We may be in the middle of a huge snowstorm here in Washington D.C. but there is another storm brewing on Capitol Hill. Master manipulator Frank Luntz is at it again, with a memo for the lobbyists and their allies in Congress who want to derail financial reform and allow Wall Street abuses go unchecked.
The memo lays out an unapologetic roadmap for harnessing Americans' anger with bailouts and their demand for accountability to ... kill any effort to bring accountability to Wall Street. It just doesn't get any more cynical.
The details of the financial meltdown are complicated, but the basic story is not. The collapse of the financial markets happened quickly, but the underlying dynamics were years in the making. For two decades policy makers in Washington and New York crafted a strategy that deliberately took away many of the safeguards and limits on our financial system. Decades of deregulating the financial industry and lack of meaningful consumer protections created a "race to riskiness" that led to financial collapse and the deepest economic recession since the Great Depression. Contrary to what the proponents of the status quo will tell you, the financial collapse and the Great Recession that followed were not a natural disaster. They were not inevitable or the result of bad luck.
They were the result of bad decisions -- bad decisions by financial wizards who were blinded by seven- and eight-figure bonuses, and bad decisions by policymakers who gave up on accountability, gave up on oversight, and trusted the financial industry to be responsible. Their choices let Wall Street make risky bets, and millions of Americans have paid the price with lost jobs, foreclosed homes, and depleted retirement savings.
And to add insult to injury, now the people who made the mess are trying to prevent us from cleaning it up. After all, the gravy train is rolling again on Wall Street, and they don't want to risk those bonuses.
So here's the basic plan by Frank Luntz for how to manipulate an American public that wants reform and accountability into backing the status quo:
Say you're for reform while you kill it
Luntz writes that in order for politicians to remain popular on financial issues, they need to "be an agent of change" and state that the "status quo is not an option." Of course this advice is included in a memo explaining how to preserve the status quo. Luntz is saying, in short, pretend to be for reform while you work to kill reform.
Call financial reform a job killer
The memo tells opponents of reform to say that financial reform kills jobs. I'm sorry, but have they checked the unemployment rate lately? Failure to enact reform earlier led to the biggest loss of jobs since the Great Depression.
Blame the government
Predictably, given that the goal is to allow the banks to keep doing what they've been doing, the Luntz memo advises Republicans to blame the crisis on government instead of the banks. I will concede one point here - the government is responsible for not doing its job and allowing Wall Street abuses to run amok. But it's a tough stretch to argue that the cure is for the government to continue the same bad behavior and forgo accountability and oversight.
Luntz, by blaming the government, is advocating that legislators ignore many of the factors that created this crisis. Ignore that the banks paid kickbacks to brokers to put customers in high-cost loans they didn't need. Ignore that credit rating agencies said that lots of risky loans packaged together were a safe security. Ignore that investment banks borrowed billions to gamble other people's money on dubious mortgage-backed securities. Ignore the explosion of derivatives - bets on future interest rates, currency values, and the price of commodities, stocks and bonds - that linked banks and investment houses in a web of risk.
Threaten that reform will limit choices
The memo tells opponents of reform to say that financial reform will limit consumer choice. What kind of choice do consumers have when credit card companies can unilaterally change the terms of the contract, when mortgage brokers get secret payments to steer borrowers into dangerous loans, when banks reorder the sequence of one's checks in order to maximize overdraft fees? That's not choice, that's tricks and traps. Real choice is clear information and the right to walk away from a bad deal without leaving your wallet behind.
Poison the process
In the memo, Luntz advises Republicans to use the phrase "lobbyist loopholes" when describing a financial reform bill. He suggests, essentially, that any advocacy for reform be characterized as the work of lobbyists seeking special favors. But the fact is, last year the financial sector hired 2,567 lobbyists and spent over $300 million lobbying Congress in an effort to water down financial reform.
These talking points are already being used by my colleagues on the other side of the aisle. Just last week, a Senate opponent to reform used a phrase right out of the Luntz memo: opposition to reform was really "taxpayer protection against bailouts."
It's incumbent on us to counter this assault on both the facts and middle class families and taxpayers. We need to set the record straight every time the Wall Street lobbyists and their allies distort the truth and call them out every time they push their Orwellian arguments for the status quo.
Their way gave us lost jobs, a housing collapse, record deficits, and destroyed family savings. We won't fix the problems by doing nothing, as they now advocate. We need to pass strong financial reform that will protect consumers and work towards rebuilding an economy that is best for the American middle class.
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