They come up for re-election every two years. Each of the 435 members of the House of Representatives is in a constant “campaign mode” because the term of office is so short. Lee White of the American Historical Association summed-up the impact of the 2010 elections this way:
On Tuesday, November 2, 2010, U.S. voters dramatically changed the landscape in Washington. Republicans gained control of the House and, although the Democrats retained control of the Senate their margin in that body has been reduced to 53-47.
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Clearly the most dramatic change will be in the House with new Republican committee and subcommittee chairs taking over.
Voter discontent was revealed by the fact that just before the 2010 elections, the Congressional approval rating was at 17 percent. More recently, according to a Gallup poll, taken during April 7-11 of 2011, Congressional job approval is now back down to 17 percent, after a bump up to 23 percent in February. Of particular interest were the conclusions drawn by the pollsters at Gallup concerning the implications of the latest polling results:
Congress’ approval rating in Gallup’s April 7-11 survey is just four points above its all-time low. The probability of a significant improvement in congressional approval in the months ahead is not high. Congress is now engaged in a highly contentious battle over the federal budget, with a controversial vote on the federal debt ceiling forthcoming in the next several months. The Republican-controlled House often appears to be battling with itself, as conservative newly elected House members hold out for substantial cuts in government spending. Additionally, Americans’ economic confidence is as low as it has been since last summer, and satisfaction with the way things are going in the U.S. is at 19%.
At this point, it appears as though we could be looking at an even larger crop of freshmen in the 2013 Congress than we saw in January, 2011. (According to polling guru, Nate Silver, the fate of the 33 Senate incumbents is still an open question.)
One poster child for voter ire could be Republican Congressman Spencer Bachus of Alabama. You might recall that at approximately this time last year, Matt Taibbi wrote another one of his great exposés for Rolling Stone entitled, “Looting Main Street”. In his exceptional style, Taibbi explained how JPMorgan Chase bribed the local crooked politicians into replacing Jefferson County’s bonds, issued to finance an expensive sewer project, with variable interest rate swaps (also known as synthetic rate swaps). Then came the financial crisis. As a result, the rate Jefferson County had to pay on the bonds went up while the rates paid by banks to the county went down. It didn’t take long for the bond rating companies to downgrade those sewer bonds to “junk” status.
JPMorgan Chase unsuccessfully attempted to dismiss a lawsuit arising from this snafu. Law 360 reported on April 15 that the Alabama Supreme Court recently affirmed the denial of JPMorgan’s attempt to dismiss the case, which was based on these facts:
Jefferson County accuses JPMorgan of paying bribes to county officials in exchange for an appointment as lead underwriter for what turned out to be a highly risky refinancing of the county’s sewer debt, which caused Jefferson County billions of dollars in losses. According to the complaint, JPMorgan, JPMorgan Chase and underwriting firm Blount Parrish & Co. handed out bribes, kickbacks and payoffs to swindle the county out of millions in inflated fees.
JPMorgan claimed that only the Governor of Alabama had authority to bring such a suit. I wonder why former Alabama Governor Bob Riley didn’t bother to join Jefferson County as a party plaintiff, making the issue moot and saving Jefferson County some legal fees, before the case found its way to the state Supreme Court?
Joe Nocera of The New York Times recently put the spotlight on another character from Alabama politics:
Has Spencer Bachus, as the local congressman, decried this debacle? Of course – what local congressman wouldn’t? In a letter last year to Mary Schapiro, the chairwoman of the S.E.C., he said that the county’s financing schemes “magnified the inherent risks of the municipal finance market.”
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Bachus is not just your garden variety local congressman, though. As chairman of the Financial Services Committee, he is uniquely positioned to help make sure that similar disasters never happen again – not just in Jefferson County but anywhere. After all, the new Dodd-Frank financial reform law will, at long last, regulate derivatives. And the implementation of that law is being overseen by Bachus and his committee.
Among its many provisions related to derivatives – all designed to lessen their systemic risk – is a series of rules that would make it close to impossible for the likes of JPMorgan to pawn risky derivatives off on municipalities. Dodd-Frank requires sellers of derivatives to take a near-fiduciary interest in the well-being of a municipality.
You would think Bachus would want these regulations in place as quickly as possible, given the pain his constituents are suffering. Yet, last week, along with a handful of other House Republican bigwigs, he introduced legislation that would do just the opposite: It would delay derivative regulation until January 2013.
As Joe Nocera suggested, this might be more than simply a delaying tactic, to keep derivatives trading unregulated for another two years. Bachus could be counting on Republican takeovers of the Senate and the White House after the 2012 election cycle. At that point, Bachus and his fellow Tools of Wall Street could finally drive a stake through the heart of the nearly-stillborn baby known as “financial reform”.
On the other hand, the people vested with the authority to cast those votes that keep Spencer Bachus in office, could realize that he is betraying them in favor of the Wall Street banksters. The “public memory” may be short but – fortunately – the term of office for a Congressman is equally brief.