What Goldman's Whistleblower Teaches Us About Washington

This morning's op-ed in the New York Times by Goldman Sachs exec (or should I say, ex-Goldman exec) Greg Smith is turning heads and has the financial world abuzz. The truth-telling about a change in culture within the investment bank away from one that is client-centered towards one that is money-centered appears directly aimed at the vampire squid's soul, if it has one left.

There are easy comparisons to make between Smith's piece about the internal culture at Goldman and our money-drenched political system. Smith recounted colleagues describing clients as "muppets" as they sold them products they didn't need. Lobbyist Jack Abramoff called his Indian tribes "monkeys" and "troglodytes." One secret to get ahead at Goldman? Trade any "opaque product with a three-letter acronym." In Washington, super PACs, c4s and 527s are the modern tools of the trade for politicians and operatives alike.

More than anything else, Smith's unflinching take-down of the unethical turn at Goldman to serve themselves rather than their clients was what struck me.

Our political system functions in exactly the same way. In fact, Goldman execs and its PAC have donated nearly $5.8 million to federal candidates and committees in the last two election cycles and has spent close to $9 million on lobbying in the last two years. That should come as no surprise given the nexus between Wall Street and Washington has been well-documented. Below are just a small number of examples from the last few days.

• Yesterday, National Journal reported that Senate Minority Leader Mitch McConnell (R-Ky.) was spending hours each night on the phone calling big money donors to prepare for his re-election -- which is three years away. McConnell, who self-identifies as the Darth Vader of campaign finance reform, already has amassed a war chest bursting at6 million.
• Recent reporting by Politico showed that some retiring lawmakers are openly talking with lobbying firms before they even leave office. They'll cash in on expertise and relationships with their colleagues still serving in office.
• One major backer of Mitt Romney, hedge fund CEO Ken Griffin, literally claimed that the wealthy have "insufficient influence" over today's politics.
• The GOP presidential nomination fight is, in effect, a three-way battle between the super PACs of the leading contenders. The question from Tuesday's primaries in Mississippi and Alabama on most political insiders' minds was whether Sheldon Adelson would continue to float Newt Gingrich's campaign. The lesson for 2016 contenders, on both sides of the aisle, is clear: find a billionaire friend, or two.
• After being rejected by voters in the South yesterday, Mitt Romney is raising $2 million in New York City today and tomorrow. The only greater chasm than that which exists between Romney and the conservative base of the Republican Party is the one between Wall Street donors and the rest of America.

So who can blame voters for believing that politics and elections are owned by the moneyed few? With new laws in dozens of states limiting the ability of as many as 5 million Americans to cast ballots coupled with deregulation of the financing of our federal elections all but completed, what's a voter to do?

Perhaps we need more Greg Smith-type truth-telling from those who have lived in the belly of the beast on Wall Street and in Washington. That'd be a good start. But while one person leaving with a kiss-and-tell story salves his or her conscience, it doesn't alter structural imbalances. An op-ed is not a campaign. The truth is, in politics, muckraking out the corruption is only half the story. We need new laws, like the Fair Elections Now Act, that help to lessen the impact of money-in-politics by attacking corruption and by increasing participation.

Goldman won't change its ways because of an op-ed and the political system won't change with one expose. That's in part because we're never going to get all the money out just like we'll never remove greed or profit-seeking from Wall Street. The essential challenge before us is getting everyday Americans invested in our democracy, and making voters and their votes the coin in the realm of American elections, not donors and their dollars.

 

Follow David Donnelly on Twitter: www.twitter.com/daviddonnelly

Comments

[pzs]

05:47 PM on 03/17/2012

A Sample of the Wall Street/Washington Incest





JP Morgan 2004 (Mutual Funds)
http://online.wsj.com/article/0,,SB110435632010212266,00.html



Dimon For Demos 2009

Theodore Dimon (JP Morgan/Bear Stearns/Stockbroker), (Zip code: 10021) $250 to GEORGE DEMOS FOR CONGRESS on 11/25/09



George Demos 2010 (Disgraced SEC Enforcement Attorney)
http://www.politicsdaily.com/2010/01/28/long-island-congressional-candidate-cited-for-giving-up-jpmorgan/



Jamie Dimon 2010 ("Do The Right Thing")

http://www.sec.gov/comments/df-title-ix/whistleblower/whistleblower-24.htm



JP Morgan 2012 (Credit Cards)
http://www.rollingstone.com/politics/blogs/taibblog/j-p-morgan-chases-ugly-family-secrets-revealed-20120313



Sign The Petition 2012 (What The Hell Is Going On?)

http://www.change.org/petitions/ny-committee-on-professional-standards-make-public-the-investigation-of-george-demos

[Countess]

09:43 AM on 03/15/2012

We know the southern dominated GOP wants a completely unregulated wall street and we also know for a fact that both the Clinton and Obama administrations were dominated by the Goldman Sachs philosophy as well and that this is just another example of real bipartisan agreement against the best interests of the people so when we hear apologists for the democratic party using this incident to tell us it is only the republicans at fault we must be intelligent and honest enough to say they are lying and denying the obvious bipartisan corruption that is dragging us down. Read real journalists like Matt Taibbi instead of listening to the party spin masters.

[bblb]

01:35 PM on 03/15/2012

THIS. ALL ABOUT THIS ^^^

[TheMediaRanger]

02:18 AM on 03/15/2012

It would be nice, but it's hardly realistic, to expect that politicians would get solidly behind campaign finance reform. Really, why should they derail the gravy train? There are a few who are principled and probably get sick of being beholden to them that sent 'em to the dance, but otherwise they pretty much play the same game by the same rules.

Therefore, it's really up to us to get informed about proposals like the Fair Elections Now Act -- as well as lobby reform and the turnstyle of public service to private employment activity. It's our responsibility to show up at candidate rallies and town halls, ask them directly where they stand on these issues and challenge them to be more proactive.

[Hailey Erikson]

11:10 PM on 03/14/2012

And the sad thing is Obama's economic advisors are littered with Goldmanites. How about a law that says if you worked for criminal enterpries like Goldman Sachs and JP Morgan you can't be appointed to key positions in government. Kind of like keeping the wolves away from the sheep.

Furthermore, criminal organizations such as Goldman Sachs and JP Morgan can no longer do business with state or federal governments. For starters, the crimininal syndicate that is JP Morgan should not be allowed to administer the food stamps program or advise counties, (like Jefferson County, Ala) on financial matters.

[mijjy]

10:50 AM on 03/15/2012

I'd second THAT.

[LisaALeigh]

06:41 PM on 03/14/2012

The grammar in your third paragraph is incorrect. Instead of: "....Goldman to serve themselves rather than their clients....", replace with: "....Goldman to serve itself rather than its clients...".