Tuesday, January 11, 2011
God Bless The GOP
The following story (written by Peter Stone, Center for Public Integrity, and Michael Isikoff, NBC News) recently appeared on MSNBC. It’s very well written and provides a great illustration of how truly f*cked up and corrupt politics have become. Being that this is the Quinsey Blog I decided to re-post the story and add in my own color commentary (in italics). Enjoy.
How Wall St. execs bankrolled GOP victory
A small network of hedge fund executives pumped at least $10 million into Republican campaign committees and allied groups before November’s elections, helping bankroll GOP victories that this week will change the balance of power in Washington, according to a review of campaign records and interviews with industry insiders by the Center for Public Integrity and NBC News. Using the terms Washington and Integrity in the same sentence – not an easy thing to do these days.
Bitterly opposed to President Barack Obama’s economic and regulatory policies — including proposals to increase taxes on some of their profits — top Wall Street hedge fund moguls were unusually energized during last year’s election. They held multiple fundraisers and coordinated strategy to direct what appear to be unprecedented sums into the coffers of GOP and allied political committees, according to industry and GOP fundraising sources. Nothing energizes hedge fund moguls like increased taxes on their profits.
Many substantial donations from the hedge fund executives escaped public notice either because they were made late in the campaign (and therefore weren’t reported until after the election) or were funneled through third-party groups, obscure “joint fundraising committees” and newly created political nonprofits that are not required to disclose donors. Reminds me of the famous line from Field of Dreams: “If you build it they will come”. Hedge fund scumbag version: “If you provide a loophole they will find it”.
The net effect has been to give the hedge funds important new allies at a time they are fending off regulations mandated by the Dodd-Frank financial reform bill and an aggressive Justice Department investigation into insider trading. The Constitution covers in great detail the notion of “Separation of Powers” but neglects to mention the more oft-used political paradigm of “Pay to Play”.
A prime example is Rep. Scott Garrett, a little known Republican from northern New Jersey who this week is slated to become the new chairman of the House Financial Services subcommittee on capital markets, a key panel that has direct oversight of the industry. A staunch foe of the regulation of Wall Street, Garrett has threatened to cut funding for the Securities and Exchange Commission and roll back some provisions of Dodd-Frank. If you google the words hedge fund bitch boy there’s a picture of Rep. Garrett.
Throwing in with apparent winners
As it became increasingly clear late last summer that Republicans were likely to capture the House, the partners at Elliott Management Corp., a $17 billion Wall Street hedge fund that specializes in distressed foreign debt, mobilized to boost Garrett’s political fortunes. One of the firm’s senior officers threw a fundraiser for Garrett. The firm’s executives and one of their spouses wrote checks totaling $195,800 to two of the congressman’s political fundraising committees, campaign records show. It is not known if the booze and hookers that showed up at Garrett’s house were included in this figure.
Of that amount, $45,000 was donated by nine Elliott executives to the congressman’s leadership political action committee Supporting Conservatives of Today and Tomorrow. As first reported by the The Record newspaper, another $150,800 was donated to a newly created entity called the Scott Garrett Victory Committee, which was registered by a GOP fundraiser using a post office box in Athens, Ga. The Scott Garrett Victory Committee? More like the Scott Garrett Bitch Boy Slush Fund.
As a so-called joint fundraising committee that shared its proceeds with the National Republican Congressional Campaign Committee, it was permitted under campaign finance rules to accept donations in excess of the standard $2,400 limit on contributions to individual candidates. A newly created entity established for the sole purpose of circumventing campaign finance laws? Fucking shameless, even for the GOP.
Elliott executives — one of whom wrote a check for $35,000 — ended up providing about 96 percent of all the funds raised by the Garrett committee, according to the review of campaign records by CPI and NBC. You mean it wasn’t a legitimate entity after all? Shocker.
“This is particularly appalling,” said Ellen Miller, executive director of the Sunlight Foundation, a nonprofit group that promotes transparency in campaign finance. “No one in America will believe that Representative Garrett can provide impartial oversight of the hedge fund industry after taking these huge amounts of money from one (hedge fund) company.” Gee, you think Ellen?
Garrett’s office did not respond to repeated phone calls and e-mails requesting comment. He was apparently preoccupied with the copious amounts of booze and hookers sent over by the hedge fund scumbags. Can you really blame him?
A political ally of Garrett, who spoke on condition of anonymity, said that the contributions from Elliott executives were largely at the request of Keith Horn, Elliott’s chief operating officer, who is a constituent of the congressman and has been raising money for him for years. Horn declined to comment, but a spokesman for Elliott stressed that the firm “does not make donations to political candidates or parties. Some individual Elliott employees raise funds and donate to candidates and party organizations, both Democrat and Republican, at the federal and state levels.” Oh, I see. The obscene contributions didn’t come from Elliot Management Corp., they came from the top executives at Elliot Management Corp. That’s completely different then.
The contributions to Garrett were only a small portion of a tidal wave of hedge fund contributions to GOP candidates aimed at boosting the industry’s fortunes in Washington. In a related story the better business bureau reports that the boozing and whoring industries outpaced the rest of the economy by an astonishing 1000% last quarter.
A central player in the effort was Paul Singer, Elliott’s publicity-shy chairman who has emerged as one of the Republican Party’s most powerful behind-the-scenes moneymen. (A fervent libertarian, Singer is also a major donor to pro-Israel causes and gay rights groups.) During last year’s election, Singer held fundraisers for GOP Senate candidates in his Central Park West apartment and, with other Elliot executives, donated nearly $500,000 to the National Republican Senatorial Committee, making the firm’s executives among the largest contributors to that group. If you google the words bitch boy puppeteer there’s a picture of Paul Singer.
Another key industry player in directing funds to the GOP was Steven Cohen, the multibillionaire chairman of SAC Capital Advisors in Stamford, Conn. His firm, generally considered among the most successful hedge funds, recently received a subpoena seeking information related to a major Wall Street insider trading probe being conducted by the U.S. Attorney’s Office in Manhattan, according to a source familiar with the probe. An SAC spokesman declined to comment for this story. Corruption at one of Wall Street’s largest hedge funds? I don’t believe it.
Other important figures in the hedge fund campaign effort were Ken Griffin, president of Chicago’s Citadel Investment, Bruce Kovner of Caxton Associates in Princeton, N.J., Robert Mercer, co-chairman of Renaissance Technologies, which is headquartered on Long Island in New York, and John Paulson, the chairman of Paulson & Co. of Manhattan. The moral of the story? Don’t trust the left coast.
A dinner for donors
The executives appear to have coordinated their efforts. At a dinner at Cohen’s palatial Greenwich, Conn. home late last August, Singer, Kovner and other hedge fund executives discussed the upcoming elections and their political contributions, according to an industry source who requested anonymity. At least one GOP operative was in attendance, the source said. (Griffin, Kovner, Mercer and Paulson all declined to comment for this story.) They reportedly closed out the festivities with a photo montage set to Sinatra’s “I’ve got the world on string”.
Among some of the more notable donations:
• Singer, Cohen, Griffin (and his wife, Anne), Kovner, Paulson and another top hedge fund executive, Cliff Asness of AQR, donated nearly $6 million to the Republican Governors Association, headed by Mississippi Gov. Haley Barbour. About $3 million of that was given in September and October, when the RGA was spearheading a crucial get-out-the-vote effort aimed at boosting Republican turnout. (The RGA is set up as a “527 committee” — a reference to that section of the tax code — which is able to take unlimited contributions from individuals and corporations but must disclose its donors publicly.) Who says “elitism” is dead?
• Ken and Anne Griffin, managing partner at Aragon Global Management, another Chicago hedge fund, also gave $500,000 in the election’s waning days to American Crossroads, an “independent” group whose formation was spearheaded by Karl Rove, former President George W. Bush’s political strategist, and Ed Gillespie, the former chairman of the Republican National Committee. Rove and Gillespie involved in political corruption? Never saw that coming.
• Mercer, the co-chairman of Renaissance, poured more than $600,000 into Concerned Taxpayers of America, making him the largest single contributor to the independent group that ran attack ads against congressional Democrats. Almost half of Mercer’s donations were made in October and November. Concerned Taxpayers of America (CTA) is really code for Corruption Through Affluence.
The magnitude of the industry donations are particularly notable because at least some of the hedge fund executives have in the past given generously to Democrats and some members of their firms continued to do so, albeit in much smaller amounts, in last year’s election. Cohen, for example, has been a major donor to Connecticut’s Democratic Sen. Chris Dodd, the retired former chairman of the Senate Banking Committee. And the Chicago-based Griffin was a “bundler” for President Obama in the last election. Paulson was a significant donor and fundraiser for Democratic Sen. Charles Schumer of New York, donating $30,400 to the Democratic Senatorial Campaign Committee as late as June 2009. But in 2010, he switched heavily to the Republicans. With other members of his firm and his wife, he contributed over $450,000 to various GOP accounts. Waffling their political allegiance based solely on how it will affect their own personal finances? What’s the opposite of integrity? Yup.
The new enthusiasm for the GOP was spurred in large part by hedge fund managers’ opposition to many of the tax and regulatory economic policies of Obama and congressional Democrats. Some hedge fund executives, along with others from private equity funds, were especially exercised about a measure that passed the House this year before stalling in the Senate. That bill would have taxed their profits, known as carried interest, as ordinary income rather than capital gains. If enacted, the legislation would increase taxes on many executives from a marginal rate of 15 percent to 35 percent. The industry also is concerned about some provisions in the Dodd-Frank financial services reform law, such as those that will require registration and greater disclosure by hedge funds and impose tighter rules on the trading of derivatives. Wait - stop the presses. Are you saying these poor guys might have to get by on just $800 million a year instead of the cool billion they’ve been pulling down? How’s that fair? Living the billionaire lifestyle ain’t cheap you know.
But the animus of hedge fund titans toward Obama and the Democrats was also driven by what they viewed as politically charged rhetoric that stigmatized them. It was bad enough when you attempted to increase their taxes President Obama, but when you hurt their feelings you crossed the line.
“Look, it was the demonization, the anti-hedge fund rhetoric,” said one Wall Street hedge fund executive who was instrumental in helping to arrange donations to the GOP. Just because someone behaves like a scumbag doesn’t mean they want to be labeled a scumbag. Makes sense to me.
“These guys,” he added, “manage billions of dollars from pension funds, from investors, local governments.” When Obama last year attacked the industry as “speculators” and criticized their role in Chrysler’s bankruptcy, many executives went ballistic. “It was the cheap-shot, class-warfare rhetoric that pissed them off,” said the executive, who spoke on condition of anonymity. Gambling with other people’s money is a tough gig man so back the fuck off okay, Mr. President.
The new GOP-controlled House may be far friendlier to the hedge fund industry, as some of its key allies are now poised to inherit important leadership positions. Incoming Majority Leader Eric Cantor of Virginia has been a key critic of the “carried interest” proposal and recently vowed to “reign in the regulatory policies” under the Dodd-Frank law to block it. In the last two years, Cantor’s campaign committee; his leadership political action committee, the Every Republican is Crucial PAC; and the Cantor Victory Committee, a joint fundraising committee he headed, all received substantial contributions from hedge fund partners. Among them: $31,400 from Cohen and executives at SAC, $32,400 from Blue Ridge Capital and $50,200 from Gruss Investments. Six top executives at the giant private equity firm KKR also contributed $55,000 to Cantor’s joint fundraising committee. More with the victory committees… I guess you can never have too many bitch boys at your disposal in Washington.
Asked for comment, Brad Dayspring, a spokesman for the majority leader, said that Cantor “has made clear that the new Republican majority will use the oversight process and all means at its disposal — including the power of appropriations — to expose and repeal regulations that kill jobs and are barriers to capital formation and economic growth.” In other words whatever the supplier of my booze and hookers wants, the supplier of my booze and hookers gets.
So there you have it. Big business abusing campaign contribution loopholes to buy the GOP’s allegiance and protect their interests in Washington. It’s the ‘new’ American way. God bless America and God bless the GOP.