Rep. Alan Grayson, who has won something of a cult following for is stance on Wall Street issues had some pointed remarks yesterday at Barry Ritholtz’ conference.
Grayson appeared on a panel with Nassim Taleb, best known as the author of The Black Swan. Their exchange about the proper role of government regulation of the financial system was entertaining, if a bit meandering. Grayson, who grew up in the Bronx and holds three Harvard degrees, has a rare ability to say relatively radical things without coming off as a rabid populist. Moderator Barry Ritholtz, author of the just-published Bailout Nation, asked a straightforward question: The U.S. government does a reasonably good job of regulating things like the safety of aeroplanes and foods. Why, then, does it do such a lousy job of regulating the financial system?
Grayson’s answer was immediate and succinct: “Capture.” For those not up on regulatory theory, this refers to the notion that regulators become captive of the industries they regulate. Noting that Fannie Mae and Freddie Mac spent $100 million on campaign contributions over the last 10 years, Grayson said: “The system is in some sense corrupt. A senator said the other day that Wall Street owns Washington, and while I might not go that far, you don’t have the airlines ‘owning’ the [airline regulators]. There is a lot of influence that Wall Street has on the government, even the judicial branch.” Indeed, Grayson could have cited the front-page story in today’s Wall Street Journal, documenting the remarkable efficiency with which banking campaign contributions appear to have helped ease accounting rules that in turn helped the banks.
Actually, if you haven’t seen the Wall Street Journal’s report to which they’re referring, you ought to check it out, particularly this interactive graphic showing who gets what money from whom. The image here is only part of the interactive graphic, so you ought to click over. As you can see, the financial services industry has gone full-on with the Democratic majority.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.