Tom Donilon and the Revolving Door
When people discuss the financial crisis in the mainstream news they typically fall neatly into the left vs. right paradigm. The left says Fannie Mae wasn’t the problem; Wall Street was the problem. And the right says the opposite: the problem wasn’t Wall Street; it was Fannie Mae.
In reality, both Fannie Mae and Wall Street contributed to the crisis. As detailed in the book Reckless Endangerment (on our reading list), Fannie Mae has long been filled with corruption, funneling money toward big campaign contributions, colluding directly with Wall Street, and carving out giant bonuses for their executives—all largely because they had the implicit backing of the federal government. What’s more, Fannie Mae’s cost to taxpayers in the form of bailouts after the crisis has been enormous.
It just doesn’t make sense to view the financial crisis as an issue of left vs. right. The collusion between Washington and Wall Street transcends party politics, and so should we.
This leads us to Tom Donilon, a symbol of this collusion. In a well researched piece from the Free Beacon, we see that Donilon lobbied for less oversight over Fannie Mae during a time when the firm participated in “extensive financial fraud,” including misreporting earnings in order to allow their executives to receive bigger bonuses.
After receiving $1.8M in bonuses himself from Fannie Mae, Donilon went on to advise Citigroup and Goldman Sachs as a lawyer at O’Melveny & Myers, earning another $3.9M before returning as a Washington insider. In 2011, he received over $12,000 a month in a Fannie Mae pension, and he likely still receives these monthly payments, even though he’s only 57 and even though Fannie Mae, again, has received enormous taxpayer bailouts (and still hasn’t repaid the money, in part because they’re still giving fat pensions to people like Donilon).
People who only blame Wall Street or only blame Fannie Mae for the financial crisis aren’t seeing the big picture. The key problem here is that the collusion between Washington and Wall Street is terrifyingly rampant. SwitchYourBank.org aims to tear power away from Wall Street in an effort to do somethingworthwhile, but we don’t by any means excuse Washington’s actions in the mess. In fact, we recognize that without reform in Washington, reform on Wall Street will be impossible. To achieve the reform we want, we need to call out the cronyism embodied in people like Donilon and help end the revolving door between Wall Street and Washington.
See more about the revolving door.
See more about why we need Wall Street reform.