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December 8, 2014

How Wall Street Still Gets Its Way in Washington, DC

A terrific must-read story in The Boston Globe about Wall Street’s secretly purchased influence in Washington, D.C. was somewhat mistitled as being about the “struggle for the Democratic Party’s Soul.” It was so much more than that. It’s also about how Wall Street’s virtually unlimited cash secretly influences the key debates as well as the policy outcomes in the nation’s capital.

It tells the sordid tale of how Wall Street not only gets a seat at the table, but how it gets the table set according to its preferences and the discussion conducted in a way that is most favorable to it. It’s also about trashing and trying to marginalize anyone who disagrees with Wall Street’s policy agenda. Adding insult to injury, Wall Street does this mostly unseen through undisclosed money and connections and behind closed doors without fingerprints.

Having caused the worst financial crash since 1929 and the worst economy since the Great Depression of the 1930s, Wall Street is thoroughly discredited and broadly disliked throughout America. Given that the vast economic wreckage it caused is still crippling families and communities across the country, this isn’t likely to change anytime soon. Unrepentant, unaccountable, unpunished, arrogant and still stuffing their pockets with billions in bonuses in the face of such suffering haven’t helped Wall Street with their standing either.

But, remarkably, that doesn’t matter much in too many places in Washington, D.C., which is often an Alice-in-Wonderland world where Wall Street’s role in the 2008 financial crash and economic calamity are almost never mentioned. It’s also where the titans and lobbyists of Wall Street and, as important, the Wall Street worldview are still treated with respect, if not open arms.

That is where front groups like Third Way and Wall Street’s other purchased allies come in.

First, they misleadingly caricature anyone who doesn’t agree with Wall Street’s views as nothing more than “soak the rich” tax and spend “populists” trying to spark class warfare. It’s argument by label and epithet. And, what better way to let your paymasters know whose side you’re on than to do that on the Opinion page of the Wall Street Journal and to attack Sen. Elizabeth Warren by name?

That few if any serious people hold the views Third Way and Wall Street’s other funded groups, organizations and people ascribe to them doesn’t matter. Label them. Dismiss them. Trash them. No room for nuance when your agenda isn’t to engage in a serious, meaningful or thoughtful discussion, but to create a cartoonish figure to attack.

Second, Third Way and Wall Street’s other allies intentionally misleadingly conflate Wall Street with what is good, necessary and important to the American people. Their favorite claim, repeated by Third Way: Wall Street is a job creator. That’s simply not true. As the ’08 crash and economic collapse proved, Wall Street is a job killer of historic proportion.

The real economy is where companies and individuals innovate, create and produce goods and services that people want and need. Those are the job creators. That is who Washington should focus on and care about. Sure, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Citigroup and the other Wall Street firms might facilitate the financing for some of that, but that is totally different than actually being a creator of any kind, much less jobs.

However, that myth is the core of Wall Street’s messaging and lobbying. Indeed, much of Wall Street’s power and influence depends on people believing it is key to employment, economic growth and our standard of living. Take that away and they are just another special interest.

As if perpetuating that core myth isn’t enough, Third Way then exaggerates, distorts and equates criticism of Wall Street as “vilification of industry.” But, Wall Street is not “industry.” Apple, GM, Caterpillar, AT&T, IBM, Boeing, Facebook, Google, ADM, P&G, Home Depot and so many other companies are “industry” that create jobs and build and sell products. No one is vilifying them.

Another favorite tactic of Wall Street and its allies like Third Way is to equate any criticism, however mild or merited, as over-the-top “vilification.” However, criticism of Wall Street for crashing the global financial system and almost causing a second Great Depression (and advocating for stronger regulation so that they can’t do it again) isn’t “vilification.” In fact, it is an essential debate about policy differences in responding to the crash and preventing the next one.

Importantly, it’s not just front groups like Third Way that push Wall Street’s agenda. Wall Street also directly or indirectly funds a massive lobbying operation as well as numerous public relations firms, academic advocates, advertising campaigns, political contributions, so-called think tanks as well as trade and industry groups. Much of this influence industry is greased by former senior government officials who have sold out spinning through the revolving door.

This massive, largely unseen network created and connected by vast sums of money is how Wall Street still gets its way — largely unseen — in Washington. Third Way is just the tip of the iceberg.

(“Wall Street” is an overbroad term and, in some ways, unfair to many people and institutions that work on Wall Street that didn’t cause the crash and crisis. As used here, it refers primarily to the too-big-to-fail, sell-side derivative dealer banks that threaten the financial system.)



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