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The Clintons and Wall Street: 24 Years of Enriching Each Other

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For twenty four years the Clintons have orchestrated a conjugal relationship with Wall Street, to the immense financial benefit of both parties.   They have accepted from the New York banks $68.72 million in campaign contributions for their six political races, and $8.85 million more in speaking fees.  The banks have earned hundreds of billions of dollars in practices that were once prohibited—until the Clinton Administration legalized them.

The extraordinary ambition displayed in the careers of Bill and Hillary Clinton defies description.  They have spent much of their adult lives soliciting money from others for their own benefit.  A 2014 story in Time magazine said this:

“Few in American history have collected and benefited from so much money in so many ways over such a long period of time…the Clintons have attracted at least $1.4 billion in contributions…”

Time failed to dig deeply enough.  A more thoroughly researched expose’ in the Washington Post a year later doubles the amount to $3 billion.

Ruthless ambition put Bill Clinton into the White House twice, sent Hillary Clinton twice to the Senate, and now has her poised on the cusp of the American presidency.  It also made the Clintons one of the wealthiest couples in the nation.

Hillary Clinton’s net worth is forty five million dollars; Bill Clinton’s is eighty million. Measured by family wealth, this puts the couple in the top 1% of American households by a factor of 16 ($7.88 million is the threshold).

The Clintons’ ambition is reinforced by arrogance.  Their behavior in the Monica Lewinsky affair is only the most glaring example.  Sexual frivolities while holding office are scarcely unusual, having spiced the lives of public figures for centuries, but if the dalliance is exposed, the scarlet official typically resigns in shame and scuttles into obscurity.  Recall Gary Hart or John Edwards in modern times.  But the Clintons rejected that time-honored code of decency.  In the glare of public scorn they besmirched the office of the Presidency by barricading themselves in the White House, shamelessly arrogant.

That performance pales, however, compared to the Clintons’ self-serving transformation of the Democratic Party, from the champion of working people to the lapdog of Wall Street—and of corporate America in general.  Cleverly the Clintons still pander to the traditional constituency, but in serving its new clientele the transformed party abandoned the less fortunate strata of American society, especially the communities of color.

Bill Clinton figured prominently in the Democratic Leadership Council, and became the first president elected in its mold.

After a landslide victory by the Republicans in 1984, some leading Democrats proposed a new centrist, more conservative stance for the party.  It would be less threatening to American business interests—and could even attract corporate financial support.  The Democratic Leadership Council was born to promote the new vision within the party.  The DLC gained influence gradually, until Bill Clinton’s presidency made conservative centrism the Democrats’ defining posture.

As Governor of Arkansas Bill Clinton chaired the Democratic Leadership Council from 1990 through 1991, and courting corporate America served him exceedingly well.  Supported by  $11.17 million in campaign contributions from Wall Street Mr. Clinton became the first DLC president in 1993.  Hillary Clinton was at his side, a de facto minister-without-portfolio.

This was the “New Democratic Party,” President Clinton said,  and he soon demonstrated how far to the right he would move its agenda.

Claiming “the era of big government is over,” President Clinton promised to “end welfare as we know it.”  And he did, by signing the Personal Responsibility and Work Opportunity Reconciliation Act.  The law bore severely on low income families, disproportionately communities of color.  Clinton took pride also in the Violent Crime Control and Law Enforcement Act, which led eventually to an explosion of incarceration, and spawned an industry of private, for-profit prisons.  Once again the law impacted most heavily the black and Latino communities.

Then it was time to favor corporate America.

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President Clinton promoted “free trade” with vigor, signing the North American Free Trade Agreement and strongly supporting the World Trade Organization.  “Free trade” was immensely beneficial to corporate America.  Among the nation’s exports, during the Clinton years, were the manufacturing jobs of 9.2 million American workers.

Rewarding Wall Street came next.

President Clinton appointed Robert Rubin, the Co-chairman of Goldman-Sachs, as his Treasury Secretary in January of 1995.  Mr. Rubin went to work fashioning two laws of stupendous value to the New York banks, but President Clinton’s first term of office ended before they could be enacted.

Perhaps sensing the need to assure Clinton’s re-election, Wall Street saw fit nearly to triple its campaign contributions—from $11.17 million in 1992 to $28.37 million in 1996.

Continued nicely in office, Secretary Rubin triumphed with the passage of the Financial Services Modernization Act of 1999, which repealed the Glass-Steagall legislation of 1933.  Now it was legal once more for financial institutions to mix commercial and investment banking; in essence, to use depositors’ funds for trading the bank’s own account in the stock market.

A year later President Clinton signed the Commodity Futures Modernization Act.  This law ended the regulation of derivatives, freeing Wall Street to manufacture mortgage-backed securities and sell them without restriction; these complex derivatives would power the “subprime” swindle soon to commence.

Meanwhile, in Clinton’s Justice Department a deputy Attorney General named Eric Holder in 1999 authored a memo entitled “Bringing Criminal Charges Against Corporations.”  It became the Holder Doctrine, and after the financial crisis of 2008 it would be of incalculable value to the Wall Street banks.  On leaving the Administration Mr. Holder joined Covington Burling, the largest law firm in Washington, D.C..  Among its clients were Morgan Stanley, Citigroup, JP Morgan Chase, UBS, Bank of New York Mellon, Deutsche Bank, Wells Fargo, and Bank of America.

Now, perhaps, the shameless intransigence of the Clintons barricaded in the White House can be understood.  If they scuttled into obscurity, they would forego the rewarding expressions of gratitude, the return favors they could expect from Wall Street.  (Obscurity would have terminated as well any presidential ambitions Hillary Clinton might have harbored.)

Wall Street’s gratitude quickly found expression.  When the Clintons left the White House, they bought a 7-bedroom house near Embassy Row in Washington, with a $1.995 million mortgage.  It must have been the prototype “subprime,” because the Clintons “…were not only dead broke, but in debt,” as Ms. Clinton later recalled.  Robert Rubin, however, had moved on from the Treasury Department to Citigroup, where the nearly $2 million in credit was quickly extended

The Clintons did manage the mortgage payments.  Sixteen days after leaving the White House, Mr. Clinton delivered a speech to the Wall Street firm of Morgan Stanley, for which he was paid $125,000.  That was the first of many speeches he presented to Wall Street banks in following years.  By May of 2015, Mr. Clinton had earned $1,550,000 from Goldman Sachs, $1,690,000 from UBS, $1,075,000 from Bank of America, $770,000 from Deutsche Bank,, and $700,000 from Citigroup.  In total, $5,910,000.

But Hillary Clinton has yet to embark on her own political career.

On leaving the White House the Clintons did not occupy their house in Washington, but instead moved into a $1.7 million, 5-bedroom home in Chappaqua, New York.  Why New York?  The six previous ex-presidents all returned to their home states to live quietly out of the public eye.  But  Hillary Clinton wanted to run for the Senate, and from New York not Arkansas.  Was Wall Street’s congeniality too gratifying to terminate?

It was not terminated.  The Wall Street banks underwrote Ms. Clinton’s Senatorial ambition, contributing $2.13 million to her campaign.  Among the congenial banks were Citigroup, Goldman Sachs, UBS, JP Morgan Chase, CIBC, and Credit Suisse.

As the new century unfolded the sub-prime mortgage scam enabled by Clinton’s “modernization” laws inflated an epic bubble in real estate prices.  In 2008 the bubble deflated.   Property values collapsed, followed by the American economy.  $13 trillion in Americans’ household wealth disappeared.  Nine million workers lost their jobs.  Five million families were evicted from their homes.  This is what Bill Clinton’s New Democratic Party had wrought, and  among the traditional constituents, now betrayed, the communities of color fared the worst.

Many New York banks faced insolvency, their portfolios bloated with nearly worthless mortgage-based derivatives—so-called “troubled assets.”

The banks had a champion, however.  President George Bush, taking a cue from Bill Clinton, also appointed a Goldman Sachs CEO as his Treasury Secretary.  Henry Paulson wasted no time in obligating the American taxpayers to cover the losses of the New York banks—his own Goldman Sachs and the rest of the swindlers.  The Emergency Economic Stabilization Act of 2008 —the “Troubled Asset Relief Program”—was signed into law on October 1 by President Bush

The law appropriated $700 billion for Mr. Paulson to buy the banks’ depressed securities.

Senator Clinton voted in favor of the bill, telling a New York radio station the next day, “I think the banks of New York…are probably the biggest winners in this…”.

Mr. Paulson started buying troubled assets immediately, and Senator Clinton’s observation proved correct.  A Congressional oversight panel later discovered Mr. Paulson was substantially overpaying the banks: the Treasury bought one package of “troubled assets” for $254 billion, the market value of which was $176 billion.  Treasury paid Citigroup $25 billion for securities worth $15.5 billion.  And so it went.  A partisan Democrat might say, “What else would you expect from the Bush Administration?”

But the 2008 presidential campaign was underway.  The Democrats’ slate of candidates included Hillary Clinton and Barack Obama.  Wall Street was impressed with both candidates.  Goldman Sachs contributed $1,034,615 to Mr. Obama’s campaign; JP Morgan Chase $847,855; Citigroup $755,057; UBS $534,166; and Morgan Stanley $528,182.  $3.7 million in total.  But Wall Street was more impressed with Ms. Clinton:  her take from the banks was $14.6 million.

Barack Obama took office as another “New Democrat,” imprinted by the legacy of Bill Clinton’s presidency.  Wall Street’s $3.7 million hedge would not be wasted.

Never disclosed in Mr. Obama’s campaigning however (or  Hillary Clinton’s), was the transformation of the Democratic party Bill Clinton had achieved.  The Wall Street banks who poured $18.3 million into the contest would be rewarded by the Obama Administration in truly spectacular ways, but the historic constituency of the working families of America and its communities of color would be largely ignored.  Deliberately kept ignorant, however, that traditional constituency voted Mr. Obama into office, the black community in particular with unprecedented enthusiasm.

The two most important Cabinet posts, for Wall Street’s interests, were Treasury and Justice.  President Obama filled both with former Clinton appointees:  Mr. Timothy Geithner to head the Treasury Department and Mr. Eric Holder to be Attorney General.  The continuity of favoritism for Wall Street was assured.

Timothy Geithner was the obligatory Wall Streeter, president of the Federal Reserve Bank of New York at the time of his appointment.  Eric Holder arrived from Covington Burling, Wall Street’s Washington law firm.

Hillary Clinton became Secretary of State.  Wall Street’s investment in her would not be wasted, either.

Now it was Mr. Geithner’s turn to administer the Troubled Asset Relief Program.  He was no less effective than Mr. Paulson in showering Wall Street with taxpayers’ money.

Mr. Neil Barofsky, a federal prosecutor, was appointed Special Inspector General of the Troubled Asset Relief Program.  His job was to audit the execution of the law, to secure against fraud, and to hold the banks accountable.  Thwarted at every turn by Secretary Geithner, Barofsky finally resigned in disgust, and wrote an expose’ entitled Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.  The book jacket says this:

Barofsky discloses how, in serving the interests of the banks, Secretary Geithner…worked with Wall Street executives to design programs that would funnel vast amounts of taxpayer money to their firms, [allowing] them to game the markets and make huge amounts of money, with almost no accountability….while repeatedly fighting Barofsky’s efforts to put the necessary fraud protections in place.

While Mr. Geithner was twisting TARP to the banks’ financial advantage, the Justice Department was shielding their executives from any sort of penalties, either fines or incarceration.

Beyond question the New York banks were guilty of massive criminal behavior, but Attorney General Holder dusted off the directive he’d written eight years previously in the Clinton Administration.  The Holder Doctrine directed the Department of Justice to consider “collateral consequences” in its prosecutions.  If such consequences were sufficient, criminal indictments were to be rejected in favor of other remedies.

Mr. Holder’s Department chose, therefore, to negotiate with each bank a financial penalty to be assessed in lieu of criminal proceedings.  The agreements required no admission of guilt, they guaranteed no further prosecution, and the documentation of illegal behavior was permanently sealed.

The penalties were paid with corporate funds.  (Goldman Sachs’ penalty was $550 million: it could recover that much in about three weeks of trading.)  No corporate executives were jailed, no damning personal records of felonious behavior were established,  no personal fines levied, no salaries reduced, no bonuses denied.  In April of 2015, having obliterated Wall Street’s lawlessness, Mr. Holder left the Obama Administration and returned to Covington Burling.

Today the banks are larger and more powerful than ever.

The Obama Administration granted one more relatively minor and specific favor to the financial industry.  A few weeks after her swearing in, Secretary of State Clinton was called to Switzerland by the Swiss Foreign Minister.  They discussed a lawsuit brought by the U.S. Internal Revenue Service against UBS, the Swiss banking international colossus (761 locations in the U.S.).

Back in Washington Secretary Clinton interceded.  The impact of the suit was reduced by 90%.

In subsequent years UBS paid Bill Clinton $1.5 million in speaking fees, for eleven separate appearances.  Hillary Clinton earned $225,000 for another one.  Also in subsequent years UBS contributed $540,000 to the Clinton Foundation.

Secretary Clinton resigned her position at the end of President Obama’s first term, perhaps to prepare and raise money for another presidential campaign.

Since then she has earned $2.9 million in speaking fees from Goldman Sachs, Bank of America/Merrill Lynch, Morgan Stanley, Deutsche Bank, Ameriprise, Apollo Management Holdings, CIBC, Fidelity Investments, Golden Tree Asset Management, and UBS.

Hillary Clinton announced her presidential candidacy on April 12, 2015.  By September 30, Wall Street banks had contributed to her campaign a total of  $6.42 million….

During the 24 years of the last three Administrations in Washington, Wall Street flourished while savaging the American economy, the American taxpayers, and the law.

The Clinton Administration, with a Treasury Secretary from Wall Street, passed laws enabling the banks to launch a financial skyrocket.  The Bush Administration, with a Treasury Secretary from Wall Street, covered their losses with taxpayers’ money when the rocket fell to earth.   The Obama Administration, with a Treasury Secretary from Wall Street and a Wall Street Attorney General as well, granted vast financial favors to the banks and absolved them of criminal behavior.

During all of those years the Clintons benefited immensely from Wall Street’s political contributions: $11.17 million for Bill’s 1992 campaign; $28.37 million for his 1996 re-election; $2.13 million for Hillary’s 2000 run for the Senate; $6.02 million for her 2006 re-election; and $14.61 million

for her first presidential campaign.  And they’ve been paid $8.85 million by the financial industry in speaking fees.

The intimate interplay of ambition and greed between the Clintons and Wall Street has continued for nearly a quarter century.  It is a tawdry history, ignored or trivialized by the Clintons, anxious to obscure it.

But now with a fresh infusion from the New York banks of $6.42 million and counting, Hillary Clinton is running for president once again.

Speaking on July 13, 2015, she said this:

“Our banking system is still too complex and too risky … While institutions have paid large fines….too often it has seemed that the human beings responsible get off with limited consequences – or none at all, even when they’ve already pocketed the gains. This is wrong, and on my watch, it will change.”

Ms. Clinton expects us, apparently, to believe her.   

Author’s note: For the sake of an uncluttered text, citations have been omitted.  They will be furnished if requested.

Richard W. Behan lives in Corvallis, Oregon. He can be reached at: rwbehan@comcast.net.

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