Charlie Gasparino writes up a meeting between Republican Senate leaders and financial big-wigs. I responded to a liberal blog post on this earlier, but here’s the interesting part — look what appears three times in Gasparino’s description of the financiers’ concerns about proposed Wall Street regs:
Both McConnell and Cornyn listened to numerous complaints the executives have with the bill. These included complaints about provisions that allow the government to continue to prop up financial institutions that are “too big to fail.”
… as they fight its least free-market components, such as the notion that the government can determine which banks are “too big to fail.”
In addition to Too Big To Fail, other parts of the bill that drew concern included what one executive from JP Morgan said is a provision that would give authority to government to override bankruptcy laws, and determine which class of bondholders should get paid off first.
Why are Wall Street types worried that Obama wants to institutionalize bailouts? Gasparino provides another clue when he describes the crowd: “About 25 Wall Street executives, many of them hedge fund managers.”
This is all little more than my deciphering bird entrails, but could it be that Republicans are trying to rally a lobby against bailouts?
I’ve written about how Republicans could get popular backing by campaigning against bailouts and the Democrats’ broader Big Business-Big Government agenda (think of the Pharma-backed health-care bill that requires us to buy private insurance, and the porked-up climate bill), but I’ve always thought there was a problem: bailouts, like all special-interest, big-government legislation, provides concentrated benefits and diffuse costs. There may be broad opposition to bailouts, but there’s no intensive lobby against it… unless….
Maybe Republicans are rallying hedge funds to lobby against bailouts. Hedge funds, including firms that invest (both long and short) in distressed debt often are playing the market. If politicians step in and disrupt the market, that takes away investment opportunities for hedge funds.
So, if the Republicans are going to follow my advice and run as free-market populists, they could have their own decidedly non-populist class of donors — Let Democrats get all the Goldman money; Republicans could get the hedge fund money.
