Student Researchers: Jocelyn Rapp and Caitlin Ruxton
Evaluator: Samual Mikhail Ph.D. Economics
Indian River State College and Sonoma State University
Federal lawmakers responsible for overseeing the US economy have received millions from Wall Street firms. Since 2001, eight of the most troubled firms have donated $64.2 million to congressional candidates, presidential candidates and the Republican and Democratic parties. Senators Barack Obama and John McCain received a combined total of $3.1 million. The donors include investment bankers Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley, insurer American International Group and mortgage giants Fannie Mae and Freddie Mac. Nearly every member of the House Financial Services Committee, who oversaw hearings on how the $700 billion of Troubled Assets Relief Program (TARP) bailout is being spent, received contributions associated with these financial institutions during the 2008 election cycle. “You could say that the finance industry got their money’s worth by supporting members of Congress who were inclined to look the other way,” said Lawrence Jacobs, the director of the University of Minnesota’s Center for the Study of Politics and Governance. For instance, in 2004 when the Securities and Exchange Commission adopted a major rule change that freed investment banks to plunge tens of billions of dollars in borrowed money into subprime mortgages and other risky plays, congressional banking committees held no oversight hearings. Congressional inaction also allowed mortgage agents to earn high fees for peddling loans to unqualified homebuyers and prevented states from toughening regulations on predatory lending practices. With significant conflicts of interest in Congress, the developing situation continues, unchecked.
“Lax Oversight? Maybe $64 Million to DC Pols Explains It” Greg Gordon, McClatchy Newspapers, October 2008 http://www.truthout.org/100308C
“TARP Recipients Paid Out $114 Million for Politicking Last Year” Capitol Eye, February 4, 2009 http://www.opensecrets.org/news/2009/02/tarp-recipients-paid-out-114-m.html
“Congressmen Hear from TARP Recipients Who Funded Their Campaigns”
Lindsay Renick Mayer, Capitol Eye, February 10, 2009