Editor’s Note: Today we are launching a new occasional feature called FLASHBACK. Each edition will be an unearthed story from history that remains relevant today. This is the first installment. Please provide feedback on this new feature in the comments below! - D
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 co-sponsor 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 definitely 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 co-sponsored a bill to end the carried interest tax loophole. He also was the guy sounding 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 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.
Importantly, 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.
Photo credit: Wikimedia Commons
This newsletter relies on readers pitching in to support it. If you like what you just read and want to help expand this kind of journalism, consider becoming a paid subscriber by clicking this link.
Only paid subscribers can comment. Please subscribe or sign in to join the conversation.