Wall Street, White House, and Congress: a horrible alliance

Two different columns, in two different publications, in two different countries, but the bottom line is the same: the nexus between Wall Street's big banks and the political establishment in DC is not healthy for democracy.

First, here is Robert Reich, writing in the Financial Times.  (The guy is on a roll--only a few days ago he had a column in the WSJ!!!)

Tight connections between Washington and Wall Street are nothing new, of course, especially when it comes to Goldman. Hank Paulson ran the bank before becoming George W. Bush’s Treasury secretary. Robert Rubin followed the same trajectory under Bill Clinton, then returned to Wall Street to head Citigroup’s executive committee. Dick Gephardt, the former Democratic House leader, lobbies for Goldman. Some 250 former members of Congress are now lobbying on behalf of the financial industry. President Barack Obama himself received nearly $15m from Wall Street during his 2008 campaign, of which almost $1m came from Goldman employees and their families.
Politicians cannot continue to have it both ways. The close nexus between Washington and Wall Street is eroding trust in government.

And then, Frank Rich in the NY Times:

The truth is that both parties are too often in hock to the financial sector, and both parties bear responsibility for the meltdown. In response to a question from Jake Tapper of ABC News last weekend, Bill Clinton was right to say that he and two of his Treasury secretaries, Rubin and Lawrence Summers, “were wrong” to leave derivatives unregulated.

Bet Against The American Dream from Planet Money on Vimeo.

Quote of the day: on the fiscal mess we are in

Robert Reich:

If any three people are most responsible for the failure of financial regulation, they are Greenspan, Larry Summers, and my former colleague, Bob Rubin. In 1999 they advised Congress to repeal the Glass-Steagall Act, which since 1933 had separated commercial from investment banking. By 1999, Wall Street was salivating over such a repeal because it wanted to create financial supermarkets that could use commercial deposits to place bets in the financial casino. That would yield the Street trillions.
At the same time, Greenspan, Summers, and Rubin also quashed the efforts of the Commodity Futures Trading Corporation to regulate derivatives, when its director began to worry that derivative trading already was getting out of control.
Yet Greenspan continues to take no responsibility for what occurred. In the interview he just completed he avoiding saying anything about the failure of the Fed under his watch to adequately oversee the banks, and the absence of sufficient financial regulation to begin with.
I dislike singling out individuals for blame or praise in a political system as complex as that of the United States but I worry the nation is not on the right economic road, and that these individuals — one of whom advises the President directly and the others who continue to exert substantial influence among policy makers — still don’t get it.

Meanwhile, there is a talk that Summers is leaving the administration ...

Two down; the third is in Obama's administration!

Difficult to imagine Alan Greenspan being invited to many parties any more, given that we are all in a drive to cancel all celebrations.

Robert Rubin is now on his way out of Citigroup.  I don't think he will be invited to join any corporate boards any time soon.

Larry Summers is still around--in quite a powerful position in the Obama administration.  He will find great company with yet another Rubin-school product: the nominee to be the treasury chief.  I suppose this is like coaches in the NFL--as soon as they get fired by one team, they get picked up by another team, and their coaching lives continue on .....