Not many people know that General Electric has been a huge beneficiary of recent bank bailouts via its financial subsidiary GE Capital, which would be America’s eighth largest bank measured by total assets. Regulators changed banking rules to guarantee $340 billion in GE Capital debt, and the bank received $16 billion in cheap emergency loans from the Federal Reserve, according to Fed data released in December. All the while GE’s CEO, Jeff Immelt, was on the board of the NY Fed (along with another former GE executive) and a member of Obama’s economic advisory board. The conflicts of interest are obvious and, as one Fed historian put it to the NY Times, “ugly”.

Immelt and Obama talking business in a GE factory

After $40 million in lobbying last year, more than any other company, the returns on GE’s political investments are still flowing. Immelt was with Obama in India a few months ago when he negotiated a $10 billion export deal benefitting GE, and Obama stood at a GE plant in New York as he named Immelt to lead his new economic advisory council, which looks like it will focus on making America’s laws, taxes, and labor force even more business-friendly.

Interestingly, the deep conflicts surrounding Obama’s promotion of Immelt have provoked the strongest criticism from libertarian think tank FreedomWorks, which has close ties to the billionaire brothers Charles and David Koch. The Kochs are energy moguls notorious for their financing of dozens of free-market political forces, from free-market think tanks to Tea Party affiliates. Jane Mayer’s New Yorker article about the Koch brothers shows how their influence through political and nonprofit financing is both unequalled and self-interested. The Kochs are fiercely opposed to bank bailouts, economic stimulus, and climate regulation. Immelt has been a high-profile supporter of all of these — perhaps because they’ve profited GE — and GE’s campaign contributions have leaned Democratic in recent years. That’s probably why he’s so close to Obama, and why the Koch brothers and groups like FreedomWorks want him to go away.

FreedomWorks and the NCPPR, another free-market think tank, have launched a campaign to “dethrone” Immelt from GE, calling him the “king of crony capitalism”, and are running ads attacking Immelt’s conflicts of interest as a blatant sign of corruption. “It’s time to break up the unethical romance between government and big business,” said FreedomWorks President Matt Kibbe in a statement. “For too long, corporate elites have lobbied to profit from the size and growth of government at the expense of hard-working Americans.”

FreedomWorks has it wrong. It’s not the size and growth of government that ensured minimal financial regulations and generous bailouts for well-connected banks like GE Capital, it’s the size and growth of finance and its influence over government. Relative to expanding financial markets, regulations and regulatory bodies are not growing, they’re shrinking. Still, FreedomWorks can apparently exploit anger about Obama’s dirty dancing with bailed-out corporate elites to rally support for further dismantling of government oversight and regulation.

The beast of corporate power is feeding off its own corruption.

The Goldman fraud suit continues to dominate the media cycle. After the initial shock of the US government actually doing something to hold Wall Street accountable, the business press — led by Goldman Sachs and their lawyers at Sullivan and Cromwell — has turned to questions about the merits of the suit. Today, the New York Times gave A1 real estate to a piece headlined “A Difficult Path In Goldman Case.”

The article opens by saying that the SEC is “pursuing an unusual claim that could be difficult to prove in court” according to legal experts. But the article only quotes one legal expert clearly criticizing the substance of the case: Allen Ferrell, a professor at Harvard Law School. According to his CV, Ferrell has been engaged as an “expert for large financial institution involving subprime-related litigation (details confidential).”

This is clearly a potential conflict, but the entire article appears to be based around Ferrell’s lone, critical quote. This is irresponsible journalism, especially considering the landmark significance of the Goldman suit. So I wrote the following letter to the Times ombudsman to alert him to the conflict and request a proper correction/disclosure:

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LittleSis is expanding its investigation into the networks of money and influence behind efforts to gut Social Security. Join the Social Security Looters research group if you want to get involved.

The most generous bank bailout in history has amplified Wall Street’s considerable political influence, and the economic implications of this democratic calamity go well beyond bloated bonuses. Over the past year, the financial propaganda machine has set its sights on Social Security, launching a massive assault on one of the nation’s most important economic programs. But rather than push back against the flawed economic assumptions of the nation’s financial elite, President Barack Obama appears to be advancing their arguments, and is now poised to repeat George W. Bush’s politically perilous efforts to gut Social Security.

A decade of wars, tax cuts for the wealthy, and the fallout from Wall Street’s housing bubble have almost tripled U.S. public debt since 2001, from $5 trillion to $14 trillion. Big, scary numbers like this, along with carefully timed downgrade warnings from Wall Street’s obedient rating agencies and continuing worries about the financial collapse of Greece, Portugal and other nations have changed the political climate in Washington, breathing new life into decades-old schemes to slash Social Security and Medicare entitlements.

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The Washington Post published a poll on the special election in Massachusetts last week, as part of the Washington Post-Kaiser-Harvard poll series. The poll carried obvious implications for the health care reform debate (as did the election). And like other polls in the series, which are frequently health care-related, it was co-directed by Harvard professor Robert Blendon.

Blendon sits on the board of Assurant, an insurance company. As I’ve noted previously, Blendon consistently fails to disclose the affiliation in his healthcare polling work or in his various bios (here, here, here). It is so hard to find this affiliation noted anywhere — even his lengthy Harvard bio leaves it out — that I get the sense that Blendon feels he has something to hide.

Since Assurant has an obvious and substantial interest in healthcare reform, and Blendon’s polling work for the Washington Post frequently concerns healthcare, shouldn’t the Washington Post notify its readers of this conflict?

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Ben Bernanke’s supporters are warning that a Senate vote against the Fed chair will send financial markets tumbling.  Tim Geithner recently chimed in by telling Politico that markets would find a no vote “very troubling,” before saying that he was confident Bernanke would be reconfirmed. 

Geithner’s chief mentor, Robert Rubin, deployed the very same argument about Enron. Rubin, then a top executive at Citigroup, made an 11th hour call to the Treasury Department as part of a campaign by Enron and its creditors to stave off a looming ratings downgrade. The call was later criticized as an improper use of the former Treasury Secretary’s influence, but Rubin defended his actions, saying that he thought an Enron collapse would imperil world energy markets.

The financial apocalypse trick has been turned many times by Wall Street’s policy elites, but the Rubin example is especially apt today: the high-level campaign to avert Enron’s ratings downgrade in 2001 appears to have been coordinated by the same Federal Reserve official lobbying for Ben Bernanke’s reappointment.

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MIT healthcare economist Jonathan Gruber has been caught up in a scandal in recent weeks after it was reported that he received large, undisclosed payments from the Obama administration for healthcare-related work while purporting to be an “independent” analyst of the healthcare legislation snaking its way through the Senate. The apparent conflict of interest was first exposed by a commenter at mcjoan’s blog on the Daily Kos, amplified by Marcy Wheeler at FireDogLake, and has led to a number of corrections by media outlets like the Times.

Despite general consensus that Gruber should have disclosed the conflict, Paul Krugman stepped up to defend his fellow economist, writing that “the truth is that this is no big deal.” He then discounted Wheeler and FireDogLake as hot-headed scandal-mongers.

Krugman’s arguments are unconvincing — he distorts the claims of Gruber’s critics, makes non-issues the focus (eg, whether Gruber believes what he says), and misses key facts. For a full dismantling of his key points, see Glenn Greenwald’s latest post.

Krugman’s choice to defend Gruber is explained in part by the duo’s interlocks; they share some important institutional affiliations.

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Bloomberg reported yesterday that the New York Fed pushed AIG to withhold key information about bonuses and swap counterparties in late 2008.  Today, the story is blowing up, with the New York Times, Wall Street Journal, and a range of other outlets picking up on the story.

There is an incredible conflict of interest at the heart of the AIG-New York Fed dealings: the very same New York Fed lawyers who pushed AIG to withhold the names of counterparties also advised Goldman Sachs on large deals in 2008.

Goldman Sachs was one of AIG’s largest counterparties, and received a controversial 100% payout on its swap contracts with the firm.

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Larry Summers continues to refuse comment on his disastrous management of Harvard University’s finances, according to a lengthy Bloomberg article out Friday (aptly titled “Harvard swaps are so toxic even Summers won’t explain”).  The former Harvard president’s failed bets on interest rates led to a historic liquidity crisis last fall that forced the school to take on an additional $2.5 billion in debt and implement campus-wide austerity measures.* Kudos to the Bloomberg reporters for continuing to chase this story (which carries national implications given Summers’s role in the White House).

One aspect of the story that has yet to break:  Harvard’s leadership, including key members of its financial team, were severely conflicted by official roles with several of the university’s counterparties on the swaps.

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In a blog post yesterday, Paul Krugman tells his readers that they shouldn’t look at a Rasmussen poll on healthcare reform in Massachusetts because “it’s Rasmussen.”  He points to a poll that he deems more accurate and trustworthy, by the Harvard School of Public Health and the Boston Globe.  The poll shows that healthcare reform in Massachusetts is actually fairly popular (Krugman supports Massachusetts-style healthcare reform).

But Krugman’s preferred poll is undermined by a significant conflict of interest:  it was co-directed by a health insurance company board member, Robert Blendon.  Blendon, a Harvard public health professor, has been on the board of Assurant since 1993, earns about $150,000 a year in this role, and is heavily invested in the insurance company.

The apparent conflict of interest was not disclosed by the Harvard School of Public Health or the Globe, so it’s not Krugman’s fault for not noticing.

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A possible candidate for Senator Kennedy’s seat has spent the last ten years building the biggest pharmaceutical lobbying practice in the country.

Nick Littlefield is chair of the lobbying group at Boston law firm Foley Hoag, which has raced to the top of the pharma lobbying charts over the last several years. In the first half of 2009, the firm raked in $2.6 million from pharma — more lobbying cash from pharmaceutical interests over the course of six months than any law firm in history, according to a review of lobbying data from Open Secrets.

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