WASHINGTON, September 4, 2014 – Rep. Eric Cantor (R-VA), the House Majority Leader and long-time defender of Wall Street, including supporting bailouts of failed firms with taxpayer money, was defeated by the voters of Virginia’s Seventh Congressional District. Rather that continue to fill out his congressional term until January, Cantor abruptly resigned and joined the Manhattan-based global investment bank Moelis & Co. as vice chairman and managing director and will serve as a “strategic counsel.”
He will receive a reported compensation of $3.5 million in cash and stock.
“The news that Eric Cantor has taken a job on Wall Street comes as little surprise,” says Kevin Broughton, national communications director for the Tea Party Patriots Citizens Fund. “After Dave Brat’s upset victory in June, many analysts accused Cantor of paying more attention to Wall Street than to the people of Virginia’s 7th District. He certainly didn’t waste any time validating that theory.”
Former Rep. Tom Davis (R-VA) was not surprised. He said, “He’s got a lot of private-sector friends he has done favors for. So I think it would be easy for him to become Eric Cantor Inc. and make a few million dollars a year.”
Cantor’s attractiveness to Wall Street has nothing to do with any experience managing large amounts of money. Before his first election as a state legislator in 1991, he practiced law in his family’s real-estate development firm in Richmond.
As The New York Times pointed out,
“What he brings to that world are the connections he built in what is still known, innocently enough, as public service. From his first assignment on the Financial Services Committee, Mr. Cantor courted the favor and donations of Wall Street. He…personally eliminated a requirement that hedge funds disclose how they gather market-sensitive intelligence…He has been well-rewarded, raising more than $3 million since 1999 from the securities and investment sector. in the last few years, he has been the top congressional recipient of its generosity.”
Representing Wall Street and big business, Cantor was perhaps the most persuasive advocate in Congress for the Export-Import Bank, which subsidizes certain large corporations. The Bank will exhaust its charter on Oct. 1. The new House Majority whip, Rep. Steve Scalise (R-LA), opposes renewing the Export Import Bank charter, as does the new majority leader, Rep. Kevin McCarthy (R-CA).The U.S. Chamber of Commerce and the National Association of Manufacturers have mounted an all-out campaign to save the Bank, but without Cantor’s influence, they may not succeed.
In Congress, Eric Cantor and others in the leadership showed contempt for any members who challenged the traditional influence of Wall Street, the subsidization of big business, and the bail-out of failed enterprises. Consider their treatment of Rep. Justin Amash (R-MI). Last December, after Amash repeatedly opposed Republican budgets, congressional leaders removed him from the House Budget Committee. At a town-hall meeting in Middleville, Michigan he told those assembled: “I was kicked off the budget committee for wanting to balance the budget.”
After law school at the University of Michigan, Amash began to receive daily e-mails from the Mackinac Center, a free market think-tank.
“They were always pointing out how Democrats and Republicans in Lansing voted the same way on economic matters,” he says. “It seemed like everyone was for industrial policy—targeted tax breaks and subsidies rather than lowering tax rates and letting markets work. I wanted to know if any economic philosophers shared my views. So I entered a few search items into Google and found myself on Hayek’s Wikipedia page.”
From there he went on to read “The Road To Serfdom” and other classics.
Sadly, Eric Cantor is far more typical of Congress than Justin Amash. Ideas and the public interest seem to take a back seat to personal advancement and enrichment. And Eric Cantor is hardly alone.
In 2009, then-House Speaker Nancy Pelosi and her husband, Paul, made the first of three purchases of Visa stock. Visa was holding an initial public offering, among the most lucrative ever. The Pelosis were granted early access to the IPO as “special customers” who received their shares at the opening price, $44.
They turned a 50 per cent profit in two days.
Peter Schweitzer, a scholar at the Hoover Institution, points out that the Pelosis got their stocks just two weeks after legislation was introduced in the House that would have allowed merchants to negotiate lower interchange fees with credit card companies. Visa didn’t like the bill, and Pelosi kept it bottled up for two years. During that time, the value of her Visa stock jumped 200 per cent while the stock market as a whole dropped 15 per cent.
“Isn’t crony capitalism beautiful?” Asks Schweitzer.
Soon after he retired from Congress in 2011, one of the leading liberals in Congress, Rep. William D. Delahunt (D-MA) started his own lobbying firm with an office on the 16th floor of a Boston skyscraper. One of his first clients was a small coastal town that agreed to pay him $15,000 a month for help in developing a wind energy project. While in Congress, Delahunt personally earmarked $1.7 million for the same energy project.
According to The New York Times,
“Today…his firm…stands to collect $90,000 or more for six months of work from the town of Hull…with 80 per cent of it coming from the pot of money he created through a pair of Energy Department grants in his final term in office.”
Members of Congress, with safe seats, now seem willing to give them up to become lobbyists and make millions. This is what Senators John Breaux (D-LA) and Trent Lott (R-MS) did. Others, such as Sen Tom Daschle (D-SD) and Rep. Richard Gephardt (D-MO) wait to be defeated before selling their services to various special interests to influence their former colleagues.
In July, former Rep. Howard Berman (D-CA) was hired as a lobbyist by the Motion Picture Association of America (MPAA) whose interests he had long promoted in Congress. The MPAA is led by former Sen. Christopher Dodd (D-CT).
Former Republican presidential candidate Newt Gingrich often criticizes big government, but has been happy to be a highly paid lobbyist in support of enlarging government dramatically when out of office or not seeking it. Conservative columnist Timothy Carney notes that,
“When Newt Gingrich says he never lobbied, he’s not telling the truth. When he was a paid consultant for the drug industry’s lobby group, Gingrich worked hard to persuade Republican congressmen to vote for the Medicare drug subsidy that the industry favored…Newt Gingrich spent the past decade being paid by big businesses to convince conservatives to support the big government policies that would profit his clients.”
Congress, for many of its members, seems something quite different from an opportunity to serve the public interest and work for the good of the community. They seem to view it as a farm team for the riches to be earned in the future by persuading their former colleagues to serve the interests of their new masters. Of course, as members of the farm team, players like Eric Cantor were doing their best to impress their future employers with bailouts, subsidies, tax breaks, whatever it took to get in their good graces and qualify for future lucrative employment. It is the rest of us, citizens and taxpayers, who pay for this corruption of our system.
Until Americans understand how this bipartisan political game works, we are unlikely to change it. Republicans and Democrats are co-conspirators in this enterprise. Thus far, we have let them get away with it. And some, like Eric Cantor, are making it pay very nicely.