“Citigroup replaces JP Morgan as White House Chief of Staff”
The revolving door is in large measure how the ruling class, the Leviathan, the Cult of the Philosopher Kings, has turned the Republic into a crony capitalist haven of mutually reinforcing money and power. And the price of admission is often a degree from an Ivy League school.
Michael Paese used to be chief of staff to House Financial Services Committee Chairman Barney Frank, until Paese became a lobbyist. When former Tom Daschle intimate Mark Patterson left Goldman Sachs’ lobby shop to become Tim Geithner’s chief of staff at Treasury, Paese took the helm at Goldman’s lobby shop.
Amy Overton, a former Fannie Mae lobbyist, worked for Sen. Tom Carper during negotiations over the Dodd-Frank financial regulatory bill, and then she departed to become a Citigroup lobbyist. Well, we learned yesterday that Frank alum Paese has hired up Overton as a Goldman lobbyist.
More problematic is the implicit government guarantee that underpinned the 2008 bailouts — and which, despite claims to the contrary, lives on in the Dodd-Frank systemic risk regime. Prior to the crisis, community banks were mostly subject to lower funding costs, being largely deposit-taking institutions that avoided the costly debt-financing activities of larger institutions. As of the second quarter and using the cost of funding earning assets as a proxy for the cost of capital, banks with in excess of $1 billion in assets have almost half (0.39%) the cost of capital of institutions with less than $1 billion (0.74%), according to the FDIC’s latest Quarterly Banking Profile. This puts smaller banks at a distinct disadvantage unrelated to their activities and financial health.
Dodd-Frank, the Lobbyists Full Employment Act
Ah, there is (a little) hope:
K Street shops, many in revenue decline for the past couple of years, can no longer afford the luxury of a high-priced former member. Senators usually don’t entertain offers worth less than $1 million, and House members’ threshold is typically about $700,000. And it’s an investment with no guaranteed payoff. Ever.
Still, it’s a bet that some firms are willing to wager, especially when it comes to top-tier, big-name talent off the Hill. And in recent weeks, the revolving door has deposited former Republican Sens. Jon Kyl of Arizona and Scott P. Brown of Massachusetts plus former Nebraska Democratic Sen. Ben Nelson into plum positions. Ditto for former Texas Republican Sen. Kay Bailey Hutchison, former California Democratic Rep. Howard L. Berman and a select few of their colleagues who have set up shop in law firms or other outfits.
But that’s a small percentage of the more than 100 lawmakers who found themselves, voluntarily or not, out of work in early January. Many of them seem missing in action — think former Missouri Republican Rep. Todd Akin, who hasn’t tweeted since Nov. 6.
Mockery, truculence, and minimalist living are best, then enjoy the decline. We also need a Revolving Door Tax (RDT) and to prosecute politicians and staff and their “family and friends” who profit from insider trading.
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