Sunday, January 4, 2009

Richardson's Bigger Picture

So it looks like one prominent Fletcher School alum will not be serving in the Obama White House. As just about every media outlet in the world is headlining today, Gov. Bill Richardson of New Mexico has bowed out (a phrase I find bizarre - he was bowing with a gun to his head. Obama's people made him quit, but no one wants to say that) from being Commerce Secretary. Which is a shame, because when it comes to commerce in state politics, the guy knows how to sell things, for better prices than Blago. A 1.4 million dollar contract to help do business with the state of New Mexico apparently cost a financial consulting firm about $100,000 in campaign contributions. That's a better deal than 500,000 for a Senate seat, and waaaay subtler.

However the big picture here is interesting. Note the quote below from a Washington Post piece on this investigation from mid December:
The inquiry is part of a long-running nationwide investigation into "pay-to-play" practices in local government bond markets. In other cities, federal investigators are questioning whether financial firms have lavished politicians with money and gifts in exchange for fee-paying work advising municipal and local governments on investments. Authorities indicted the mayor of Birmingham, Ala., this month on charges of taking hundreds of thousands of dollars in gifts and loans from a firm that led the city into toxic investments and massive bankruptcy.
In other words, the Justice Department under Bush was focusing on sweetheart deals between financial services firms and state governments when it came to managing the very lucrative business of investing public money. Now you would think that with all the crap involving bond sales and the sub-prime mortgages that Obama would continue to push Justice to look into this stuff. A LOT of local governments (i.e. a lot of state governments as well) are up to their eyeballs in debt, and turning attention towards losses that can be blamed on fraud would divert attention away from the debt. Demonizing financial services firms would make for good political theatre.

But it could be the case that in Obama's world where government is categorically a good thing, exploring the seedy side of how financing for local debt gets done would be too damaging. This could also be very embarrassing if it looks like prominent Democrats are involved in this, and Richardson certainly fits that category. So my question is this - will this focus continue? It's important to remember that every President staffs Justice with some people in management and has some say on what gets more attention. For example this piece from NPR notes that liberals in the Department are hoping Obama pushes more civil rights stuff which Bush ignored. Wonder if going after local government officials will remain on Obama's radar?

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