Wall Street Doesn't Like Ed Markey
By David Sirota, Jacobin
31 August 20
Ed Markey, the Democratic Massachusetts senator facing a tough primary
challenge from Joe Kennedy III, is known for the Green New Deal - but he
also has a history of drawing the ire of Wall Street.
The Democratic establishment is trying to kick Ed Markey out of the Senate
in tomorrow's Massachusetts primary. It is difficult to overstate how
devastating a Markey loss would be. Joe Kennedy III defeating the
working-class author of the Green New Deal during a climate crisis would
make 2020 an even worse year than it has already been.
Markey, though, is not merely a Johnny-come-lately or a good environmental
legislator - you can detect his deeper commitment to economic justice by
taking a look back on his career as one of the lawmakers willing to wage the
toughest possible fight in Congress: the battle to prevent Wall Street's
takeover of our economy.
This key part of Markey's career is lost history - but it is the most
revelatory, because combating the financial industry is not like any other
policy battle for a Democrat. It is not like taking on the fossil fuel
industry or the gun industry, which has gone all-in with the Republican
Party. Being a Democrat and challenging Wall Street means going up against
both the GOP and your own Democratic Party, which has its own deep and
lucrative ties to a financial industry that bankrolls the party's
candidates.
This is why so many Democrats have gone along with schemes to deregulate
Wall Street. It probably has something to do with Kennedy refusing to
cosponsor legislation to repeal the special "carried interest" tax break for
the hedge fund industry whose donors have supported him - until he was
called out in the press. And it is why so few Democratic lawmakers question
Wall Street's supremacy.
Markey, though, has often been one of those few. He was one of just a
handful of lawmakers who voted against deregulation in the late 1990s and
who cosponsored a bill to end the carried interest tax loophole. He also
sounded an early-warning alarm about the risky derivatives that were
boosting Wall Street profits before they helped blow up the economy during
the financial crisis.
Ron Suskind's classic book Confidence Men - which is about the Obama-era
fight over financial reform - tells that forgotten story. Suskind notes that
"Markey could bid fair claim to being farther ahead of the curve on the
financial crisis than almost any elected official in Washington."
Back in the early months of Barack Obama's first term, Markey led the battle
to prevent Wall Street firms from using taxpayer bailout money to pay their
executives huge bonuses. Here's the press release from Markey's office at
the time:
"This is complete March madness. You don't blow the big game and then still
get a trophy," said Markey. "Not one single penny of taxpayer funds should
be used to reward the reckless executives whose irresponsible risk-taking
has done massive damage to our economy. And this bill will ensure that they
are not rewarded."
The Bonus Recoupment Tax Bill will impose a 90 percent tax on bonuses for
those individuals earning more than $250,000 at companies that have received
at least $5 billion in government funds from the Troubled Asset Relief
Program.
From 1987 to 1995, Rep. Markey was the chairman of the House Subcommittee on
Telecommunications and Finance. In that role, Markey held five oversight
hearings on the risks financial derivatives posed to the markets. He then
introduced The Derivatives Market Reform Act of 1994, a bill which would
have regulated derivatives transactions by affiliates of insurance companies
like AIG to protect the financial system.
Markey introduced similar legislation in 1995, 1999 and 2008, but it never
was adopted due to opposition from the Republican majority and the financial
services industry.
Markey led this fight even as President Obama was trying to fight off the
bonus tax proposal after having just run a campaign that had raked in more
Wall Street money than any previous candidate in the history of presidential
campaigns. So it took a lot of guts for Markey to fight the good fight.
In Confidence Men, Markey recounts how he realized Wall Street's schemes
were getting out of control right after the 1987 stock market crash.
"Something very basic, very fundamental, had changed on the Street, and we
on the subcommittee couldn't put a finger on what was different," Markey
said. He recounted how one of the major Wall Street figures convicted of
securities fraud in that era would tell lawmakers that finance industry
executives "figured out how to turn the investing of other people's money
into a kind of game, where they were constantly changing the rules in a way
that was subtly fraudulent, against the basic principles of fairness or
fiduciary duty."
No doubt, Markey hasn't opposed every bill Wall Street has wanted - he voted
for the 2008 emergency bailout, and both he and Kennedy supported the recent
CARES Act coronavirus relief legislation that provided a giant bailout to
corporate America. But he (and Kennedy) also most recently opposed
bipartisan legislation to roll back the modest Dodd-Frank reforms passed in
the wake of the financial crisis.
The financial industry has near-complete control of Washington - and its
moguls are right now funding both sides of the national election as Wall
Street continues growing ever larger and more powerful. In light of that,
the Massachusetts race is a proxy battle over the whole issue of plutocracy.
If Democratic voters nominate Kennedy, they will be rewarding a wealthy
scion whose closing ad promotes a Game of Thrones-style argument effectively
insisting that his lineage makes him the One True King of Massachusetts.
If voters instead choose Markey, they will help keep a crucial Senate seat
in the hands of a legislator who has been willing to challenge the most
powerful industry on the planet as it tries to swallow our entire economy.
In this age of oligarchy, that would be no small thing.