Barney Frank, of Dodd-Frank fame, is throwing a fundraiser on Wall Street tonight, reports Heidi Moore at NPR:
Tonight, SIFMA will be hosting a fundraising dinner for Democratic Congressman Barney Frank: yes, he's the Frank in Dodd-Frank. SIFMA members will pay $1,000 or more for a seat at the table. The deal here isn't hard to spot: Wall Street wants to bend Frank's ear.
Chris Hayes, Washington editor of the liberal Nation magazine, bemoaned this fundraiser as an example of "institutional corruption, elite failure and the crisis of authority." I think that's right. I also agree with Moore that this fundraiser is "bound to raise a few eyebrows." But I also think it's completely unsurprising.
To be surprised that Wall Street would host a fundraiser for Frank you need to ignore quite a few truths:
- Regulation is not inherently harmful to the businesses being regulated. Often it serves to keep out competition and provide a government stamp of approval.
- Barney Frank was a chief architect of the Wall Street bailout. Even if banks don't like all his regulations, they might consider them a price worth paying to ensure future bailouts.
- Dodd-Frank was an incredibly open-ended bill, leaving tons of room for lobbying on its implementation. Frank will have a voice in how this law takes shape. Reporters at ProPublica called the bill "a bonanza for lobbyists."
- Bank of America's CEO -- the highest executive at the nation's biggest bank -- contributed $2,000 to Frank's campaign last year, three weeks before the election, when it looked like Frank might be in trouble.
- Wall Street and big banks profited handsomely off the subsidies provided by Fannie Mae and Freddie Mac, whose fiercest congressional champion was Frank.
But there's a bigger lesson here. Increasing government control of the economy sometimes hurts Big Business and it sometimes helps Big Business. But it always makes tighter the relationship between Big Business and politicians. Remember, Barney Frank has two former top staffers who are now Wall Street lobbyists, and Banking Committee Counsel Amy Friend, one of the leading Senate authors of Dodd-Frank, is now a Wall Street lobbyist.
Friend is just one embodiment of how increasing government can be lucrative for staffers -- the "bail them out, regulate them, work for them" formula.
Sen. Chuck Schumer is doing a similar dance right now, worrying about some of the effects of Dodd-Frank. The Wall Street Journal editorial page put it well:
Step One: Vote for destructive law.
Step Two: Complain about said law, while doing nothing to repeal it.
Step Three: Raise campaign money by showing to business community the volume of said complaints.
It's not just banking. The staffers who wrote ObamaCare are cashing out to the health industry as lobbyists -- as are the lawmakers who passed it.
I have a more basic three-step guide for regulators, staffers and lawmakers:
Step One: Increase government control of industry.
Step Two: Offer to work with businesses to ensure this government involvement is to their benefit.
Step Three: Take their money, either in the form of campaign contributions, or lobbying fees.
If a bill, like ObamaCare and Dodd-Frank, is a "bonanza for lobbyists," it will also be a bonanza for those staffers and lawmakers who want to become lobbyists -- and for those politicians who want to raise money from these lobbyists and the industries they represent.