Let me get this straight.
In the years leading up to the crisis, Ed Yingling - the head lobbyist for the American Bankers Association (ABA) and all the big banks - successfully lobbied against every real effort to regulate consumer credit products.
Operating under the lax regulation and weak rules that Yingling and his army of lobbyists helped create, the industry got reckless and, in the process, brought the economy to its knees. Millions of Americans went through foreclosure after signing onto mortgages that never should have been offered, and millions more lost their jobs as a result of the subprime meltdown. One in eight homeowners with a mortgage is now in default or foreclosure, more than one hundred community banks have been shut down this year, more than 1.5 million families have filed for bankruptcy, and small businesses on Main Streets across the country are closing in mass.
To add insult to injury, Ed Yingling's biggest and, yes, most reckless clients were protected from failure by taxpayer bailouts (unlike everyone else, who was just left to fail). The management teams at those institutions stayed in charge, Yingling kept his job, and the budget for bank lobbying is bigger than ever.
And now, here we are - after Yingling and his army wrote the rules, devastated our economy, kept their jobs, and kept their budget thanks to taxpayer bailouts -- and what are they up to now? They are fighting for the same status quo they (as much as anyone) helped create, lobbying to "kill" the Consumer Financial Protection Agency and other regulatory reforms that just may have prevented the current crisis. Talk about a vicious, vomit-inducing cycle.
Now, if you think Yingling's days of influence came to an end with last year's economic crash, think again. GQ Magazine just named him the 24th most powerful person in Washington. That puts him on higher footing than all but a handful of Members of Congress, Cabinet members, White House staffers, inside-the-beltway journalists, and on and on. And, according to Bloomberg News, he has 44 full-time lobbyists at his command - all of whom are knocking on doors on Capitol Hill, well equipped with fancy memos and lots of scare tactics.
How can this be happening? And how can it stop happening?
The protests against the ABA in Chicago this week were a long-overdue sign of outrage. But, to have real impact, the outrage needs to stay intact and not disappear.
If you think that this is impossible, take a deep breath and a step back, and remember a lobby that used to be every bit as powerful as the banking one: big tobacco. Twenty years ago, the conventional wisdom was that the tobacco lobby was invincible and always won. But then things started to change as public outrage grew and more information came to light about how bad industry practices really were. Today, most Members of Congress won't even take a contribution from the tobacco industry because it is just that toxic.
It's time for the bank lobby to go the way of big tobacco. It won't be easy, but let's not forget: even Phillip Morris never sunk our economy or demanded taxpayer bailouts. There is plenty of room for outrage in the current crisis, it just needs to be targeted at making sure the ABA becomes every bit as toxic in Washington as its record merits. That won't happen overnight, but it needs to happen. At least, it needs to happen if we want a more secure middle class and an end to boom and bust economic cycles that benefit the very few on the upswing at the expense of everyone else on the downturn.
This piece was originally posted on New Deal 2.0.
"Sure...we (the U.S.) can just come up with the great ideas, reduce our industrial output to almost nothing, and buy everyone else's stuff. And the best part of it is that we can make tremendous amounts of money....just shifting everyone else's money!"
Yes, I'm being more than a little glib here...but the truth is not too far from this. Ross Perot warned us years ago.
Philip Morris is one of the best run companies in the planet (no exaggeration there). There corporate governance amongst the fortune 50 companies is one of the best.
Banks come nowhere close to the corporate governance or looking out for shareholders like MO can.