Is it any surprise that a top Tea Party congressman — a self-declared champion of small government and spending cuts, a man who eagerly helped push the U.S over the fiscal cliff — is now headed to Wall Street?
Well, it’s true. Yesterday, it was reported that former House Majority Leader Eric Cantor was joining a $2 billion investment bank called Moelis & Co. (NYSE: MC).
You might think a man with exactly zero investment banking experience might start at the bottom — but no, Cantor will be a vice chairman, managing director, and immediately get a seat on the firm’s board of directors.
Oh, and he’ll make $800k in his first year (plus $1 million in Moelis stock). And Moelis will rent him a Manhattan apartment, too.
Next year, 2015, Cantor will reportedly get a minimum compensation of $1.2 million, plus another $400k in stock. That’s a total of $3.4 million.
What does his new employer want from him, a man who’s never worked in the investment field? Well, one reporter said it better than I could:
Wall Street is after what it’s always buying in Washington: access, influence, and unfair advantage. And Cantor is a big catch for anybody who wants access. … He and the rest of the influence peddlers at the highest level of government work the shadows and do indirectly what the law prohibits them from doing directly.
Let’s not forget that Cantor has gotten $1.2 million in campaign contributions from Wall Street firms since 2012. He voted for the $700 billion TARP bailout for banks, but he voted against the stimulus bill that went to the states to help pay salaries for public workers like teachers and cops.
It’s pretty clear where Cantor’s loyalties lie: He’s been in Wall Street’s pocket for years. Now it’s official.
Cantor’s new employer spent $200,000 lobbying Congress in 2012. Now that it has Cantor, it has a direct line into Congressional Republicans.
And his first responsibility as a new investment bank vice chairman?
Why, open a Washington, D.C. office, of course!
If you had any illusions about what public service means to this era of politicians, this is just one more in a long list of examples. Our elected officials use a few terms in Congress as a job interview to nail down a cushy Wall Street job.
This is why nothing changes. This is why there weren’t any criminal prosecutions of Wall Street executives after the financial crisis. This is why 25% of state pension funds are in the hands of hedge funds that charge outrageous fees…
Nothing New
It’s not my intention to vilify the GOP here. The revolving door works just as well for the Democrats.
Guys like New Jersey’s Jon Corzine, for instance. He went from CEO of Goldman Sachs to New Jersey governor to CEO of MF Global.
Corzine drove MF Global into bankruptcy by doubling down on Greek bonds as the euro debt crisis exploded, then he “misappropriated” client funds to pay margin calls as those bonds plunged in value. Of course, he then lied about it.
And of course, he was never prosecuted.
Treasury Secretaries do pretty well, too…
- Robert Rubin helped overturn the protections in the Glass-Steagall Act that left the U.S. financial system vulnerable to the exact type of leverage that caused the financial crisis. He left the Treasury in 1999 and went right to Citigroup.
- After being a Wall Street lapdog at the New York Fed, Tim Geithner continued schmoozing Wall Street as Treasury Secretary. He left that office to become president and managing director at private equity firm Warburg Pincus.
- Larry Summers was Treasury Secretary for barely a year before he became the president of Harvard University. He resigned that cushy job after a no-confidence vote, went to Wall Street, and made millions as a managing partner of hedge fund D.E. Shaw.
These are just a few examples of the Wall Street revolving door that continues to corrupt our government. There’s a lot more, as I’m sure you know.
And if you feel like your votes do nothing to stop this type of corruption, well, join the club. The American voter has been systematically marginalized by gerrymandering and campaign finance rules.
The Rich Get Richer
There’s nothing new here: The wealthy have always conspired with politicians to craft rules that benefit themselves at the expense of the middle and lower classes. And usually, the wealthy and the politicians are one and the same.
They will continue to vote for tax breaks for themselves. They will continue to pass toothless banking regulations that protect their own profits. They will continue to slash away at so-called “entitlements” like Social Security and Medicare. Corporations will continue to cut their retirement “plans” and push health care costs onto their employees.
The message should be clear: You are on your own.
By the time I hit retirement age, which is in about 15 years, I do not expect there to be much “help” waiting for me. That’s why I’m taking action now and helping as many individual investors as I can along the way…
Just the other day, one of these investors wrote me to let me know how he was doing. Here’s what John S. had to say about the income he’s been making:
I have made $1,000.00 per month on a 16,000.00 thousand account the last 4 months since using your service so I THANK YOU!! I have used margin but still a great return. Keep up the good work!!
It’s messages like these — from individual investors just like you — that make it a pleasure for me to come to work in the morning.
Sure, it’s still frustrating to see the things that make America great get slowly eroded by our corrupt and selfish politicians.
But at least it’s still possible to put your money to work generating the type of income you need to make life better.
If you want to learn more about how you can use a simple, low-risk strategy to make $1,000 or more a month in income, the details are right here.
Until next time,
Until next time,
Briton Ryle
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A 21-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He is also the managing editor of the Wealth Daily e-letter. To learn more about Briton, click here.
