The hedge fund sector’s main lobbying group employs Senator Chuck Schumer’s former top banking aide, Carmencita Whonder.
Just two years after Schumer sat down with top hedge fund managers to tell them that they’d better start playing politics now that Democrats were running Capitol Hill, the circle has been completed. Hedge funds set up the Managed Fund Association, which then hired Whonder’s firm Brownstein Hyatt Farber Schrek to lobby lawmakers.
The story of how Whonder went from being Schumer’s top financial aide to collecting paychecks from hedge funds reveals a little understood fact about the way government works. Typically, people think that lobbying is a parasite on political operations, a way for business interests to garner favours from politicians. Economists use the fancy word “rent-seeking” to describe this kind of behaviour.
But the reality is almost the photographic negative of this. Instead, it is the politicians who initiate and demand lobbying by industry, often using threats to get otherwise non-political businesses to start making campaign donations and hiring their aides. It’s not politics that gets corrupted by meddling, it’s politics that does the corrupting and meddling.
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