An ex-Biden aide’s new book has been cast as a gossipy tell-all about the vice president. A Fox News column accused the liberal media of ignoring it, though the author was recently the subject of a 13,000-word profile in The New Yorker.
But the real significance of Jeff Connaughton’s The Payoff has not been well understood. It tells a larger story about the Obama administration’s complete indifference to implementing reform on Wall Street through the prism of the author’s gradual disenchantment with Biden and the Democratic party.
The Payoff is the latest in a series of accounts, from New York Times reporter Gretchen Morgenson’s Reckless Endangerment to former TARP special-inspector general Neil Barofsky’s Bailout, that expose the Obama administration’s fecklessness in tackling corrupt bank and insurance executives and call out high-ranking politicians and officials unwilling to bite the Wall Street hand that feeds them.
Connaughton spent years as a staffer in Biden’s Senate office before becoming a corporate lobbyist and, finally, from 2008 to 2010, chief of staff to Delaware senator Ted Kaufmann. It was during his time as Kaufmann’s No. 2 that Connaughton saw up close the Obama administration’s approach to redressing Wall Street’s ills. He was not impressed.
Connaughton is a creature of the Washington political elite, and he is unsparing in his description of key players: the “financially illiterate” president and vice president; Wall Street’s “biggest booster” and the “most Machiavellian of United States Senators,” Connecticut’s Christopher Dodd; and the disciples of Clinton-era Treasury secretary Robert Rubin, “the bulls who’d helped ransack” the china shop and were then charged with putting it back together. Connaughton says of writing this book, “I have taken off my blue jersey, I don’t think anymore as a partisan.”
According to Connaughton, the evidence presented in reports such as the one issued by the Financial Crisis Inquiry Commission points to serious crimes committed by bank executives. “When competent independent fact-finders look at what happened, they find evidence of what sure looks like fraud,” Connaughton tells NRO, but he says “the Justice Department never made investigating these actions a high priority.” And now, “everybody’s ready to move on.”
Connaughton asks us to pause and review the landscape: a court-appointed examiner’s report, spanning more than 2,000 pages, which found that Lehman was hiding $50 billion in toxic assets by temporarily shifting them off balance sheets in order to produce rosier quarterly reports; a civil lawsuit against Bank of America in which prosecutors allege that fraud, “brazen in scope,” was carried out against mortgage giants Fannie Mae and Freddie Mac; and the report issued by the Financial Crisis Inquiry Commission, which concluded that “the crisis was a result of human action and inaction” and points to “predatory and fraudulent practices” on Wall Street.
Connaughton points the finger first at President Obama and Vice President Biden for failing even to investigate the possibility of criminal prosecution for those who carried out this fraud. “Unfortunately for America,” he writes, “Obama and Biden (who pledged in his 1972 campaign never to own a stock or a bond) were both financially illiterate.” While Obama did a “fair impersonation of someone who had grasped the elements of the crisis” on the stump in 2008, once in office, Obama and Biden gave the problem “a sideways glance and then delegated the solutions to the same circle of Wall Street-Washington technocrats who had brought the financial disaster upon us in the first place.”
That circle includes, among others, Treasury secretary Timothy Geithner, his chief of staff and former Goldman Sachs lobbyist Mark Patterson, National Economic Council director Larry Summers, and former senator Chris Dodd. As a group, they argued that taking on the big banks would hamper economic growth. As a group, they are all intimately connected to Wall Street. “I thought Dodd was negotiating with himself to weaken the bill,” Connaughton says of the Dodd-Frank bill hailed by so many Democrats. Though it spans more than 1,500 pages, the bill fails to limit the size of banks, Connaughton worries, and doesn’t prevent them from becoming “too big to fail.”
Over the past several months, President Obama has told us, “We know what change looks like.” Thanks to the revelations of Connaughton’s book and others, we certainly do, and it’s not pretty.