FACTCHECK: Toomey Tries to Mislead Voters About Career of Fighting for Wall Street, Corporate Special Interests
Harrisburg, PA – Today, Pat Toomey, Wall Street derivatives trader and lifelong champion of Wall Street and corporate special interests, released an advertisement that tries to mislead voters about his career of fighting for Wall Street and corporate special interests.
“After Pat Toomey ended his career as a Wall Street derivatives trader, he continued to fight for corporate special interests as a member of Congress and the President of the Wall Street-backed Club for Growth,” said Mark Nicastre, spokesman with the Pennsylvania Democratic Party. “As a member of Congress, Pat Toomey fought to deregulate Wall Street, which contributed to the economic collapse that left Pennsylvania families reeling. With the Wall Street-backed Club for Growth, he fought to privatize Social Security and put seniors’ retirement savings in the hands of reckless Wall Street bankers. For Pat Toomey, his allegiance to Wall Street isn’t limited to a single job; it has defined his entire career. Pennsylvania families need a Senator who will fight for them, not Wall Street and corporate special interests.”
“I worked on Wall Street just out of college and left twenty years ago.”
Pat Toomey has spent his entire career fighting for Wall Street and corporate special interests while taking $1.6 million in campaign contributions from the Wall Street and corporate special interests.
Toomey Has Taken $1.6 Million from the Finance, Insurance and Real Estate Industry. According to the Center for Responsive Politics, Toomey has accepted $1,631,492 in campaign contributions from the finance, insurance and real estate sector over the course of his career. [Center for Responsive Politics]
Toomey took to the House floor and fought to deregulate Wall Street. The Pittsburgh Post-Gazette reported on a first videoshowing Toomey heaping praise on derivatives during a 1999 House speech. The Philadelphia Inquirer reported on a second videoof Toomey advocating for more deregulation of derivatives in a 2000 House speech. The Allentown Morning Call reported on a third video in which Toomey calls over-the-counter derivatives “perhaps the most important, creative and innovative development in finance in the last 30 years” in a 2003 House speech.
Toomey Would Continue to Favor Deregulation Of Financial Markets. In April 2009, Toomey said that he would continue to favor deregulation of financial markets. According to The Scranton Times Tribune: “Mr. Toomey also said he would continue to generally favor deregulation of the nation’s financial markets, despite a collapse that many blame on a failure of regulation.” [Scranton Times Tribune, 4/16/09]
Toomey fought for deregulation of financial services. As a freshman in Congress, Toomey fought for extensive deregulation of the financial markets. Toomey said, “The trend in deregulation, beginning in the early 1980s, is one of the biggest reasons for the sustained economic expansion. I would like to see us continue to deregulate on many fronts, including the financial services industry.” [Derivatives Strategy, 5/1999]
Toomey Denied Wall Street Needed More Regulation. Asked in June 2010 by KDKA about Wall Street reform, Toomey said, “Financial institutions are among the most heavily regulated in our economy, have been for decades and continue to be today,” he said. [KDKA, 6/9/2010]
Toomey helped write the legislation that led to the current economic crisis.Toomey’s bill repealed the Depression-era Glass-Steagall Act, which regulated the separation of banks and investment firms. Its repeal allowed Wall Street giants such as Citigroup – which combined the operations of Citibank and several large investment houses – to emerge. Some, including President Barack Obama, have pointed to the repeal of that law as a cause of today’s financial crisis because it paved the way for so-called “too big to fail” financial services behemoths such as AIG. [HR 10, Vote #276, 7/1/99; Morning Call, 4/30/09] Toomey supported an amendment to limit a bank’s ability to report suspicious financial activity. The amendment would limit financial institutions’ ability to profile accounts and source funds. The bill stripped a bank’s ability to assess the purpose of any transaction or seek from the customer an explanation for the transaction; to monitor customer body language or behavior; to monitor customer transactions and compare them to historical patterns; and to report transactions that do not conform to a customer’s historical transaction patterns. The amendment was struck down 129-299. [HR 10, Amendment 4, Vote #269, 7/1/99] Toomey opposed a bill to tax bonuses to executives at bailed out banks. As Club for Growth President Toomey wrote a letter praising Republican congressman John Campbell (R-CA) who opposed a bill to tax bonuses to banks that were bailed out by taxpayers. Toomey said the bill “unfortunately” passed and quoted Campbell who said, “This is horrible!” The bill passed the House, 328-93. [HR 1586, Vote #143, 3/19/09; Letter written by Toomey posted on Facebook, 3/21/09] Toomey voted against stricter provisions against corporate wrongdoing. Toomey voted against tougher Senate-passed provisions against corporate wrongdoing than were in the House version of the bill. The bill would have closed loopholes to prevent corporate officials from using bankruptcy to evade court-ordered financial penalties and required top executives to certify the accuracy of their company financial statements and face prison time for false certifications, among other provisions. [HR 3763, House Vote # 313; Centre Daily Times, 7/22/02]
Toomey participated in and worked for “freewheeling” financial climate.Toomey moved to the British bank Morgan Grenfell in 1986 to start a “serious derivatives operation.” He was later to describe his work to Derivatives Strategy: “We were dealing in various currencies, all kinds of interest rate and currency-related derivatives-options, swaps, forwards and so on.” Within a year of coming on, two senior directors would resign under accusations of insider trading in Guinness’ takeover of Distillers. In a discussion of how corporate culture affects a bank’s propensity to take risks, The Economist described Morgan Grenfell as “a merchant bank which had a more free-wheeling culture.” [The Economist 6/25/88; Derivatives Strategy 5/99]
Toomey praised derivatives: “Enormous for positive change in our economy.” During a House Banking and Financial Services Committee hearing, Toomey said “the derivative industry has profoundly transformed the capital markets” and that it “has done enormous good and has been an enormous force for positive change in our economy generally.” While speaking about the Commodity Exchange Act, Toomey said, “I’d just like to emphasize the enormous importance of derivatives in our financial system and our capital markets. I had the privilege of being involved in this industry for about seven years and I struggled to find an analogy, and I’ll spare you my efforts there. But the fact is that the derivative industry has profoundly transformed the capital markets, international finance, the ability of American and foreign institutions to manage risk, and has done enormous good and has been an enormous force for positive change in our economy generally.” [House Banking and Financial Services Committee Hearing, 7/19/00]
Toomey introduced legislation to further protect derivative trading. Toomey twice introduced legislation that would allow counterparties to make claims on their credit swap transactions with bankrupted companies before their assets froze. The International Swaps and Derivatives Association (ISDA) lobbied Senate leaders in support of Toomey’s bill. In both cases, the resolution was held in committee. Netting provisions were eventually enacted as part of the bankruptcy reform package passed in 2005. The netting exemption represented a further commitment to derivatives as important assets for financial institutions. In effect, netting allowed derivative counterparties to “skip the line entirely” in bankruptcy proceedings, jumping ahead of other creditors. Theoretically, the netting exemption would add stability to the historically volatile derivatives market, allowing for increased liquidity throughout the system. The measure may have in fact precipitated the end for Bear Stearns, Lehman Brothers, and AIG “by removing legal obstacles for banks and hedge funds that wanted to close positions and demand extra collateral from the three companies,” effectively accelerating the bankruptcy process. [ISDA letter to Senate leaders, 11/13/00; Talking Points Memo, 3/6/09; Financial Times, 10/30/08]