Trapped in New York by the sixth worst blizzard in city history gave me time to stew in my own juices after reading Charles Gasperino's "Bought and Paid For -- The Unholy Alliance between Barak Obama and Wall Street."
Watching shoppers stream out of places like Sacks Fifth Avenue left me asking what happened to the recession. Then, I remembered. There really hasn't been a recession on Wall Street. They made as much money in 2009 as they made in 2006 -- courtesy of an American taxpayer bailout. But who let it happen?
Well, we can start at the top. The banking industry bet on Barack Obama early in the game. They were freaked out by Sen. John McCain and they were war weary of another Clinton White House. Instead, they gave massive amounts of money to Obama in the primary and even more to him in the general election. They got what they paid for and more.
If you're asking yourself why banks that are too big to fail can still operate investment banking activities and still invest at least part of their capital in high-risk investments, go no further than the amount they donated to campaign coffers of Democrats or to political action committees.
In the case of Citigroup, it was $3.4 million. Goldman Sachs? $5 million.
A partial list of contributions from Wall Street banks and investment firms totaled $20 million and that barely scratches the surface. Hedging their bets, however, the same listed firms donated $13 million to Republicans. That was a waste, as it turned out, because Republican ingrates voted against the bank (TARP) bailout.
The notion that all wealthy people are anti-government Republicans is a little simplistic. Maybe it's true of small business owners, but Wall Street actually loves big government. In dollars, the bond market is four times larger than the stock market, and the latter is where Wall Street thrives.
Big government drives the spending that takes place with borrowed money, and borrowed money is the mothers' milk of Wall Street. Deficits? They'll cross that bridge when they come to it, and make even more money selling bonds short.
Until I read Mr. Gasparino's book, I could never understand why the Obama administration seemed to be sucking up to Wall Street. For example, it made no sense to me that Goldman Sachs received 100 cents on the dollar on its AIG bonds that would otherwise have lead to Goldman's bankruptcy if we had allowed those bonds to default.
We could have at least negotiated 80 cents on the dollar in return for allowing Goldman, overnight, to become an FDIC taxpayer-insured savings institution without a single customer savings account. It was an utter perversion of the FDIC's purpose.
The money that financial institutions gave to get Obama elected has been paid back in spades, but New York was still feeling victimized by bad publicity.
So, in apologetic tones, after going through the motions of being "shocked, shocked!" at the thought of $23 billion in bonuses to just Goldman executives alone at the end of 2009, the administration justified its empty, but tough-sounding rhetoric by saying that "we are standing between you guys (Wall Street) and the people with torches and pitchforks. "
Unfortunately, as weak as the reform legislation might be, Republican lawmakers, coming full circle, are pledging to make it much weaker. Why? So that the next round of campaign financing will be going to them. To belly up to that same Wall Street feeding trough, Republicans will be trying as hard as possible to portray themselves as the party that can gut the reforms that cost the banking industry, by their own estimate, only about 8 percent of what will otherwise have been their profits.
To paraphrase Harry Truman, "If taxpayers want a friend in Washington, they'll need to get a dog." Short of that, light the torches and sharpen the pitchforks.