12-30-08, 10:47 am

Former US government officials often become either lobbyists or high paid executives for corporations over whom they previously had some regulatory power. They then often return to government much richer than when the left to serve the interests of those corporations. This has been most pronounced of course in the Pentagon and Pentagon-related activities (with the outgoing Vice President Dick Cheney as the most illustrious recent example).

But there is an interesting story in the New York Times this week, titled 'Veterans of ’90s Bailout Hope for Profit in New One,' which, when one reads between the lines, should give us some insight into how capitalists always work to profit from all conditions, including disasters.

The article refers to the former government regulators, now in private practice, who are representing the collapsing institutions of finance capital in their attempt to get as much as they can from the $700 billion dollar. Also, the article looks at their various finance capitalist clients with dreams of buying up these institutions at dirt cheap prices, thanks to public financing.

A key figure in all of this is William Seidman, who chaired the Resolution Trust Corporation which administered the Savings and Loan bailout and is now, according to the Times reporter, both representing various clients and serving as an advisory to both Secretary of the Treasury Paulson and economists of the Obama transition team. (Mother of mercy, is that a conflict of interest?)

If you believe that the masters of capital are moving away from the principle that Oliver Stone immortalized in the film 'Wall Street, 'that is, 'Greed is Good,' get a load of Seidman's comment about his activities. 'It is an enormous market [the battle to both get a piece of the $700 billion and to buy up institutions cheap that government funding will revive] I am really enjoying this.' 'Fortunes will be made here, no doubt about it,' another former Resolution Trust official notes. Another official notes with a bit a guilty glee, that while the financial crisis is a disaster for the nation, 'the opportunity going forward is unprecedented. It is fantastic. It is as if I had been in training for this for the last 40 years of my career.'

These men and their firms see the crisis as a way to make millions for themselves and billions for their clients. They are the 'vultures' of state monopoly capitalism, like the old Wall Street 'bears,' coming in to both buy cheap in the midst of a crisis in which it is public assets that will be sold off. Right now, as Sam Zell, CEO of the bankrupt Tribune Company, who made his fortune buying up Savings and Loan properties in the first great bailout notes 'the best opportunity right now is in the debt area, mortgages. We have been buying all along.'

Millions of people face foreclosure on their homes and 'the best opportunity right now is in the debt area, mortgages.' Tens of millions of workers who live paycheck to paycheck face the possibility of unemployment which will devastate them and their families and prominent figures like William Seidman are 'really enjoying this.' This is the system that praises itself as the foundation of progress and civilization, which defines conduct that would be considered pathological in normal social relations as good?

Immediately I thought of the old Robber Barons, particularly Jay Gould, who set up crises like this to profit from them (sometimes with the inside information of bribed government officials but not with their capital). Establishment scholars used to consider capitalists like Gould as the 'exceptions' to a system in which others, like Morgan and Rockefeller, however destructive their policies were to labor and small capitalists, were nevertheless developing a large corporate industrial system that raised living standards over time. While I never really bought that one, business leaders like Zell and functionaries like Seidman show that under the present decaying system of state monopoly capitalism, figures like Gould are now quite openly the rule rather than the exception.

What this shows is the necessity for a policy to make this 'bailout' very different than the last one. It is time to look seriously at public ownership and forms of regulation that will stop the profiteering, perhaps by making those who be these institutions be subject to various surcharges and other forms of taxation that will return to the public sector the built of the profits which come from them. The Obama transition team should take with a pitcher of salt 'advice' from these former bailout officials. They have little to offer, except perhaps as an example of what not to do in distributing the $700 billion in public investment.

--Norman Markowitz is a contributing editor of Political Affairs.