The Progressive: The Bankers’ Latest Scam

Of all the devious tricks practiced by the financial industry–hidden fees, usurious interest rates, and incomprehensible contracts that take advantage of consumers–the campaign strategy for 2010 has to rank right up there.

As the banks begin pouring cash into Congressional elections, they are targeting members of Congress who support consumer protections that could cut into their bottom line.

But here is the kicker: Opponents of financial reform are tarring members of Congress who want to regulate the banks as tools of Wall Street. This Orwellian tactic is designed to confuse voters. In effect, the banks are running against themselves. Look for lots of ads that tie reform legislation to “bailouts,” “fat cats,” “Wall Street,” and “lobbyists.”

“The banks are going to be huge players in the 2010 elections,” says Mary Bottari, director of the Center for Media and Democracy’s Real Economy Project and editor of the website In Massachusetts, she points out, the financial services industry dumped $450,000 into Scott Brown’s race for Ted Kennedy’s Senate seat, helping Brown to win as a crusader against Wall Street, even as he opposed such basic reforms as a tax on banks to help pay back the bailout.

In January and February she began tracking deceptive ads targeting Democrats in ten states that tie bank reform legislation to “Wall Street bailouts.”

One such television ad in Montana urges voters to contact Senator Jon Tester and tell him to oppose a “$4 trillion bailout” for Wall Street.

The ad, paid for by a group called the Committee for Truth in Politics, begins with ominous music as words appear on a black screen:

“Fat cat lobbyists. Special interests. Lining their pockets at our expense. HR 4173 already passed in the U.S. House.” Photos of House Democrats Nancy Pelosi and Barney Frank flash past. More words appear: “Soon to be considered in the Senate.” Photos of Harry Reid and Chris Dodd standing beside Frank and Pelosi pop up, followed by pictures that move almost too fast to follow: Wall Street, wads of cash, a man smoking a cigar and two men in suits shaking hands in front of the White House, scenes of people out of work, the word “foreclosure” and the figure $4,000,000,000,000. Then more words appear: “The Big Bank Bailout Bill. Lobbyists and Bureaucrats. They play. We pay.” (Photos of ordinary Americans.) “More taxes. Spending. Debt.” (A beleaguered-looking citizen in reading glasses, apparently doing his taxes.) “Call Your Senators” (phone numbers for Senators Max Baucus and Jon Tester). “We won’t be fooled again. EVER.”

In the wake of the financial collapse, it’s no surprise to see political ads that focus on Wall Street and bank bailouts. But wait a minute. HR 4173, also known as the Wall Street Reform and Consumer Protection Act, is the House bill designed to end bank bailouts and create a Consumer Financial Protection Agency. Watchdog Elizabeth Warren has said she is “delighted” with the bill.

And Jon Tester, the Montana Senator who is one of the ad’s main targets, is the only Senate Democrat who voted against the Wall Street bailout and the auto industry bailout.

Tester also authored the Credit CARD Act, which includes such consumer-friendly features as a ban on interest rate hikes for customers who are less than sixty days late paying their credit card bills, and requirements that credit card companies mail out statements earlier, give more notice of fee changes, and make other important information more readily available to consumers.

“I can see why some folks with a lot of money to burn don’t want this bill to pass,” Tester says of the companion legislation to HR 4173 he has been working on in the Senate Banking Committee. “They don’t want it to pass because it finally puts referees on Wall Street.”

The financial reform legislation in the House and Senate would, besides establishing a consumer protection agency, limit the Fed’s authority to pursue future bailouts and empower the government to shut down institutions that overextend themselves through risky financial dealings.

But lately, Tester’s staff has been fielding hundreds of calls from constituents who have been contacted by phone with a recorded message from the Committee for Truth in Politics and then directly connected to Tester’s office, where they are urged to demand that the Senator vote against the “$4 trillion bank bailout.”

“Many callers were relieved–and confused–to learn that Wall Street reform is not a bailout,” Tester says.

In response to all the calls and ads, Tester wrote a letter to the Committee for Truth in Politics, demanding to know “who you are and where your funding comes from.” The letter was addressed to William W. Peaslee and James Bopp Jr.–the lawyers whose names are listed on legal documents associated with the group.

The committee has not responded to Tester’s challenge. When I reached William Peaslee, a former political director of the North Carolina Republican Party, and the sole member of the group’s board of directors, according to the articles of incorporation he filed in North Carolina in 2008, he declined to say anything about his group’s aims.

“I am just the attorney who filed the articles of incorporation,” Peaslee told me.

In fact, Peaslee has been active in Republican politics for some time. His group also ran ads targeting Barack Obama in the 2008 Presidential election. And his colleague James Bopp Jr. is the lawyer for National Right to Life and the architect of the Supreme Court’s recent Citizens United decision. Bopp was the attorney for Citizens United in lower court. Recently, he sued the FEC, saying that the Committee for Truth in Politics should not have to disclose anything about its finances or spending to the government.

I asked Peaslee if he could say anything at all about his group’s political objectives, the ads it is running, or what sort of legislative reform it seeks. Is banking reform his issue?

“I’m not making any representation about whether it is my issue or not,” Peaslee said. “You can send me a list of questions and I will send it along to the people who formed the group and ask if they want to respond. I have no idea if they will or not.”

(No one replied to a list of questions I e-mailed to Peaslee.)

The Committee for Truth in Politics ads are a classic example of “muddying the waters,” says Ken Goldstein, a professor of political science at the University of Wisconsin-Madison and director of the Wisconsin Advertising Project. But there are more ads of this type than ever, he says. “It’s very early, and it’s already very noisy and toxic.”

While the Committee for Truth in Politics is determined to reveal nothing about itself, the ads it is running seem to be taken almost word for word from a memo written by Republican pollster Frank Luntz, leaked to HuffingtonPost, advising Republicans on how to take advantage of the financial crisis:

“Public outrage about the bailout of banks and Wall Street is a simmering time bomb set to go off on Election Day,” Luntz writes in the seventeen-page memo.

He advises Republicans to harness this outrage as they oppose Democrats’ efforts to regulate the banks:

“Ordinarily, calling for a new government program ‘to protect consumers’ would be extraordinarily popular,” Luntz writes. “But these are not ordinary times. The American people are not just saying no. They are saying ‘hell, no’ to more government agencies, more bureaucrats, and more legislation crafted by special interests.”

Republicans, Luntz says, can take advantage of “the simple belief the government cannot effectively regulate the financial markets at any level.”

“Frankly,” Luntz writes, “the single best way to kill any legislation is to link it to the Big Bank Bailout.”

Luntz singles out Representative Barney Frank, citing his big unfavorable ratings as evidence that voters don’t trust Washington.

He advises Republican candidates to use some of the same words and phrases that appear in the TV ads that ran in Tester’s district:

“Bailouts for Wall Street. Government takeovers for insurance companies. Trillions of taxpayer dollars to bail out CEOs and their risky investment schemes. And now Congress is preparing to enact legislation to pass a law with $4 trillion more for bailouts.”

He even advises using the words “never again.”

(Never mind that the Republicans, under President Bush, passed the first massive Wall Street bailout.)

So close is Luntz’s language to the actual ad the Committee for Truth in Politics produced, it seems as though he scripted it.

That’s no coincidence, says Congressman Barney Frank.

“Understand that Luntz’s memo is aimed at the consumer protection agency,” Frank says. “The big financial institutions don’t want consumer protection. This is one of the things they hate the most in the world. That’s their major focus, trying to undermine it.”

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