Hensarling Assembles Wall Street-Backed Panel for Hearing on His Wall Street Giveaway, the “Financial CHOICE Act”

On April 26, the House Financial Services Committee will hear testimony in support of Rep. Jeb Hensarling’s (R-TX) deceptively-named “Financial CHOICE Act.” As chairman of the committee, Hensarling has assembled a handpicked lineup of Wall Street-backed, think tank lackeys to discuss his legislation, which guts protections guaranteed by the Dodd–Frank Wall Street Reform and Consumer Protection Act, established in the wake of the 2008 financial crisis. Each of the individuals chosen by Hensarling to sing the praises of his massive Wall Street giveaway have deep ties to the financial industry. Below is a review of those connections.

John Allison

John Allison

Allison’s deep ties to Wall Street began nearly a half a century ago.

  • Allison’s deep ties to Wall Street began in 1971 when he started working for BB&T Corporation, the massive financial services company he later ran for nearly two decades, serving as “chairman and CEO” from 1989 to 2008. Allison oversaw “sixty bank and savings-institution acquisitions,” for the then eleventh largest bank in the United States. In 2007 alone, Allison took in nearly $5 million in “total compensation” from the bank. A graduate of the Stonier Graduate School of Banking, Allison has worked as a director of the investment bank Morellis & Company since November 2015. Moelis & Company boasts it has “expert capabilities in M&A, Recapitalization & Restructuring, Capital Markets, and Financial Institution Advisory.” Despite working for only two months, Allison took nearly $60,000 in cash payments and stock awards from the bank that year. [“John A. Allison Bio,” Cato Institute website, accessed April 24, 2017; and “John A. Allison IV’s Executive Profile,Bloomberg, accessed April 24, 2017; Andrew Martin, “Give BB&T Liberty, but Not a Bailout,” New York Times, August 1, 2009; Christina Rexrode, “BB&T’s Allison Will Step Down Dec. 31,” Charlotte Observer, August 28, 2008; “About Us,” Moelis & Company website, accessed April 24, 2017; Jennifer Jacobs, “Ex-BB&T CEO Allison Said to Be in Running for Treasury Chief,” Bloomberg, November 23, 2016; “Moelis & Co Summary,” Reuters, accessed April 24, 2017; Peter Lee, “Moelis Makes It to the Big League,” Euromoney, July 2014; and  “Moelis & Company’s 2015 8-K Filing,” Moelis & Company website, accessed April 24, 2017.]

Allison is a member of several Wall Street-backed special interest trade groups that lobby Congress for weaker consumer protections.

Allison ran BB&T when it accepted more than $3 billion in a TARP bailout. He also mandated his new bank executives get a copy of Ayn Rand’s Atlas Shrugged.

  • Allison, who ran BB&T when it accepted $3.1 billion in bailout money under the Troubled Asset Relief Program” which he had called a “rip-off,” was touted as “perhaps the most vocal proponent” on Wall Street of Ayn Rand’s ideas on “the dangers of government meddling in the markets.” Allison, who claimed his bank had been “forced” to take the money, had mandated that all new BB&T executives get “Atlas Shrugged” and “a thirty-page pamphlet describing BB&T’s philosophy and values,” which appear to be derived from Rand’s works. One visiting analyst who listened to an “hour and a half” of a lecture from Allison, said people who “‘don’t drink [Allison’s] Kool-Aid . . . don’t work at the bank.'” BB&T spent “about $5 million a year to finance teaching positions and research on ‘the moral foundations of capitalism'” to fit with Allison’s personal beliefs. Between 2005 and 2008, “the BB&T Charitable Foundation [gave] twenty-five colleges and universities several million dollars to start programs devoted to the study of Rand’s books and economic philosophy.” Allison sat on the board of trustees at the Ayn Rand Institute and, while he was CEO, BB&T “contributed regularly to ARI in the five- and six-figures.” [Andrew Martin, “Give BB&T Liberty, but Not a Bailout,” New York Times, August 1, 2009; Eric Lichtblau, “Cato Institute and Koch Brothers Reach Agreement,” New York Times, June 25, 2012; Clark Davis, “Ayn Rand Studies on Campus, Courtesy of BB&T,” National Public Radio, May 6, 2008; and Philip Rojc, “If Altruism Is Overrated, Who’s Backing Ayn Rand’s Ideas?,” Inside Philosophy, August 3, 2016.]

Allison once ran the Koch-founded Cato Institute and still sits on its board of directors, which is stocked with other financial industry executives.

  • Allison is the former President and CEO of the Cato Institute, and still sits on the board of directors of the conservative think tank. The Cato Institute, founded by Charles G. Koch in 1977, has received “about $30 million” from the Koch brothers, and is directed by a board stocked with financial industry executives. Board members include an executive at a “real estate management, investment, and development company;” a founding partner of a private equity firm; a “Chicago commodities trader;” a Wall Street trader who “developed proprietary quantitative financial forecasting and risk models;” and the former director of E*TRADE Financial. In 2014, Allison’s BB&T contributed “$5,000 or more” to the Cato Institute and was named a Corporate Sponsor. [“The Early Days: Reviving a Tradition,” in Twenty-Five Years at the Cato Institute, 2001 Annual Report, accessed April 24, 2017; Laurie Bennett, “The Kochs Aren’t the Only Funders of Cato,” Forbes, March 13, 2012; “Institutional Support,” in Cato Institute 2014 Annual Report, accessed April 24, 2017; “John A. Allison Bio,” Cato Institute website, accessed April 24, 2017; “Author Profile: John Allison,” James G. Martin Center for Academic Renewal website, accessed April 24, 2017; Cato Institute, “Cato Names Bond, Kilts, and Lapeyre to Board,” news release, April 1, 2014; Julia Flynn Siler, “Business People; A Commodity Trader Fares Poorly in Funds,” New York Times, April 26, 1988; Board of Directors, Cato Institute website, accessed April 24, 2017; and “Executive Profile: Robert Gelfond,” Bloomberg, accessed April 24, 2017.]

Allison supports the complete repeal of the Federal Reserve and the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Alison was interviewed by Trump to potentially join his administration of Wall Street insiders as Treasury Secretary.

Norbert Michel

Norbert Michel

Michel is a senior research fellow at Heritage Foundation, a think tank with deep ties to Wall Street and wealthy corporations.

  • Michel is a senior research fellow for financial regulations and monetary policy at the Heritage Foundation, a conservative Washington, D.C., think tank. Steven Forbes, president and editor-in-chief of Forbes Media, is a trustee at the Heritage Foundation, while its chair founded a private equity firm and “served as a managing director of Morgan Stanley.” The board of Heritage includes William Walton, the founder and chairman of a private equity firm, and Mark Kolokotrones, the founder of a financial services firm and venture capital firm. Heritage has accepted at least $12 million from the Richard and Helen DeVos Foundation/DeVos Urban Leadership Initiative, and takes funding from Lockheed Martin, Boeing, Chevron, the Walton Family Foundation, and “conservative foundations such as the Lynde and Harry Bradley Foundation.” [“Norbert J. Michel,” Heritage Foundation website, accessed April 24, 2017; Graziella Steele, “Leveraged Landlording: Institutional Investors Look to New Mechanisms to Raise Capital,” Mecklenburg (County, NC) Times, February 18, 2014; and Association of Credit and Collection, Oregon, “Oregon: House Subcommittee Continues Critique of CFPB,” news release, April 8, 2017; “Board of Trustees,” Heritage Foundation website, accessed April 24, 2017; Ken Silverstein, “The Great Think-Tank Bubble,” New Republic, February 29, 2003; Lee Fang, “Emails Show Close Ties Between Heritage Foundation and Lockheed Martin,” Intercept, September 15, 2015; Michael Barbaro and Stephanie Strom, “Wal-Mart Finds an Ally in Conservatives,” New York Times, September 8, 2006; and “The Heritage Foundation,” Conservative Transparency website, accessed April 26, 2017.]

Michel thinks there are too many financial regulators and that predatory payday lenders should be left alone.

  • Michel, who believes the United States “has too many financial regulators,” defended payday lenders when he argued Congress should “leave payday loan companies . . . alone” rather than “killing this industry in the name of protecting people.” [Graziella Steele, “Leveraged Landlording: Institutional Investors Look to New Mechanisms to Raise Capital,” Mecklenburg (County, NC) Times, February 18, 2014; and Association of Credit and Collection, Oregon, “Oregon: House Subcommittee Continues Critique of CFPB,” news release, April 8, 2017; and Norbert Michel, “Government: We Must Destroy Payday Lenders Because Americans Are Stupid,” Daily Signal, October 9 2015.]

Michel thinks there has been no substantial financial deregulation in the U.S. in more than one hundred years.

Michel thinks the CFPB should be eliminated to preserve our economic freedom and because it isn’t necessary.

  • In 2017 Norbert Michel said, “Curbing the CFPB’s authority is necessary to preserve Americans’ economic freedom.” He said the CFPB “should be eliminated” because it “has too much power” and “isn’t necessary.” [Norbert Michel, “Yes: It Has too Much Power–and Besides, It Isn’t Necessary,” Wall Street Journal, March 18, 2017.]

Michel thinks opposition to Hensarling’s Financial CHOICE Act is “disturbing.”

  • In 2016, Norbert Michel showed support for Rep. Hensarling’s CHOICE Act and called rhetoric against it “disturbing.” He said, “fear-mongering and special interest lobbying” would “prevent real financial reforms from even being debated” just “as with the 2010 Dodd-Frank Act.” Michel claimed, “The objective is to scare everyone into believing Dodd-Frank and the CFPB make us safer.” [Norbert Michel, “Opponents of CHOICE Act Aren’t Interested in Protecting Consumers,” Daily Signal, September 20, 2016.]

Hester Peirce

Hester Peirce

Peirce works for the Mercatus Center, a think tank deeply tied to Koch Industries. 

Peirce thinks the government attempting to identify risks that could lead to another financial crisis is like helicopter parenting.

Peirce doesn’t think hedge funds should have to register with the SEC.

Peirce has attacked the U.S.’s non-governmental regulator of stock and bond markets.

  • In 2017, Hester Peirce criticized the Financial Industry Regulatory Authority, which is the U.S.’s “non-governmental regulator for the stock and bond markets” that “oversees about 4,030 firms and more than 638,000 individuals,” calling it “‘largely unaccountable to the industry or to the public,'” and “‘not structured in a way to produce high-quality regulation.'” [Patrick Temple-West, “Wall Street’s Self-Regulator Defends Itself from Critics,” Politico Pro, March 24, 2017.]

Alex Pollock

Alex Pollock

Pollock spent nearly four decades in the banking industry.

Pollock’s appointment to a Trump transition landing team was seen as a sign the administration would gut Wall Street protections.

Pollock’s appointment also was seen as a step away from candidate Trump’s campaign rhetoric targeting the “global banking elite.”

  • Prior to the official announcement of his appointment, sources said Alex Pollock would be Treasury’s “point man on financial regulation,” which indicated a step back from Trump’s campaign rhetoric against the “global banking elite” and pointed towards a reality “that Trump has always been proposing a bonanza of tax cuts and deregulation for bankers.” [Matthew Yglesias, “It Turns Out We Should Have Taken Trump Literally as Well as Seriously,” Vox, November 28, 2016.]

Pollock has testified and written about his opposition to the government attempting to detect risks that could lead to another financial crisis. 

  • Pollock has testified and written about his opposition to the Financial Stability Oversight Council (FSOC), including arguing that FSOC’s work to designate companies as “systemically important” to our economy was “unavoidably political” and was not necessarily the height of “objectivity.” [Hearing on The Arbitrary and Inconsistent Non-Bank SIFI Designation Process, Before the Subcommittee on Oversight and Investigations, U.S. House Committee on Financial Services, 115th Cong. (March 28, 2017) (statement of Alex J. Pollock, Distinguished Senior Fellow, R Street Institute); and Alex Pollock, “FSOC is Too Political to Be Taken Seriously,” American Banker, April 19, 2017.]

Pollock opposed the creation of the Consumer Financial Protection Bureau.

  • Pollock has publicly voiced his opposition to the creation of a Consumer Financial Protection Bureau, claiming that any potential bureau to protect consumers would be “highly intrusive.” Pollock also argued against such protective measures by saying Americans should “be able to take risk in their financial decisions.” [Alex Pollock, “One Good Idea and a Number of Bad Ones,” June 24, 2009, American Enterprise Institute website, accessed April 24, 2017; and James L. Gatos, Todd Zywicki, Alex Pollock, and David C. John, “Protecting Consumers in the Financial Marketplace: Thinking Outside the Boxes,” Heritage Foundation website, April 2, 2010.]

Pollock works for a corporate-funded think tank with multiple board members employed by insurance companies that have lobbied Congress about Dodd-Frank.

  • Pollock works for the R Street Institute in Washington, D.C., a think tank whose board of directors is occupied, in part, by insurance industry representatives. The insurance corporations which employ these individuals have lobbied Congress on portions of Dodd-Frank that could affect their companies’ business, noting that implementation could “affect . . . operations.” During the institute’s creation, the organization from which it was subdividing–The Heartland Institute–advised “any individual, foundation, and corporation” in insurance “to contribute to [the] new organization.” As recently as 2014, R Street’s donors were “divided roughly equally among corporate and foundation sources.” [“Alex J. Pollock,” R Street Institute website, accessed April 24, 2017; David Weigel, “Climate Change Believers Split from Heartland Institute,” Slate, May 14, 2012; “Company Overview,” RennaisanceRe website, accessed February 24, 1017; “Leadership,” R Street Institute website, accessed April 24, 2017; Michael Cohen,” Natural Hazards Center website, accessed April 24, 2017; RenaissanceRe Holdings Ltd., 2015 Annual Report, accessed April 24, 2017; “Fast Facts,” State Farm Mutual Automobile Insurance Company website, accessed February 24, 2017; “Robert Watkins,” LinkedIn website, accessed April 24, 2017; “State Farm Insurance, Issue: INS, 2014,” Center for Responsive Politics website, accessed April 24, 2017; and “Funding and expenditures,” R Street Institute website,  accessed April 24, 2017.]

Peter Wallison

Peter Wallison

Wallison works at the American Enterprise Institute, a D.C.-based think tank supported and funded by billionaires and Wall Street interests.

  • Wallison is the co-director of the “program on financial policy studies” at the American Enterprise Institute (AEI), a Washington D.C.-based think tank that has two billionaires hedge fund managers, Seth Klarman and Bruce Kovner, on its board of directors. AEI receives financial support from a cadre of billionaires including former Lehman Brothers CEO Peter Peterson, oil titans Philip Anschutz and Charles Koch, co-founder of private equity firm KKR George Roberts, and New York hedge fund manager Paul Singer. AEI also has received $20 million from the “co-founder and chairman of the private equity firm the Carlyle Group,” which, as of 2012, had “more private equity funds, investors, and assets than any other [PE] firm,” owned more than 209 companies, and accepted funding from for-profit college chain, Corinthian Colleges, Inc. [“Peter J. Wallison,” American Enterprise Institute website, accessed April 25, 2017; David Callahan, “Which Washington Think Tank Do Billionaires Love the Most? And Why?,” Inside Philanthropy, February 5, 2015; Jennifer Steinhauer, “In New Home, Policy Group Gets Big Gift,” New York Times, February 24, 2014; Nathan Vardi, “David Rubenstein and The Carlyle Group: The Kings Of Capital,” Forbes, October 3, 2012; Nathan Reiff, “Who is Seth Klarman,” Investopedia, February 7, 2017; Lee Fang, “Emails Show Close Ties Between Heritage Foundation and Lockheed Martin,” Intercept, September 15, 2015; and Michael Barbaro and Stephanie Strom, “Wal-Mart Finds an Ally in Conservatives,” New York Times, September 8, 2006.]

Wallison played a significant role in the Reagan administration’s financial services deregulation efforts, and its response to the Iran-Contra scandal.

During the financial crisis, Wallison vehemently opposed financial regulations designed to protect Americans.

  • In November 2008, Wallison wrote that it was “probably impossible” to predict the “true sources of systemic risk” in financial markets before they collapse, that we should not “want to” investigate it, and that we should discard “the idea of regulating” massive financial institutions, suggesting regulation would not prevent massive financial institutions from “taking . . . huge risks.” In this same piece, Wallison also wrote that it was “completely inexplicable” that lawmakers would want to “spread regulation” to “hedge funds, brokerage houses, and others that the government designates as systemically significant.” [Peter J. Wallison, “Not Everything Can Be Too Big to Fail,” Wall Street Journal, November 22, 2008.]

Wallison knew who to blame for the financial crisis: “predatory borrowers.”

  • Wallison appeared to pin the blame for the financial collapse of 2008 on “predatory borrowers” writing that “many people who received high-risk loans were predatory borrowers . . . because they took advantage” to get mortgages “they knew they could not pay.” He also believes there was no evidence that “predatory lending was so widespread as to have produced the volume of high-risk loans that were actually originated.” [Peter J. Wallison, “Dissent from the Majority Report of the Financial Crisis Inquiry Commission”, American Enterprise Institute website, January 14, 2011.]

Wallison didn’t think the financial crisis was caused by insufficient Wall Street regulations.

Wallison doesn’t believe the experts, won’t blame credit default swaps for the financial crisis.

  • Wallison believes credit default swaps were not responsible for the financial crisis, calling the failure of AIG an “outlier,” and saying that “‘blaming CDS for the financial crisis because one company did not manage its risks properly is like blaming lending generally when a bank fails.'” However, even the Financial Crisis Inquiry Commission noted that “credit default swaps (CDS) fueled the mortgage securitization pipeline” which helped to “fuel the housing bubble.” [Peter J. Wallison, “Dissent from the Majority Report of the Financial Crisis Inquiry Commission”, American Enterprise Institute website, January 14, 2011.]During, and in the wake of the collapse, however, various outlets reported on the role of credit default swaps in the crisis. [Alex Blumberg, “Unregulated Credit Default Swaps Led to Weakness,” National Public Radio, October 31, 2008; Nelson D. Schwartz and Julie Creswell, “What Created This Monster?New York Times, March 23, 2008; “History of the Commission,” Financial Crisis Inquiry Commission website, accessed April 25, 2017; and Financial Crisis Inquiry Commission, The Financial Crisis Inquiry Report: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States, January 2011, accessed April 24, 2017.]

Wallison didn’t think Lehman Brothers’ failure caused systemic risk but Moody’s saw possibility of failure.

Wallison doesn’t believe the repeal of Glass-Steagall had a role in the financial crisis.

Wallison served for twenty years on “Shadow Financial Regulatory Committee,” which said there was no need for “umbrella” regulators to oversee banks.

Wallison thinks reinstating Glass-Steagall would lead to more bailouts.

  • Wallison wrote that “Glass-Steagall reform . . .spurred innovation” and that “reinstating Glass-Steagall [would] reverse this process” causing “banking organizations . . . [to be] less profitable . . . [and] making bank failures and taxpayer bailouts more likely.” [Peter J. Wallison, “How Can Trump Support Deregulation and Glass-Steagall?,” American Banker, August 9, 2016.]

Wallison wrote that fixing the problem of “too-big-to-fail” banks was a “waste of time.”

  • “When it was enacted, the Dodd-Frank Act was advertised as the answer to the too-big-to-fail problem: the threat of taxpayer bailouts because the government is unwilling to let a large bank fail. But the law is not a viable solution, and some other ideas–such as breaking up the biggest banks–are not workable either. In reality, fixing TBTF is a waste of time.” [Peter J. Wallison, “The TBTF Fix No One’s Discussing: Simpler Capital Ratios,” American Banker, May 11, 2016.]

Wallison thinks the “Consumer Financial Protection Agency” proves that “liberals are elitist.”

  • “These are the questions raised by the Obama administration’s proposal for a Consumer Financial Protection Agency. . . . Conservatives have always argued that liberals are elitists who do not respect ordinary Americans; this legislation seems to prove it.” [Peter J. Wallison, “Elitist Protection Consumers Don’t Need,” Washington Post, July 13, 2009.]

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