Though Bernie Sanders has spoken about reining in Wall Street, in general there has been little discussion in this presidential race about the degree of corruption that infests American politics and what serious attempts to reduce it would entail. The lure of money for their campaigns and for personal enrichment has kept officeholders in the past from realistically addressing the problem.
While political corruption enmeshes government at all levels in the United States, there is in particular a symbiotic relationship with financial institutions and their executives that fosters illegal conduct in both realms. One hand washes the other but it cannot clean away the stain of corrupt behavior that allows cash to flow in both directions. Money is given to legislators who craft laws that allow financial institutions and their top personnel to make money in various ways. The dissolution of the Glass-Steagall Act in 1999 allowing the merger of investment banks and commercial banks was probably the single biggest gift the politicians have ever given to the financial industry.
The 2007-2008 recession was due in large part to fraudulent loans for mortgages to people who could not afford them, the mortgages bundled together and sold as safe investments by a number of the large banks and Wall Street firms. Many of the subprime mortgages subsequently defaulted, with financial institutions and investors losing vast sums of money, resulting in a global credit crunch. The mortgages and their bundling together in financial instruments was in actuality a giant scam, of which none of the perpetrators ever went to prison. The crooked mortgage brokers and the investment bankers made huge sums in this fraudulent activity, and while some of the major players were fined, they did not have to admit to criminal conduct. Wall Street firms were bailed by the government out while the little guys who could not keep up with their mortgages had their homes foreclosed.
Aside from the inter-relationships between financial entities and politicians, many government figures in the executive and legislative branches direct government contracts to companies that have donated money to their campaigns, or provide jobs to people in their districts, or have personnel with whom they have personal relationships. Promises of jobs or fees to the officeholders when they leave office also helps companies to obtain contracts, or to have legislation enacted that is favorable to them.
One example of the questionable connections between government and corporations is the work that went to Halliburton spin-off (2007) KBR in Iraq during and after the war, where Vice-President Dick Cheney had previously been CEO. KBR was the leading recipient of government funds for work in Iraq, having made $39.5 billion by March 2013. In his role as CEO earlier, Cheney was also able to get Halliburton many Pentagon contracts, after having resigned as Secretary of Defense shortly beforehand.
Another blatant illustration of the corrupt interplay between politicians and corporations was the million dollar job Republican Representative Billy Tauzin of Louisiana was given by the pharmaceutical industry after quitting as head of the Congressional committee that regulated pharmaceutical firms. Tauzin became head of PHARMA, the lobbying arm of the industry. He had helped shepherd the Medicare drug bill through Congress with a provision that prohibited Medicare from direct negotiations on prices with the drug companies, keeping drug costs high. There are innumerable other examples of politicians and businessmen colluding on government contracts to benefit both.
Nobel Prize winner and Columbia Professor Joseph Stiglitz in March 2016 suggested six ways to radically reform America’s corrupt financial system excerpted from his book Rewriting the Rules of the American Economy. First was undertaking ending “Too Big To Fail” by breaking up the large financial institutions whose risks are underwritten by the federal government. Second is Regulating the Shadow Banking Sector and Ending Offshore Banking. Third is Bringing Transparency to All Financial Markets. Fourth is Reducing Credit and Debit Card Fees. Fifth is Enforcing Rules with Stricter Penalties. Sixth is Reforming Federal Reserve Governance.
With the financial industry and politicians still intertwined, these are not changes that will occur in the near future. However, at some point to reduce the risks to the economy and the government and lessen the degree of inequality that undermines American society, these changes need to be instituted. Hopefully, in the near future, the voters and the people they elect to office will realize that. It will take an informed electorate that pays attention to what is going on in the political arena to bring about the necessary changes, so don’t hold your breath.
Resurrecting Democracy
www.robertlevinebooks.com
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Political junkie, Vietnam vet, neurologist- three books on aging and dementia. Book on health care reform in 2009- Shock Therapy for the American Health Care System. Book on the need for a centrist third party- Resurrecting Democracy- A Citizen’s Call for a Centrist Third Party published in 2011. Aging Wisely, published in August 2014 by Rowman and Littlefield. Latest book- The Uninformed Voter published May 2020