The turmoil in the financial markets has without question shifted the political landscape in the last few weeks. Not only should this not – but we should not allow it to – adversely affect the races for the House and Senate. Actually, the opposite should be true.
Much like the spike in oil prices was originally thought to favor the Democrats, once the proposition of expanded drilling and increased domestic production became the centerpiece of the campaign, the liberals went scurrying off on vacation to escape having to answer for being in the back pocket of the greenies. Similar to how we won the “Amnesty” battle last year, and the “Drill, drill, drill” this summer, we can drive this debate and put the Democrats in electoral peril.
The same political success can absolutely be accomplished with the financial crisis and the proposed trillion dollar government intervention to bailout financial institutions. The difficulty is in describing the complexity of the crisis in terms that the average voter can understand or relate to without their eyes glazing over. It’s not that they aren’t capable of understanding it, it’s that the subject can become too easily conflated with housing, GSE’s, credit rating agencies, short selling, credit derivatives, and other complex sidebars that are just too much for most people not acquainted with the way risk is priced and traded.
We need a simple theme that can be conveyed easily to the electorate of why it is Democrats that are responsible for this mess, both the ones in office and their big money benefactors in the banking world.
The best way to WIN this debate over the economy and the crisis is to pull out the baseball bat and start kneecapping the Congressional Democrats. By that, I mean basically use the same tactics they are so fond of against them – for once.
The Democrats are going to try to use the same tactics they did with the oil shock earlier this summer. Blame “Big Oil”, blame Bush and Cheney, talk about how they want to provide relief for the little guy, blah, blah, boilerplate liberal rhetoric. This time they are going to blame “Wall Street Fat Cats”, Bush and Cheney tax cuts for the rich, 28 years of deregulation, and how they are going to help the little guy stay in “his home” by providing mortgage workouts and allowing bankruptcy judges to set interest rates and affect individual neighborhoods’ home prices with arbitrary rewriting of mortgages.
These are all easily torn apart, and the counterpunch we have to send back on the Democrats are like brassknuckles between their eyes.
Proposed Financial Crisis Talking Points For GOP
- The crisis was not a result of lack of Federal government regulation, oversight, or enforcement because nearly the same mortgage and banking related issues occurred all over the Western world. One of the early seminal events in the credit crunch actually started in England with Northern Rock last year. British regulators had to bailout Northern Rock way before any of the financial bailouts in the U.S. began. The housing bubbles in Spain, Italy, Australia, and England occurred concurrent to the one in the U.S., so it was a global phenomenon. The only difference is that none of those countries have such onerous regulation as Sarbanes-Oxley, so the extent and magnitude of losses in European and British financial institutions are only now becoming apparent.
Simpy put: It is impossible to make a credible case for lack of regulation in the U.S. under Bush, when he signed Sarbanes-Oxley into law – the most onerous regulatory regime in decades that is capable of sending CEOs and CFOs to prison for signing off on incorrect financial statements. It also defies logic to say that quasi-socialist European governments were allowing “Cowboy Capitalism” to go unchecked right along with the U.S. to explain their nearly identical housing and banking crises.
- Since it wasn’t government regulation, what caused this to happen? This subject is far too complex to simply talk about Fannie Mae and Freddie Mac, the Community Reinvestment Act, Glass-Steagall, or all the other arcane subjects that the average voter can’t even relate to at all. Fannie and Freddie are to blame, no question, but most people don’t interact with them, let alone stand in line at one of their branches to cash a paycheck or fight with customer service on the phone over a service charge. The best way to drive the debate, and put the Democrats on the defensive, is to use examples that hit people where they live. Use names of firms that most voters have actually heard of, maybe do business with, and where they can connect the dots to Congressional Democrats.
The best example, and one that is hot in the news now, is the now insolvent Washington Mutual. The biggest bank failure in U.S. history. This also has the potential to move voters in some crucial Western battleground states because of its huge presence in the region. Shouldn’t oversight and regulation begin with Corporate Governance? Don’t Board Members have as much access as Federal regulators, and ability to stop the bank from risky lending practices?
A quick check of WaMu’s Board of Directors referenced with OpenSecrets.org brings us some interesting facts. WaMu’s Board was full of big-time Democrat donors and well known liberal activists such as:
ex-Starbucks CEO Orin Smith, a big Democrat campaign contributor who helped bankroll the Democrat money machine ActBlue.
Regina Montoya, the CEO of New American Alliance, “a 501(C)(6) organization of American Latino business leaders committed to leading the process of Latino empowerment and wealth-building by expanding the forms of capital most crucial for economic advancement, including economic capital, political capital, human capital, and philanthropy.” It was co-founded by a recipient of a Bill Clinton out-the-door pardon, none other than former HUD Secretary Henry Cisneros, also a Board member of mortgage mess culprit Countrywide Financial.
David Bonderman, a Texas hedge fund manager who has donated campaign contributions to literally ever big-name Democrat in the U.S. Congress for the last two decades. His donations are wide reaching across the Democrat caucus, and he would have to be considered one of their biggest single benefactors.
Then comes the capper:
Alan Fishman, the Washington Mutual CEO who was hired two weeks ago and stands to make $20 million for 17 days on the job. He basically signed the papers to deliver the savings and loan to the FDIC. He is a major longtime Democrat contributor. He is also one of the biggest sponsors of Chuck Schumer’s political career, having poured money into his campaigns from the very beginning of Schumer’s electoral efforts. Best of all, he is a Barack Obama supporter and donor.
There is also the most obvious and direct case is that of Herb and Marion Sandler, the former co-CEO’s of Golden West Financial, also known as World Savings, now part of Wachovia.
The Sandlers sold their S&L to Wachovia in 2006, personally pocketing over $2 billion. This was at the very top of the mortgage market, and as a result of the overly risky portfolio of Home Equity loans on the books from World Savings, Wachovia is now facing a fate very similar to that of WaMu. The Sandlers knew exactly what they were doing when they sold everything to Wachovia, getting out of the market entirely. You see, unlike a mortgage that defaults and goes into foreclosure, a Home Equity Credit Line or Loan does not receive the funds from a foreclosure auction unless it exceeds the original mortgage value. Scary thought – the Sandlers unloaded billions of dollars worth of these onto Wachovia – and it is possible that many of them will end up worthless.
Herb and Marion Sandler are two of the biggest Democrat donors out there. As a married couple, they have donated over a million dollars to Congressional Democrats over the last 4 election cycles, according to Open Secrets. They are also big money bankrollers of ACORN, MoveOn.org, and a new group they formed called ProPublica – designed to hire journalists to dig up dirt and smear the reputations of Republican candidates and Conservative media personalities.
There is also all the Clinton leftovers on Boards of Wall Street investment banks and money center banks. Names like Erskine Bowles (Morgan Stanley), Robert Rubin (Citigroup), Laura D’Andrea Tyson (Morgan Stanley), and of course the aforementioned Henry Cisneros (Countrywide Financial – now owned by Bank of America). They are former government officials who had front row seats for the collapse of the credit markets, who could have alerted regulators, who could have changed company policies or mangement, but who did nothing.
Simply put: The people most directly responsible for this, and who benefitted the most, are the Herb and Marion Sandlers and their like. They also happen to all be influential and wealthy Democrat campaign donors and activists. WaMu and Wachovia – those are two names voters can latch onto and understand.