Wall Street’s Investments on Capitol Hill
It’s Wednesday. Time for a pop quiz.
I know, most of you are already whining like school children but trust me, when you read these few questions, your should be forthcoming.
Let’s get started. Shall we?
- Can Congressional representatives properly oversee the bailout of the financial sector when they get hundreds of thousands of dollars from the banks receiving hundreds of billions in public support?
- Is it a potential conflict of interest for members of Congress to own stock in the companies that they are overseeing?
- Is disclosure of political contributions by bank to Congressmen and Senators sufficient when hundreds of billions of taxpayer money are involved?
Okay, time is up. Put down your pencils.
If you think this is an academic exercise, you are wrong. These are questions that every American should consider since these are real problems in Congress today.
Yesterday, the Center for Responsive Politics posted an interesting story on their Open Eye blog about the contributions received by member of Congress from the banking industry. Their findings were shocking. Here is an excerpt from the story:
The eight CEOs testifying Wednesday before the House Financial Services Committee about how their companies are using billions of dollars in bailout funds may find that the hot seat is merely lukewarm. Nearly every member of the committee received contributions associated with these financial institutions during the 2008 election cycle, for a total of $1.8 million. And 18 of the lawmakers have their own personal funds invested in the companies.
All of the companies represented at the hearing have received millions, even billions, from the government’s Troubled Assets Relief Program (TARP), including Goldman Sachs, JPMorgan Chase, Bank of New York Mellon, Bank of America, State Street Corporation, Morgan Stanley, Citigroup and Wells Fargo. These companies’ PACs and employees gave $10.6 million to all members of the 111th Congress in the 2008 election cycle, with 61 percent of that going to Democrats.
It was noted in the piece that68 Congressional representatives sitting on the finance committee overseeing the TARP program received approximately $1,848,803 in contributions from the financial services industry.
As we have noted in previous posts at Global Investment Watch, political contributions by financial service companies and corporations as a whole are not a new phenomena. As companies and regulators develop better risk models for doing business, we must reconsider the political risks associated with their business activities. As the core of this political risk assessment is how Congress receives money from the very businesses they oversee. It’s not just about disclosure and transparency. Being honest about the disclosures is only the first step.
At the end of the day, preventing this sort of sanctioned corruption must be stopped. What do you think?
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