[Marxism] Sucking Up to the Bankers: A Bipartisan Lovefest

Louis Proyect lnp3 at panix.com
Thu Jul 31 07:28:06 MDT 2008

(Scheer was one of the people who rolled over and played dead for John 
Kerry in the last election. My guess is that Obama's politics are 
becoming too unsavory even for a long-time liberal propagandist like 
Scheer. I would add that Evan Bayh, one of the 2 potential VP 
candidates, is cut from the same cloth as Joe Lieberman.)

Sucking Up to the Bankers: A Bipartisan Lovefest
Posted on Jul 29, 2008

By Robert Scheer

This is a time to condemn the bankers, not to embrace them. They are the 
scoundrels who got us into the biggest economic mess since the Great 
Depression, lining their own pockets while destroying the life savings 
of those who trusted them. Yet both of our leading presidential 
candidates are scrambling to enlist not only the big-dollar 
contributions but, more frighteningly, the “expertise” of the very folks 
who advocated the financial industry deregulations at the heart of this 

Republican candidate John McCain even appointed as his campaign 
co-chairman Phil Gramm, who went from being chairman of the Senate 
Banking Committee, where he sponsored disastrous legislation that 
empowered the banking bandits, to becoming one of them at UBS Warburg. 
Gramm was forced to resign from McCain’s campaign only after he went 
public with his contempt for the financial concerns of ordinary 
Americans, calling them “whiners” and perpetrators of a “mental recession.”

But Gramm and the Republicans couldn’t have done it without the support 
of leading Democrats. The most egregious of Gramm’s legislative favors 
to the financiers took the form of legislation named in part after 
him—the Gramm-Leach-Bliley Act, which became law only after 
then-Treasury Secretary Robert Rubin prevailed upon President Clinton to 
sign the bill. The bill’s immediate major effect was to legitimize the 
long-sought merger between Citibank and insurance giant Travelers. 
Rubin’s critical support for the bill was rewarded with an appointment, 
within days of its passage, to a top job at Citibank (later Citigroup) 
paying more than $15 million a year.

That is the same Rubin with whom Democratic candidate Barack Obama met, 
along with other influential advisers, on Tuesday to figure out what to 
do about the sorry state of our economy. But what in the world did he 
expect to learn from Rubin? And why did he appoint Rubin’s protégé, 
Jason Furman, who ran the Rubin-funded Hamilton Project, to be the Obama 
campaign’s economic director? Hopefully, during their encounter Tuesday, 
Rubin offered himself as a contrite model of everything that the 
candidate of change needs to change.

After all, Goldman Sachs, where Rubin spent 25 years of his business 
career before entering the Clinton administration, has been one of the 
prime corporate villains in the financial shenanigans that led to the 
subprime mortgage scandal. As co-chairman of the firm, surely he had 
knowledge of the financial hanky-panky that would prove so disastrous 
down the road. Indeed, as Treasury secretary, he favored an extension of 
the deregulation that enabled this explosion of banking avarice. Not 
surprisingly, the current Treasury secretary, Henry Paulson, also 
previously headed Goldman.

When Rubin assumed a top position at Citibank after his stint at the 
Treasury, he was not above influencing his former employees in the 
government. In one notorious instance during the fall of 2001, when 
Enron was going down the tubes Rubin telephoned a Treasury 
undersecretary and asked him to consider intervening with credit-rating 
agencies to hold off downgrading Enron’s ratings. When the story was 
leaked, some media accounts noted the possibility of a conflict of 
interest because Enron owed Citibank $750 million, which it could not 
pay if bankrupt.

Despite his skills and his vaunted position as Citibank’s chairman, 
Rubin was not spared the disastrous consequences of Citibank’s own wild 
financial manipulations, which, if anything, exceeded those of Enron. 
Tens of billions in bad mortgage and credit card debt placed the bank at 
the forefront of the current economic crisis, and so it is weird that 
Obama would now turn to Rubin for advice.

It’s even weirder that the presumptive Democratic nominee would pick 
Rubin’s man Furman as his campaign economic director at a time when 
cleaning up the mess left by the bankers is the highest priority. Furman 
hardly distinguished himself four years ago in that role in John Kerry’s 
failed presidential campaign, with its muffled economic message that 
could not be blamed on the candidate’s stiff style alone.

The bigger problem is that folks such as Rubin and Furman, perhaps best 
known as an economist for his bold but woefully misguided defense of the 
Wal-Mart business model, clearly do not feel the pain of the voters who 
are losing their homes.

But then again, why should Rubin, or Gramm on the Republican side, be 
expected to care when he has made so many millions off the suffering of 
those voters? Not good at a time when we need a presidential candidate 
who sticks it to the bankers instead of sucking up to them.

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