I wondered what the presidential candidates and other politicians were saying about the Federal Reserve’s unprecedented interventions in the financial sector, including today’s provision of $30 billion to guarantee JP Morgan Chase against the risks it will incur as it takes over Bear Stearns for pennies on the dollar (and inherits its subprime portfolio).
It’s not that often, after all, that the government decides to socialize someone else’s losses–I can’t remember many manufacturing businesses or agricultural businesses that were deemed “too big to fail.” So, while looking for their public statements from today, I also went online to follow the money trail a bit further.
Here’s what I’ve learned so far. First the candidate responses:
“I’m not going to second-guess the Fed either on their movement to get the sale consummated and to back up the JP Morgan commitment.”
–Hillary Clinton
Total raised by Clinton from securities and investment sector: $6.3 million
Rank of JP Morgan Chase & Co. among her top individual donors: #6
Obama said the Federal Reserve did the right thing in agreeing to finance up to $30 billion of Bear Stearns’s assets. “It’s premature to start talking about taxpayer-funded bailouts,” Obama told reporters while campaigning in Pennsylvania. “A general principle is that we don’t want to reward bad behavior,” the Illinois senator said. But he added, “What we can’t do is potentially have a domino effect on Wall Street in which our financial markets and our credit markets completely collapse.”
Total raised by Obama from securities and investment sector: $6 million
Rank of JP Morgan Chase & Co. among his top individual donors: #3
Douglas Holtz-Eakin, senior policy adviser to John McCain, said McCain “has complete confidence in Chairman Bernanke and the actions of the Federal Reserve….John McCain understands the federal government’s responsibility to ensure the stability of the U.S. financial system.”
Total raised by McCain from securities and investment sector: $2.6 milion
Rank of JP Morgan Chase & Co. among his top individual donors: #11.
And you thought “money talks” was just a saying.
One out of ten Members of Congress appear to own stock in JP Morgan Chase, according to their 2006 personal financial disclosure statements, the most recent available. (Absurdly, we won’t get their 2007 statements until the middle of 2008!). The top stock owner, Senator John Kerry, with at least $1 million. I couldn’t find any statement from him on the Morgan guarantee.