The 17th century philosopher Blaise Pascal posited that it was safer to believe in a supreme being than to disavow one. In what came to be known as Pascal’s Wager, the Frenchman asserted that if one’s conviction in a deity proved incorrect, the end result was much superior than if one eschewed belief and was mistaken. In other words, “Better safe than sorry.”
It appears Wall Street executives have been reading up on their western philosophy.
After some procedural bantering, last week marked the birth of debate on a major financial services regulation bill. Senate Banking Committee Chairman Chris Dodd and Ranking Member Richard Shelby insisted while making the rounds on the Sunday talk shows that they are “near” a deal. Conventional wisdom now predicts that, in a stunning show of discipline, 41 Republican Senators may hold the line and prohibit passage of financial regulatory legislation.
The staggering revelation is not that the Senators (and particularly Democrats) are focused on regulating large financial institutions. Recent populist rage has, after all, focused most Americans anger at “The Street.” Republicans who block or ultimately refuse to vote for some type of regulatory overall run the risk of being unfairly labeled as beholden to the “fat cats” and supporters of “too big to fail”.
The real story here, to quote Deep Throat—or at least Hal Linden who played Deep Throat in All the President’s Men—is to “follow the money.” One would think that with Senate Democrats (save Ben “Best Hair in Washington” Nelson) falling over themselves to hyper-regulate financial institutions, Wall Street representatives would be savvy enough to severely limit (or at least temper) their campaign contributions from those same politicians.
But, boy, would you be wrong.
The Center for Responsive Politics recently reported that Chairman Chris Dodd (who is not running for reelection in 2012) accepted $1,222,688 from the financial services industry in this election cycle. Senate Majority Leader Reid—the pied piper of stringent regulatory reform—accepted $1,266,717 in financial services PAC money in the 2010 cycle.
Perhaps most blatantly, President Barack Obama—that is the same President Barack Obama whose SEC chairman just filed suit against Goldman Sachs for, among other things, fraud and abuse (those are criminal charges in some instances, by the way)—accepted $996,595 during his 2008 campaign from his newest Wall Street nemesis. Contributions that undoubtedly helped make his own campaign too big to fail.
It’s a long-held proposition in Washington that major corporations “play both sides of the aisle”—meaning they generally give to both Republican and Democratic candidates in an effort to hedge their bets when elections change the political dynamic of Pennsylvania Avenue.
Those of us on the Republican side, who believe in free enterprise, free markets and pure capitalism can’t help but wonder why Wall Street big wigs continue to fill the coffers of those legislators hell bent on breaking apart their entities and imposing over-burdensome regulations on their business dealings.
Wall Street executives find themselves trapped in a no-win version of the children’s game “Red Rover”—where Washington Democrats insist they welcome financial titans (or at least their money) to their team, but refuse to allow them to break into their ranks once they begin their sprint toward the other side.
Let’s hope some Wall Streeters wise up soon and stop feeding the beast intent on devouring them.
Cameron Lynch is a former aide to three Republican Senators and president of The Lynch Group, LLC, a Republican government affairs and political consulting firm.