By: Chris Stirewalt
April 26, 2010
All week, the unions and their allies in community organizing will be holding mass demonstrations across the country to decry the power of Wall Street and demand passage of the president's plan.
Rallies and marches for a bank bill? What does that have to do with working for the government?
Stephen Lerner, who is spearheading the movement for the Service Employees International Union, summed it up for Peter Dreier of the Huffington Post: They want the banks' money.
"The compensation bonus pool for the big six banks -- over $130 billion -- would solve the entire budget crisis for all the states," he said in urging the Left to unite against Wall Street.
The bill that Lerner and his team are championing actually makes the big banks bigger and certainly won't take Wall Street's bonus cash to shore up the state budgets, which are wracked by unaffordable pay and benefits for public employees.
But tucked into the 1,250 pages of new rules proposed by Sen. Chris Dodd, D-Conn., is a provision that gives new powers to board members. And that could mean big payoffs for the unions down the road.
The great power of the pubic employee unions is their pension funds -- hundreds of billions of dollars provided by taxpayers to pay for retirement benefits. The investment of these funds is directed by political appointees who are motivated to keep the unions happy.
Consider the recent scandal in New York centered on President Obama's former car czar, Steven Rattner.
The New York state pension fund has about $130 billion in it. The contracts for investing those funds are hugely lucrative, and the work is pretty easy. So Rattner, then at the investment firm he founded, went the extra mile to land the business.
The firm, Quadrangle Group, now disavows Rattner's practices and has agreed to pay $12 million to settle complaints from the Securities and Exchange Commission and the state.
Rattner, one of the most prodigious Democratic fundraisers in the land, allegedly used his stroke in New York politics and some liberally applied consulting fees to get the former state comptroller, now facing corruption charges, to give Quadrangle the business.
The tin-eared political class sees nothing wrong with the practice. Michael Bloomberg, New York's Democratic-turned-Republican-turned-Independent mayor, just pulled his billions out of Quadrangle and put the money in the hands of Rattner's new firm, Willett Advisors.
Around the country, politically connected investment advisers get paid lots of money and then provide more contributions for Democrats to get elected. It's a perpetual motion political machine funded by taxpayers.
But aside from directly funding the campaigns of the politicians who then reward the unions with raises and better benefits, the pension funds provide the unions with clout outside the government.
Shares of stock bought with tax dollars are a way to get publicly traded corporations to do the unions' bidding. Enough shares mean seats on corporate boards and decision-making power.
Already, companies have to be mindful of whether their positions on laws relating to global warming, "card check" union organizing and other politically charged issues will cause a backlash from labor-oriented shareholders and others on the Left who have motivations beyond profits.
The Dodd bill would empower the unions further.
Incorporation has always been a state affair. When you start a company, you incorporate not in Washington but in your state capital or in a state sympathetic to corporations. And you follow state rules for how you establish your board of directors and the powers those directors have. That means states have an incentive to offer attractive rules for corporate governance.
The Dodd plan would federalize that responsibility for the first time and give the SEC the power to set the rules for how boards are governed. The preference among the Democratic majority on the commission is likely to be for rules that give pension funds more seats on more boards and more power to make decisions.
While Democrats are busy decrying the growing influence of corporations on politics, little is said about the growing influence of politics on corporations.
The Dodd bank bill won't shift the $130 billion coveted by the SEIU out of bank bonuses and into the raises of schoolteachers and bureaucrats, but it will make it possible for public employees to start pressuring the banks to change their practices from the inside out.
So when you see public employees and the refugees from ACORN out in the street this week decrying Wall Street greed, remember that they are not fighting to take power away from big banks, but to instead control that power themselves.
Chris Stirewalt is the political editor of the Washington Examiner. He can be reached at firstname.lastname@example.org.