Speaking to an audience of big business and big labor executives (including Goldman Sachs' Lloyd Blankfein, Bank of America's Bruce Thompson and SEIU's Andy Stern) at New York's Cooper Union, President Barack Obama noted "the furious efforts of industry lobbyists to shape" the financial regulation bill "to their special interests." Obama then admitted, "I am sure that many of those lobbyists work for some of you. But I am here today because I want to urge you to join us, instead of fighting us in this effort." Obama should have saved his breath. Wall Street and big labor lobbyists have already joined forces to make sure the current Senate legislation has become a Wall Street Bailout Bill.

Big labor's ties to this White House are already well documented. Less known is just how close Obama administration interests align with the big firms that benefit most from the TARP bailout. The Washington Examiner reports that at Goldman Sachs, the nation's largest investment bank, four of the five in-house lobbyists were Democratic Capitol Hill staffers -- the remaining one gave $1,000 to Hillary Clinton last election. And USA Today notes that Goldman Sachs alone has given nearly $900,000 since January 2009 to congressional candidates, with 69% of that cash lining Democrat pockets. Finally, then-candidate Obama collected almost $1 million from Goldman executives and employees in 2008, more than the combined Goldman haul of every Republican running for president, Senate and the House.

So what have Wall Street lobbyists bought with their campaign cash and high priced lobbyists? A bill that gives permanent TARP-like authority to Washington regulators, thus enshrining Washington as a permanent bailout machine. Specifically, the bill:

• Creates a protected class of too big to fail firms. Section 113 of the bill establishes a "Financial Stability Oversight Council," charged with identifying firms that would "pose a threat to the financial security of the United States" if they encounter "material financial distress." While these firms would be subject to enhanced regulation, such a designation would also signal to the marketplace that these firms are too important to be allowed to fail and, perversely, allow them to take on undue risk.
• Creates permanent bailout authority. Section 204 of the bill authorizes the Federal Deposit Insurance Corporation (FDIC) to "make available … funds for the orderly liquidation of [a] covered financial institution." Although no funds could be provided to compensate a firm's shareholders, the firm's other creditors would be eligible for a cash bailout. The situation is much like the bailout AIG in 2008, in which the largest beneficiaries were not stockholders but rather other creditors, such as Deutsche Bank and Goldman Sachs.
• Provides for seizure of private property without meaningful judicial review. The bill, in Section 203(b), authorizes the Secretary of the Treasury to order the seizure of any financial firm that he finds is "in danger of default" and whose failure would have "serious adverse effects on financial stability." This determination would be virtually irreversible in court.
• Establishes a $50 billion fund to pay for bailouts. Funding for bailouts is to come from a $50 billion "Orderly Resolution Fund" created within the U.S. Treasury in Section 210(n)(1), funded by taxes on financial firms. However, according to the Congressional Budget Office, the ultimate cost of bank taxes will fall on the customers, employees and investors of each firm.
• Opens a "line of credit" to the Treasury for additional government funding. Under Section 210(n)(9), the FDIC is effectively granted a line of credit to the Treasury Department that is secured by the value of failing firms in its control, providing another taxpayer financial support.
• Authorizes regulators to guarantee the debt of solvent banks. Bailout authority is not limited to debt of failing institutions. Under Section 1155, the FDIC is authorized to guarantee the debt of "solvent depository institutions" if regulators declare that a liquidity crisis ("event") exists.
• Imposes one-size-fits-all reform in derivative markets. Derivatives are already increasingly being traded on clearinghouses thanks to private efforts coordinated by the New York Fed. But the Senate bill would require virtually all derivative contracts to be settled through a clearinghouse rather than directly between the parties. Applying such ill-designed blanket regulation would make financial derivatives more costly, more difficult to customize, and, consequently, less widely used—which would increase overall risk in the economy.

According to Rasmussen Reports, 64% of Americans are not confident that policymakers in Washington know what they're doing with regards to Wall Street. They have every reason to be concerned. Rep. Peter DeFazio (D-OR) tells National Review: "From the beginning, I've thought that the deal Goldman Sachs got via Treasury Secretary Tim Geithner on their bad bets through AIG kind of stunk. They got $13 billion from AIG last year." DeFazio doesn't seem to realize that the bill Obama is pushing would empower Secretary Geithner to repeat the AIG bailout ad infinitum. No need to ever go back to Congress for a new TARP. The Senate bill is a permanent TARP. Which is exactly what Goldman Sachs and the rest of their Wall Street lobbyists wanted all along.

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