Somebody spilled the beans Tuesday, telling the truth about the financial reform bill being debated in Congress. But most media ignored it.
Rather than being the targets of this bill, Wall Street financiers will be rewarded by it. The chairman of Goldman Sachs, Lloyd Blankfein, told a Senate subcommittee, "The biggest beneficiary of reform is Wall Street itself."
So why does President Obama instead want us to believe the legislation is our revenge against Wall Street, a chance to get our money back after so many bailouts?
Simple. Bailouts are the most unpopular topic in the country, so the quickest way to pass another big-government bill is to label it “anti-bailout,” even when it’s the opposite.
Obama says this bill will end bailouts. Opponents say it will perpetuate bailouts. Then they call each other liars.
The key is that they use different definitions. Obama claims that so long as taxpayer money doesn’t go directly to a company or to its shareholders, it’s not a bailout.
But Obama considers it okay to send billions to pay off that company’s creditors — who typically are big companies and Wall Street firms. To the rest of us, paying a company’s debts is the bailout, as we’ve already seen happen multiple times.
Obama also pretends that it’s not government money. Bankers would be ordered by the new law to create a $50 billion fund; but since Obama won’t agree that it’s a tax, he claims it’s not taxpayer money. Of course, the banks will charge higher fees to customers to recoup this amount.
Obama’s tough talk against Wall Street draws headlines. But when whipping boy Goldman Sachs says they like the proposed punishment, they’re not being masochists. They know that they’re getting a government guarantee that they and their friends — as creditors — won’t suffer losses when a business partner goes under.
Furthermore, anyone doing business with the Wall Street big boys knows they won’t take a loss thanks to the proposed law. They’ll get more business thanks to that assurance and protection.
The financial reform bill has plenty of other dangerous flaws, but the bailout issue attracts the most attention. The selling of this bill echoes the pattern used to pass Obamacare; only now are some realizing just how many false claims were used to jam that healthcare bill into law.
Nobody should forget that the supporters of the financial reform measure are mostly the same members of Congress who made false claims about the health package. People also should remember that most of these same members of Congress supported the original bailouts, making their current criticism of bankers ring hollow.
A well-known ad campaign for a former firm, EF Hutton, bragged that “When EF Hutton talks, people listen.” Today, when the CEO of Goldman Sachs now admits, "The biggest beneficiary of reform is Wall Street itself," then it should not be ignored. It’s a dramatic sign that this bill is being sold under false pretenses.
But Wall Street is about money, not adoration. They benefited from the original bailouts, which means more to them than the criticism. They invested $15 million in Obama’s campaign — and plenty more in congressional campaigns. Now they’re willing to take a public bashing from their friends so long as they’re rewarded with what counts. And that’s the bottom line.
Former Congressman Ernest Istook is a Distinguished Fellow at The Heritage Foundation (www.heritage.org).
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