The state's pension crisis -- the worst in the nation -- is becoming the issue of the 2014 governor's race. Mary Ann Ahern reports. (Published Monday, Jul 22, 2013)
Capitol Fax conducted the first poll of the Democratic primary since Lisa Madigan dropped out of the race. Pat Quinn is leading Bill Daley, 38 percent to 33 percent, which is terrible for an incumbent in a primary, and certainly shows the governor is vulnerable.
But that wasn’t the poll’s most interesting result. The website also asked voters a question related to Daley’s tenure as Midwest chairman of JPMorgan Chase, a “big six” bank that received a $94.7 billion bailout from the federal government after the Wall Street collapse of 2008. (It has repaid all the money.) Here was the question, and the result:
“Would you be more likely, or less likely to vote for a Democratic gubernatorial candidate who ran a major bank that received federal bailout money, foreclosed on large numbers of Illinois homeowners and engaged in predatory subprime mortgage lending?” voters were asked.
Unsurprisingly, that question moved the needle in a big way. According to the poll, a whopping 73 percent of Democrats were less likely to vote for the candidate. Results like that indicate the issue has major traction.
That issue is not only a weakness for Daley, it’s a weakness that plays into Quinn’s strengths as a populist crusader. The governor has already gotten in one dig at Daley’s wealth, cracking that Daley “has a better tailor” than he does. During the 2010 campaign, Quinn ran an ad attacking opponent Bill Brady, a wealthy developer, for not paying income taxes as a result of business losses in 2008 and 2009.
“In recent years, millionaire Bill Brady somehow didn’t pay any federal income taxes,” Quinn’s ad said. “Who is this guy?”
Here’s some more grist for the governor, from Simon Johnson, author of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
, a book criticizing the Wall Street bailout and the policies that allowed a handful of banks to become too big to fail. It appeared on his blog, The Baseline Scenario
, after Daley was appointed White House Chief of Staff in 2011:
Until this week, Bill Daley was on the top operating committee at JP Morgan Chase. His bank – along with the other largest U.S. banks – have far too little equity and far too much debt relative to that thin level of equity; this makes them highly dangerous from a social point of view. These banks have captured the hearts and minds of top regulators and most of the political class (across the spectrum), most recently with completely specious arguments about why banks cannot be compelled to operate more safely. Top bankers, like Mr. Daley’s former colleagues, are intent of becoming more global – despite the fact that (or perhaps because) we cannot handle the failure of massive global banks.
The system that led to the crisis of 2008, and the recession that has so severely damaged so many Americans, encouraged excessive risk-taking by major private sector financial institutions and, yes, Fannie Mae, Freddie Mac, and other Government Sponsored Enterprises.
Today’s most dangerous government sponsored enterprises are the largest six bank holding companies: JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley.
Top bankers, including Bill Daley, have pulled off a complete snow job – including since the crisis broke in fall 2008. They have put forward their special interests while claiming to represent the general interest. Business and other groups, of course, do this all the time. But the difference here is the scale of the too big to subsidy – measured in terms of its likely future impact on our citizenship and our fiscal solvency, this will be devastating.
JPMorgan Chase provided financing to Ameriquest and Countrywide, two of the most notorious subprime lenders of the mid-2000s. Ameriquest invented the “stated income loan”: if a customer told Ameriquest he earned 100 grand a year, Ameriquest would take his word for it. Why let the facts mess up a bad loan? Countrywide rewarded its agents with higher commissions for adjustable-rate mortgages, inspiring them to go door-to-door in poor neighborhoods, offering second mortgages to distresses homeowners. The company spent $8.7 billion to settle predatory lending charges filed by 11 state attorneys general.
In his career as governor, Quinn has already beaten back two political dynasties (the Hyneses and the Madigans), and a rich guy (Brady). Daley is a rich guy AND a member of a political dynasty. Quinn took over as governor just as the economy tanked. Don’t be surprised if he tries to link Daley’s banking career to Illinois’s financial struggles.