Home / News / Government / Report: $5B in Political Support Bought Wall St. Freedom from Regulation
Print This Post Print This Post

Report: $5B in Political Support Bought Wall St. Freedom from Regulation

According to a report issued Wednesday by two nonprofit organizations, the financial sector invested more than $5 billion in political influence over the past decade, with as many as 3,000 lobbyists winning deregulation and other policy decisions that led directly to the current financial collapse.
The 231-page study was published by ""Essential Information"":http://www.essential.org, a Washington, D.C. nonprofit organization that seeks to curb excessive corporate power, and the ""Consumer Education Foundation"":http://www.wallstreetwatch.org/, a California-based nonprofit group that supports measures to prevent losses to consumers.
The report, entitled """"Sold Out: How Wall Street and Washington Betrayed America"":http://www.wallstreetwatch.org/soldoutreport.htm,"" shows that from 1998-2008, Wall Street investment firms, commercial banks, hedge funds, real estate companies, and insurance conglomerates made $1.7 billion in political contributions and spent another $3.4 billion on lobbyists. The nonprofit groups call the political price tag ""a financial juggernaut aimed at undercutting federal regulation.""
+_Based on the report findings, during the 10-year period: _+
- Commercial banks spent more than $154 million on campaign contributions, while investing $363 million in officially registered lobbying;
- Insurance companies donated more than $218 million and spent more than $1.1 billion on lobbying; and
- Securities firms invested more than $504 million in campaign contributions and an additional $576 million on lobbying.
The nonprofits said that nearly 3,000 officially registered federal lobbyists worked for the financial industry in 2007 alone, and that companies drew heavily from government in choosing their political advocates. Surveying 20 leading financial firms, ""Sold Out"" finds 142 of the lobbyists they employed from 1998-2008 were previously high-ranking officials or employees in the executive branch or Congress.
The report documents a dozen distinct deregulatory moves that, together, the nonprofits say, led to the financial meltdown. These include prohibitions on regulating financial derivatives; the repeal of regulatory barriers between commercial banks and investment banks; a voluntary regulation scheme for big investment banks; and federal refusal to act in order to stop predatory subprime lending.
Harvey Rosenfield, president of the Consumer Education Foundation, said, ""The report details, step-by-step, how Washington systematically sold out to Wall Street. Depression-era programs that would have prevented the financial meltdown that began last year were dismantled, and the warnings of those who foresaw disaster were drowned in an ocean of political money. Americans were betrayed, and we are paying a high price -- trillions of dollars -- for that betrayal.""
Robert Weissman of Essential Information and the lead author of the report, added, ""Congress and the executive branch responded to the legal bribes from the financial sector, rolling back common-sense standards, barring honest regulators from issuing rules to address emerging problems and trashing enforcement efforts. The progressive erosion of regulatory restraining walls led to a flood of bad loans, and a tsunami of bad bets based on those bad loans. Now, there is wreckage across the financial landscape.""
To access the ""Sold Out"" report, ""click here"":http://www.wallstreetwatch.org/soldoutreport.htm.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

Check Also

HUD Grants $150M to Tribal Communities for New, Affordable Housing

“Strong investments in Tribal communities help ensure residents can access much-needed safe and affordable housing,” said Secretary Marcia L. Fudge. “The funds HUD is making available will meet the challenges of today and allow Tribal communities to make innovative and vital advancements needed to prepare for the future."