that Wall Street poured into Washington—who did it? Over how many years? This number, $5.1 billion.
ROBERT WEISSMAN: Well, what we did is look at the entire financial sector—so it’s the commercial banks, the investment banks, the insurance companies, the real-estate companies, the accounting firms, all of whom are heavily intermingled now, by the way—looked at their campaign contributions over the last decade. That total is more than $1.7 billion. They spent about twice that much, $3.4 billion, on lobbying, with the results that we’re talking about. So, more than $5 billion, and that is a way understatement on what they spent. It doesn’t include the money they’ve poured into state-level activities. It’s a narrowly defined definition of lobbying, only people who are officially registered lobbyists.
We saw that they had 3,000 separate people working as lobbyists for them in 2007. We looked at twenty different top firms in the financial sector. We found 144 who formerly had high-level positions in the US government. I mean, it’s epitomized by people like Rubin and Paulson, who came from Goldman Sachs, went into government—in Rubin’s case, he went back into the private sector—and who were driving policy on behalf of Wall Street and the big financial sector to the massive detriment of the American public and, as we now know, really the entire world.
AMY GOODMAN: What are the recommendations that you make, Rob Weissman?
ROBERT WEISSMAN: Well, the first thing is that all these deregulatory moves ought to be repealed. But beyond that, we think it’s time for a big picture look at this stuff, and we’re worried that, although Wall Street is obviously on its heels right now, they are not—they are not absent from Washington. This lobbying activity is ongoing, including on a variety of small things being debated in Congress today. But in the big picture, we think there has to—we can’t just get mired down in some of these details.
The financial sector itself ought to be much smaller. In the preceding three or four years, the financial sector was taking about a third of all corporate profits in the United States. It was way too big relative to the rest of the economy. It shouldn’t be more than ten percent. So it should be shrunk down.
There is a range of activities that ought to be prohibited altogether. A lot of these exotic financial derivatives, which serve no social purpose, should be just banned. Any new instruments that are put on the market ought to be required to get pre-approval from government regulators, just the way a new pharmaceutical product has to get pre-approval, be shown to be safe and serve some social benefit before it’s allowed on the market.
We ought to erect again regulatory walls and barriers that prohibit institutions from doing different kinds of things. Banks ought not to be engaged in these exotic derivatives. They should not be putting taxpayer-insured money at risk in this kind of stuff. Consumers need to be directly empowered to organize themselves, so that they are a counterbalance to the influence of the commercial financial sector.
And I think we ought to have a financial transactions tax, a speculation tax, so we slow down the level of speculative activity. That kind of tax would be highly progressive, because it’s only rich people who are engaged in mass transactions on Wall Street. It would bring in a lot of money, have major social benefits.
And finally, I think if you look back over what happened in the last four or five years or the last decade, it’s clear that a huge amount of money was made on Wall Street, but the firms themselves are now in complete crisis. They’re needing the taxpayer money. Some of them are going bankrupt. They’re being merged out of existence. So the companies themselves destroyed themselves.
Why did they do that? What were the incentives that led them to take such crazy risks that they actually destroyed themselves? And it’s very hard to avoid looking at the way individual people were compensated. They got massive bonuses, sometimes five, ten, twenty times their regular compensation level, based on what they did in the previous year. So I think we have to have compensation caps, for sure, on executives and others. But even more importantly, the incentive mechanisms can’t be that they get paid on how they did that year, when they can manipulate it or they can benefit from a bubble. It has to be, any compensation incentives that are going to be in the form of bonuses have to be tracked to a very long-term performance by these companies.
AMY GOODMAN: Rob Weissman, President Obama got millions from the finance industry, one of his largest contributors. Do you see this regulation happening? We only have about thirty seconds. Where do you see the pressure come from?
ROBERT WEISSMAN: Well, it’s up for grabs. His advisers, actually, of course, are very terrible on this. But we’ll see. They’re going to have to do something that’s very serious and to restrain the financial sector if they hope to bring the economy out of the problems it’s in. There were some good pieces in the budget. The financial sector is fighting them like crazy right now. For example, they want to eliminate the ability of companies to manipulate their taxes by relying on offshore subsidiaries. The insurance companies are going berserk and lobbying on Capitol Hill to try to stop that. The Obama administration, in this case, is trying to do the right thing.
AMY GOODMAN: Are the companies that are getting bailed out using some of that money to lobby in Washington right now or make campaign contributions?
ROBERT WEISSMAN: Well, they’re not using that money, but what’s the difference? They’re using some other money. So they’re still very engaged. There is an effort, for example, right now to—
AMY GOODMAN: Five seconds.
ROBERT WEISSMAN: —crack down on predatory lending. They are trying very hard to get that language eliminated from the appropriations bill that just passed.
AMY GOODMAN: Rob Weissman, thanks very much for being with us. His report is called "Sold Out: How Wall Street and Washington Betrayed America.”
