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Friday, October 28, 2016

Weekend Reader: “Extortion: How Politicians Extract Your Money, Buy Votes, And Line Their Own Pockets”

Extortion by Peter SchweizerToday Weekend Reader brings you Extortion: How Politicians Extract Your Money, Buy Votes, and Line Their Own Pockets by conservative author Peter Schweizer. In addition to writing for Andrew Breitbart’s website, Schweizer was also the foreign policy adviser to Sarah Palin in 2011. He is currently the president of the Government Accountability Institute and research fellow at Stanford University’s Hoover Institution. 

In Extortion, Schweizer puts partisan politics aside and explains how both Democrats and Republicans at all levels of government have created a dynamic in Washington where legislation, votes, and committee assignments all come with a hefty price tag. A description of Extortion states, “Conventional wisdom holds that Washington is broken because outside special interests bribe politicians. The reverse is true: politicians have developed a new set of brass-knuckle legislative tactics designed to extort wealthy industries and donors into forking over big donations…” 

You can purchase the full book here.

There is one big difference between the Permanent Political Class and the Mafia. In the world of organized crime, the bosses are permanently in opposition to law enforcement. They might use bribery or extortion to control judges, witnesses, and the police, but they are always on the side of crime. If a member of a Mafia family decides to cooperate with law enforcement and become an informant, the Mafia will do anything and everything to kill him. You cross the lines at your mortal peril.

For the Permanent Political Class, by contrast, line-crossing is an art form. The name of the game is to make money and to extract it from the private sector, but you can do that from both sides of the public-private divide. You don’t have to be a member of Congress — you can be a lobbyist or a lawyer. Better yet, you can pass back and forth between political office and this private-public actor of Washington, always working to extract wealth from various industries that fear the laws and regulations you help create.

In 2010 Congress passed, and President Obama signed, the Dodd-Frank Wall Street Reform and Consumer Protection Act. It was allegedly designed to provide new safeguards for financial markets by further regulating investment banks and other financial market participants. The trouble? No one can actually understand it. As one banker, publicly supportive of the law, told The Economist , when asked about the “Volcker Rule,” a centerpiece of Dodd-Frank, the rule is “unintelligible any way you read it.” Sheila Bair, the former head of the Federal Deposit Insurance Corporation (FDIC), has called the Volcker Rule “extraordinarily complex” and says, “Regulators should think hard about starting over again with a simple rule.”

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But that won’t happen for one simple reason: Dodd-Frank was designed to be indecipherable by mere mortals. For the Permanent Political Class, the regulatory minefield creates a lucrative opportunity for extortion.

Part of the problem is the law’s massive size. At 2,319 pages, it is dramatically larger than previous financial reform laws and approaches the monstrous length of the Obamacare bill. By comparison, the Federal Reserve Act of 1913, which established the Federal Reserve banking system and the single national currency, was 31 pages long. The Glass-Steagall Banking Act of 1933, which overhauled the entire banking system in light of hundreds of bank failures, was 37 pages long.

Dodd-Frank is also remarkably complex. Even seemingly basic principles are expanded and twisted to make compliance with them nearly impossible. For example, the so-called Volcker Rule, which grew out of a three-page memo from former Fed chairman Paul Volcker to President Obama in 2009, morphed into a 298-page description with 383 questions that break down into 1,420 subquestions.

The cost of filling out the complex paperwork is enormous. The forms required by sections 404 and 406 of the law (which require the collection of systemic risk data from private funds, including hedge funds) will cost hedge funds approximately $100,000 to $150,000 to complete the first time, and then $40,000 a year after.

The law was written to create more rules. As Jonathan Macey of the Yale Law School puts it, “Laws classically provide people with rules. Dodd-Frank is not directed at people. It is an outline directed at bureaucrats and it instructs them to make still more regulations and to create more bureaucracies.” For example, the law requires 243 rules and sixty-seven studies by eleven different agencies. The law also requires the creation of multiple new government entities, including the Financial Stability Oversight Council (FSOC) and the Consumer Financial Protection Bureau (CFPB).

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  • charleo1

    Why buy the book, when we already know how the story ends? If the excerpt is any indication of the work in it’s entirety, it uses the same objections, the same flawed case the Right always tries to make aganist any regulation. Using the same worn out talking points, and excuses, as to why government should never interfere with the private sector under any circumstances. So, the bill is, too long, too hard to read, and understand, and too costly. And there are no lawyers on Wall Street trained in financial regulatory law. Now that, I can believe. Most of them probably haven’t seen a regulation in years, that amounted to more than a friendly suggestion. What was most glaring to me, in the wake of a near catastrophic melt down, enabled by over a decade of deregulation, and as we found out too late, almost no governmental oversight. It was the Republican position, that no additional regulations were necessary. In a sort of, here’s the tax payers money to cover your gambling losses, now, go and sin no more. And, of course, they were careful to not be too preachy. Understanding, a certain amount of sin is necessary in a free market. As such, the GOP then happily joined the same financial entities who’s greed, and malpractice had managed to nearly bring down the world economy. In fighting by every legislative means at their disposal, to stop any regulation, or additional oversight, that would make a repeat of a similar crisis less likely. And just as galling, Wall Street, now on the government dole, spent part of the TARP monies, designed to keep them solvent, and economy from collapsing, greasing palms, and paying lobbyists, to fight financial reform.

    • daniel bostdorf

      extortion politics just now at AP news about Christie!

      • charleo1

        Upon reading the article my thoughts were, just what the
        world needs. Another Right Wing propaganda piece, casting the government as the ruthless shakedown artist. And the Wall Street Bankers playing the part of the poor, but proud shop owners, just trying to keep their doors open, and their heads above water. But, you’re exactly right. Christie, and his circle
        of goons, do come off looking, and sounding more like the mob, than the Government of the State of New Jersey. Eh, what’s this hear about my boys shutting down a bridge or something? Forgetaboutit! Never happened!

  • Donna

    I’m well aware of what Politicians are capable of doing, well aware that they are all corrupt and will do anything to stay in office, or to get into office. What I don’t understand is why the dumbass American people of this country refuse to stand their ground and demand that when these politicians terms are over and done with SO is their massive pay checks.

    • daniel bostdorf

      Lack of education and apathy and fear…mostly fear..

      Why and How?

      “Where once you had the freedom to object, to think and speak as you saw fit, you now have censors and systems of surveillance coercing your conformity and soliciting your submission. How did this happen? Who’s to blame? Well, certainly there are those more responsible than others … but … truth be told, if you’re looking for the guilty, you need only look into a mirror. I know why you did it. I know you were afraid. Who wouldn’t be? War, terror, disease. There were a myriad of problems which conspired to corrupt your reason and rob you of your common sense. Fear got the best of you, and in your panic you turned to the now-High Chancellor … He promised you order, he promised you peace, and all he demanded in return was your silent, obedient consent.”

      Bush Cheney NSA etal??

      from movie V For vendetta

  • daniel bostdorf

    You want extortion politics….Check out Christies latest extortion…vote my project or you get no Sany Relief funds!


    Mayor: Christie aides tied Sandy funds to project

  • 1standlastword

    After reading 6 chapters, I can say this (so far) is a balanced and fair treatment of the permanent political classes of both parties. The thesis is simple and makes perfect sense. Politicians are the sellers of influence and corporation are the buyers. There have been moments when I thought the author was trying to wring sympathy for corporation as he writes them in the position as the victims of greedy politicians but with my background of knowledge I know the real victims are the citizen classes. I’m wondering if the author will acknowledge that the working and middle classes are the true victims of the games between the permanent political class and the corporate class. It seems to make sense that he SHOULD as the voters are the real losers. The corporations pay and they get to play and the politician get paid and gain more power. We–progressives, conservatives, libertarians, and independents and free thinkers are the big loser because neither of the sides in the came have any incentive to stop the racketeering

  • rustacus21

    Looking at this from a perspective of detachment is what creates the feeling of helplessness, frustration & resignation. By not taking citizen action from the start – massive, nation-wide protests, on Dec12, 2000; voting not for more Republicans in 2002 mid-Terms; rebelling against the ‘party choice’ in 2004 & DEMANDING Howard Dean as the ‘obvious WINNING’ candidate for president; continue voting against Republicans from ’06 thru now, all of which would have resulted in more ‘muscular’, meaningful regulations, greater tax equity, stronger environmental laws & global leadership & NO economic Depression in ’08. These are the simple things. We, the people, made things harder by doing none of the above…