As discussed the other night, Democrats in Congress are in heat over the opportunity to impose wage restraints on bankers, so much so that they desired to inflict their punishment retroactively. Sadly, this shovel ready load of spite found its way into the stimulus bill as the House and Senate voted to limit future compensation for the denizens of Wall Street. It has been reported that President Obama is opposed to this measure, which is no surprise since the intended victims pour large sums of cash into Democrat coffers.
This particular piece of legislation was tucked inside the stimulus bill by none other than Senator Chris Dodd. Yes, the same Chris Dodd who personally benefited from VIP mortgage terms offered by one of these now pay restricted bankers (Mr. Angelo Mozilo of Bank Of America subsidiary Countrywide Financial). The irony in this saga is rich (pardon the pun). Senator Dodd, Chairman of the Senate Finance Committee, lined his own pockets with cash that came from what is now essentially a ward of the government. This sets a new standard for the term Sleaze Factor.
Such brazen behavior by a man who has yet to make good on his promise to release the details of his own sweetheart mortgage is a reminder of the days of monumental congressional arrogance and Danny Rostenkowski. Dodd is just betting that no one is paying attention and he’s probably taking his cue from Barney Frank, the similarly obtuse chairman of the House Financial Services Committee. As the Wall Street Journal opined today, Representative Frank held his much anticipated show trial this week and failed badly:
Chairman Barney Frank’s hearing was intended to flay the CEOs for not lending enough. It fell flat as political theater because banks have actually increased their lending in recent months. The people who aren’t lending more are investors in nonbank financing such as asset-backed securities.
In fact, the nonbank credit market is normally much bigger than bank lending. But new issues backed by auto loans, credit cards and the like have been rare this year, as markets wonder how the government’s next move will change the value of such investments. Buyers and sellers of existing securities are “sitting on the sidelines,” according to Asset-Backed Alert, waiting for still another Washington recalibration of risk and reward.
Most investors who lend in these markets are not recipients of financial bailout money, so Congress can’t simply browbeat them into making another big bet on the American consumer. They’ve been burned badly.
It’s no surprise that an intellectual munchkin like Representative Maxine Waters (D-CA) would not grasp this fact (and she didn’t) but it is not unreasonable to expect that a committee chairman should understand these details. But Congressman Frank held high the bar of mediocrity and slavishly soldiered on for the cause of Fear and Loathing. That two charlatans like Frank and Dodd could chair the powerful committees that are responsible for oversight of the US financial system is testimony to the rot at the core of the House and Senate.