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Friday, November 26, 2010

Bought and Paid For

Charlie Gasparino is a tough guy. He is easily the most pugnacious financial journalist that I have ever seen or read. Yet he is also the most unpretentious, dogged in pursuit of a story and ever loyal to his blue collar roots. As he has risen from the New York Post to Newsweek to the Wall Street Journal to CNBC and now Fox Business Network and the Huffington Post, he never seems to have been sucked in to the lifestyle of the major league success that he is. He has lost none of his outspokenness or sense of fair play.

Mr. Gasparino has a strong new book out entitled, “Bought and Paid For” (Sentinel, 2010). The subtitle is “the unholy alliance between Barrack Obama and Wall Street”. The book turns a lot of conventional wisdom completely upside down. Most people view Wall Street as full of Republicans who lobby hard for lower taxes and deregulation of the financial industry. At the same time, Democrats are the main street little guys who detest the financial leaders and all that they do. Slowly and convincingly, Gasparino builds the case that such assumptions are way off base.

The book starts off simply a listing of financial contributions by Wall Street executives to political campaigns since 2008. Surprise! They gave $20.1 million to Democrats and just under $14 million to Republicans.

The major thesis of the volume is that the Wall Street boys benefit from an increasingly larger government. When Bill Clinton set a goal for 70% home ownership, Wall Street obliged with new mortgage products that made it easier to bundle and re-package mortgages. They made a tidy sum in the process. And now, with the economy still moribund, and the middle class struggling just to hold steady, Wall Street is on a tear again. But, the average taxpayer will pay for Wall Street’s mortgage mistakes for decades. And, as we pile on more debt and still more debt, Wall Street gets a cut of that as well. So, Wall Street is not too adverse to a Democratic president despite the folklore.

There is also a fascinating portrait of Senator John McCain as presidential candidate McCain in 2008. He never was able to muster much support on Wall Street while the leading commercial bankers and investment bankers saw Obama as a moderate who would support them. McCain, a former POW who was tortured by the North Vietnamese “couldn’t stand being in the same room with guys who compared trading bonds for a living with warfare. As a man who had survived the brutality of war in the most literal sense, he found their talk unbearable.” Being from Arizona did not help either. Financial services were not an industry that he had to cater to in his House and Senate races over the years.

Now, Gasparino indicates that the tide may be turning. Wall Streeters are seeing that the president is not really oriented towards business at all. He stops just short of saying what some people suspect and it is this—no matter who gets elected Wall Street really runs things. Jim Carville, Bill Clinton’s enormously entertaining and engaging former aide, said back in the ‘90’s, that “when I grow up, I want to be the bond market” as they can stop anything. It appears that in the battle between Main Street and Wall Street, Wall Street has won and won easily.

I highly recommend “Bought and Paid For”. You may, like I, agree with parts of it. But Charlie Gasparino does not mince words and gives you a refreshing viewpoint that you are unlikely to see anywhere else. And, importantly, he, like most of us, is an ardent believer in free markets. He just wants to see the game played fairly.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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