Friday, July 16, 2010

The Lawyers and Lobbyists Full Employment Act

At The Foundry

image  Without spending a single dime, the Obama administration did more yesterday to create jobs for the U.S. economy than it has throughout its entire existence. With the single stroke of a pen, President Barack Obama signed the Dodd-Frank financial regulation bill that set in motion 243 new formal rule-makings by 11 different federal agencies. Each of the 243 rule-makings will employ hundreds of banking lobbyists as they try to shape what the final actual laws will look like. And when the rules are finally written, thousands of lawyers will bill millions of hours as the richest incumbent financial firms that caused the last crisis figure out how to game the new system. Yesterday, the Washington law firm Jones Day snapped up the Securities and Exchange Commission head enforcement division lawyer, and J.P. Morgan Chase, one of the biggest U.S. banks by assets, assigned more than 100 teams to examine the legislation. University of Massachusetts political science professor Thomas Ferguson tells The Christian Science Monitor:

By delegating so much to the regulators, Congress is inviting everyone interested in the outcome to make more campaign contributions, as they intervene in the regulatory process to influence the regulators. Nothing is settled. It’s a gold mine for members of Congress.

So if the richest big banks, lawyers, lobbyists and Congress were the big winners yesterday, who are the losers? Small banks, entrepreneurs and you…

Back in 1994, Jonathan Rauch wrote in his book Government’s End: “Economic thinkers have recognized for generations that every person has two ways to become wealthier. One is to produce more, the other is to capture more of what others produce. … Washington looks increasingly like a public-works jobs program for lawyers and lobbyists, a profit center for professionals who are in business for themselves.” The Dodd-Frank bill is the perfect extension of Washington as “a public-works jobs program for lawyers and lobbyists.” Instead of encouraging the U.S. economy to invest in engineers, technology and new products, it requires firms to invest in lawyers and lobbyists just to stay alive. It will do nothing to help create new wealth or new net jobs in the economy, but will transfer more wealth to lobbying and law firms in Washington, D.C.

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