Ted Kaufman - United States Senator for Delaware

Greed's Not Good

Source: The Pilot

By Chris Larsen

August 8, 2010

The recent disaster of the BP oil spill in the Gulf of Mexico points up a common element of "greed" that has led to our recent environmental and economic troubles.

Corporate interests have trumped the concerns of ordinary Americans and tragically altered normal everyday life. Congress has gone along with special interest groups for decades and allowed things to spiral out of control. Many of the safeguards provided by strong regulations and watchdog agencies were tossed aside in the name of "good business."

Part of the problem is that most people elected to Congress from both major political parties have benefited from the campaign contributions of the financial services industry and big oil. More than 600 lobbyists were hired to oppose recent financial reform legislation and also offer subtle reminders of their past and future largesse.

With regard to the oil spill, it was amazing how the Gulf Coast legislative caucus fell into bipartisan lockstep in support of the oil company and not of those whose lives have been damaged.

My old friend Rep. Gene Taylor (D-Miss.) made the moronic comment that the spill looked "just like chocolate milk." Let's all check his Federal Election Commission report. I am not sure if the Cocoa Milk Council gave him any contributions, but I bet BP sure has.

There were many who stood up for more regulation and against the entrenched powers. But only one U.S. senator has never had to reach his hand into the deep campaign money pockets of big business. He's Ted KAUFMAN, and I happened to work for him when he was chief of staff to Sen. Joe Biden (D-Del.), the man he was appointed to succeed when Biden was elected vice president.

KAUFMAN agreed to the appointment and announced he would not run to fill the seat in 2010. Many thought he would be a "place holder" so that Biden's son Beau, Delaware's attorney general, could run to succeed his father in 2010. (Think JFK and his youngest brother, Ted.) The KAUFMAN appointment was seen as safe and a reward to a dedicated public servant for years of tireless and largely unnoticed service.

Then Beau Biden decided not to run for his father's seat.

Rather than sit back and enjoy his newfound glory, KAUFMAN has been an extraordinarily active and high-profile freshman senator. With nearly two decades of service as a top congressional staffer, he knew his time was short to leave a mark, and he has made the best of it.

For many years before being appointed United States senator, KAUFMAN served as senior visiting fellow at Duke University. For 10 of those years he taught a course to law and business school students on the relationship between business and government. He is now busy teaching those same lessons to his colleagues in the Senate.

No Referees

I had the opportunity to speak with Ted KAUFMAN by phone on a recent evening as he drove home to Delaware.

Since taking office, he has become a leading voice in the Senate by advocating greater transparency and stronger regulation in many areas of the economy - particularly the area of banking.

Contrary to the 1980s motto championed by the likes of Ivan Boesky, greed is not good. The argument to repeal -regulatory laws like Glass-Steagal, which separated commercial banks from their risky brothers in the -investment banking industry, was that business was being stymied by regulation.

The repeal led to the dangerous investment in unregulated derivatives of fragile mortgage portfolios and ultimately a $2.5 trillion taxpayer bailout of the country's six biggest banks. "Too big to fail" became the way out of this deregulated mess.

Ted KAUFMAN was a principal co-sponsor, with Sen. Sherrod Brown (D-Ohio), of an amendment that would have required these banks to split up, arguing they had become too big to be regulated. The amendment was dismissed handily with the all-powerful bank lobby's opposition in full force.

"Hey, I am a market guy," said KAUFMAN. "Our forebears came to this country, in large part, because the streets were paved with gold. ... People making a profit doesn't bother me, as long as we are working in the right direction."

Quoting from a book by billionaire George Soros, KAUFMAN said, "Corporations do not want to compete, they want to win." KAUFMAN compares the need for regulation to the need for a referee in football. "I love football," he says, "but without a referee, there would be bedlam."

Weak regulations and weak regulators allowed unfettered growth to occur to the point that some of the biggest names in business like AIG , Merrill Lynch and Citigroup teeter on the edge of existence. Goldman Sachs is well over 10 times larger than it was 10 years ago. These companies are not just too big to fail, they are too big to regulate

KAUFMAN is also concerned about automated computer-generated trading. Some 70 percent of trades are made by computers with what KAUFMAN says is no real transparency and no clear regulation. Not even the brokerage houses making the deals can keep up with how they are making money.

Quite literally, computers are acting without our knowledge.

'No Party of Principle'

It is this high-frequency trading that recently led to a 1,000-point drop in the Dow Jones in 20 minutes, equaling a $1 trillion drop in market value. The folks out in the real world who buy stocks and sit on them for years are at a tremendous disadvantage when the stock market plays so loose and does not allow buyers and sellers to determine value.

KAUFMAN voted in favor of a watered-down version of financial reform legislation. Despite his support, he continues to caution his colleagues against the rule-making and enforcement of the new law.

"The same regulators who failed in the run-up to the last crisis will once again be given the solemn task of safeguarding our financial stability," he said. "I'm concerned whether they have the capacity and wherewithal to succeed."

Asked if he saw any similarity between the floundering economy and the BP Oil disaster in the Gulf of Mexico earlier this year, KAUFMAN said oil industry regulators were considered "family" by those they were supposed to regulate. In a sense, the referee was wearing a BP uniform.

KAUFMAN is truly a unique senator. Like Jimmy Stewart in "Mr. Smith goes to Washington," he is beholden to no one. He is free to do what he deems the right thing.

I asked if that freedom affected the hard-line -positions he has taken. He said he thought it would be good politics if he were running in Delaware - maybe not New York or California or even North Carolina.

"I am sure if I were -running, my opponent would get buckets of cash and support from the banks," he said, "but good ideas would beat them every time."

When pressed, he said the only thing different is if he were running for re-election to this seat he would be spending more than 60 percent of his time raising money for the campaign.

There is something tragically wrong with a system of governing that forces its elected officials to spend over half their time raising money so they can ask for their job back, when extraordinary men like Ted KAUFMAN can put their time to better use.

"There are many men of principle in both parties in America," said Alexis de Tocqueville, author of "Democracy in America." But he added: "There is no party of principle."

If there were, Sen. Ted KAUFMAN might be its leader.

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