Tips, Bribes, and Campaign Finance

One of the predictable side effects of the excessive financialization of the US economy is mushrooming corruption. Here’s the latest story:

[A new report says] the former head of the federal pension insurer [PBGC] . . . improperly contacted some of the firms potentially bidding on [government] contracts and later sought and received job-hunting help from an unnamed executive of Goldman Sachs after the company had been awarded a contract to manage up to $700 million.

At the heart of the inspector general’s inquiry is a controversial decision made in early 2008 to gradually shift billions of dollars from bonds, which make up the bulk of the agency’s assets, into stocks, real estate, and private equity investments.

I’ve also been following New York Attorney General Andrew Cuomo’s ever-expanding investigation into state pension funds. I am happy to see that Cuomo is starting to get at the heart of the problem by targeting campaign finance:

Under the terms of [a May 14] agreement, [the Carlyle Group] will adopt Cuomo’s Public Pension Fund Code of Conduct. The code of conduct bans investment firms from hiring, utilizing, or compensating placement agents, lobbyists, or other third-party intermediaries to communicate or interact with public pension funds to obtain investments. To avoid pay-to-play schemes, the Code prohibits investment firms (and their principals, agents, employees and family members) from doing business with a public pension fund for two years after the firm makes a campaign contribution to an elected or appointed official who can influence the fund’s investment decisions.

As the Center for Public Integrity has noted, there’s no clear definition of a bank “too big to fail”–the cash hogs at the bailout trough are “simply ‘too politically connected to fail.'” Andrew Cuomo is one of the few political officials to make that connection explicitly as he addresses the public corruption that’s become de rigeur in our age of “Bad Money.”

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