(This article is far too long to post in its entirety, but is
extremely important. Basically, the N.Y. Times is revealing the
extensive ties between one of the Senate's most powerful Democrats
and Wall Street banks. My guess is that they only decided to print
the facts about something that has always been obvious because of the
magnitude of the crisis. People like Schumer make it virtually
impossible for the financial system to be reined in and the editors
of the N.Y. Times, astute defenders of the capitalist system, fear
that unless solutions are found, the crisis of the system will deepen
to a degree not seen since the 1930s.)
NY Times, December 14, 2008
The Reckoning
A Champion of Wall St. Reaps the Benefits
By ERIC LIPTON and RAYMOND HERNANDEZ
"We are not going to rest until we change the rules, change the laws
and make sure New York remains No. 1 for decades on into the future."
Senator Charles E. Schumer, referring to financial regulations, Jan. 22, 2007
WASHINGTON As the financial crisis jolted the nation in September,
Senator Charles E. Schumer was consumed. He traded telephone calls
with bankers, then became one of the first officials to promote a
Wall Street bailout. He spent hours in closed-door briefings and a
weekend helping Congressional leaders nail down details of the $700
billion rescue package.
The next day, Mr. Schumer appeared at a breakfast fund-raiser in
Midtown Manhattan for Senate Democrats. Addressing Henry R. Kravis,
the buyout billionaire, and about 20 other finance industry
executives, he warned that a bailout would be a hard sell on Capitol
Hill. Then he offered some reassurance: The businessmen could count
on the Democrats to help steer the nation through the financial turmoil.
"We are not going to be a bunch of crazy, anti-business liberals,"
one executive said, summarizing Mr. Schumer's remarks. "We are going
to be effective, moderate advocates for sound economic policies, good
responsible stewards you can trust."
The message clearly resonated. The next week, executives at firms
represented at the breakfast sent in more than $135,000 in campaign donations.
Senator Schumer plays an unrivaled role in Washington as beneficiary,
advocate and overseer of an industry that is his hometown's most
important business.
An exceptional fund raiser a "jackhammer," someone who knows him
says, for whom " 'no' is the first step to 'yes,' " Mr. Schumer led
the Democratic Senatorial Campaign Committee for the last four years,
raising a record $240 million while increasing donations from Wall
Street by 50 percent. That money helped the Democrats gain power in
Congress, elevated Mr. Schumer's standing in his party and increased
the industry's clout in the capital.
But in building support, he has embraced the industry's free-market,
deregulatory agenda more than almost any other Democrat in Congress,
even backing some measures now blamed for contributing to the financial crisis.
Other lawmakers took the lead on efforts like deregulating the
complicated financial instruments called derivatives, which are
widely seen as catalysts to the crisis.
But Mr. Schumer, a member of the Banking and Finance Committees,
repeatedly took other steps to protect industry players from
government oversight and tougher rules, a review of his record shows.
Over the years, he has also helped save financial institutions
billions of dollars in higher taxes or fees.
He succeeded in limiting efforts to regulate credit-rating agencies,
for example, sponsored legislation that cut fees paid by Wall Street
firms to finance government oversight, pushed to allow banks to have
lower capital reserves and called for the revision of regulations to
make corporations' balance sheets more transparent.
"Since the financial meltdown, people have been asking, 'Where was
Congress? Why didn't they see this coming? Why didn't they provide
better oversight?' " said Barbara Roper, director of investor
protection for the Consumer Federation of America. "And the answer
for some, including Senator Schumer, is that they were actually too
busy pursuing a deregulatory agenda. Their focus was on how we have
to lighten up regulation on Wall Street."
In recent weeks, Mr. Schumer has worked closely with the Bush
administration to try to mitigate the damage to New York's financial
institutions. And as members of Congress and President-elect Barack
Obama have called for new regulations to prevent future upheavals,
Mr. Schumer has endorsed the need for reforms while still trying to
make them palatable for Wall Street.
Calling himself "an almost obsessive defender of New York jobs," Mr.
Schumer has often talked of the need to avoid excessive regulation of
an industry that is increasingly threatened by global competition. At
the same time, Mr. Schumer has cast himself as a populist who looks
out for the middle class.
In an interview, Mr. Schumer said that until the recent market
turmoil, he did not fully appreciate how much risk Wall Street had
assumed and how much damage its practices could inflict on ordinary
Americans. "It is a learning process, no question about it, an
evolution," he said, adding that he now believed that investors and
homeowners must be better protected.
But he defended his record. "Wall Street and Main Street are tied
together," he said. "Often times, they are not in conflict. When they
are in conflict, I tend to side with Main Street."
While Mr. Schumer has taken some pro-consumer stances, his critics
fault him for tilting too far toward Wall Street in balancing his
responsibilities.
"He is serving the parochial interest of a very small group of
financial people, bankers, investment bankers, fund managers, private
equity firms, rather than serving the general public," said John C.
Bogle, the founder and former chairman of the Vanguard Group, the
giant mutual fund house. "It has hurt the American investor first and
the average American taxpayer."
full: http://www.nytimes.com/2008/12/14/business/14schumer.html
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