According to the legal dictionary on The Free Dictionary by Farlex, the legal definition of the word “graft” is thus:
Graft is the personal gain or advantage earned by an individual at the expense of others as a result of the exploitation of the singular status of, or an influential relationship with, another who has a position of public trust or confidence. The advantage or gain is accrued without any exchange of legitimate compensatory services.
Behavior that leads to graft includes Bribery and dishonest dealings in the performance of public or official acts. Graft usually implies the existence of theft, corruption, Fraud, and the lack of integrity that is expected in any transaction involving a public official.
With this definition in mind, I was quite surprised to read this write-up on Fox Business regarding Larry Fink’s quest for the Treasury:
But people who know him say that for all that he has accomplished, Fink believes his career is incomplete unless he achieves the one goal that has eluded him for years — a presidential appointment to become U.S. Treasury Secretary.
People close to Fink, one of Wall Street’s most prominent Democrats, say that he’s now hoping his next chance to become Treasury Secretary is if Democratic front-runner Hillary Clinton wins the presidency in 2016.
One major sign that he’s angling for the job, they say, is his October 2013 appointment of Democratic political operative and Hillary Clinton confidant Cheryl Mills to the BlackRock board of directors.
Renewed talk about Fink’s interest in the job came in October after the appointment of Mills to the BlackRock board. Mills has little financial experience, BlackRock insiders concede, though she is skilled in politics, having served in the administration of President Bill Clinton, and as chief of staff to Secretary of State Hillary Clinton during President Obama’s first term.
People at BlackRock say Mills is well qualified as a board member of a large financial services company in the post-banking crisis world because policy-making in Washington plays such a central role in Wall Street’s affairs.
Of course. People who know nothing about financial services are well qualified to be on the board of the largest money management firm in the country.
Hey, I have a million year-old CPA. Why not me? Oh. This must be why:
But Mills, these people concede, is also just the type of political insider who could help Fink overcome skepticism among the left-wing of the Democratic Party of Wall Street types playing a role in government if Hillary Clinton becomes president, as many Wall Street Democrats are betting on.
Fink appears to be one of those, and he has guessed right in the past. His support of Obama back in 2007 came when many Democrats in the financial business believed Hillary Clinton was the odds on favorite.
I guess it’s all about knowing which slice of bread to butter while the buttering is good.
By the way, this development should be troubling to Hillary supporters everywhere for this reason, plus at least one other that I will get to in a moment:
Fink, a former bond trader at First Boston who played a key role in creating the mortgage-backed security, created BlackRock initially as an arm of the private equity firm Blackstone, which extended him a $5 million line of credit.
And of course bond traders who know everything there is to know about MBS must also know everything there is to know about monetary policy… I mean, how hard can it be? The quote below comes from an article published today on Business Insider, but it is just one of the many recent outsized establishment of presence in the “interest rate” debate that include appearances on Bloomberg’s Surveillance.
BlackRock CEO Larry Fink says negative interest rates are lining up savers and the economy for “potentially dangerous financial and economic consequences.”
In his annual letter to shareholders published Sunday, the head of the world’s largest asset manager singled out the risk of subzero rates on the global economy.
Japan and some countries in Europe have lowered benchmark interest rates below zero to stimulate their economies by encouraging borrowing and spending.
Fink argued that the lower rates are, the more money savers need to put aside to meet their retirement income and other goals.
This lowers how much discretionary income they have left to spend. And as the backbone of the US economy, consumer spending could be a drag on growth if it decreases.
Here is Business Insider’s direct quote of Fink on monetary policy:
Not nearly enough attention has been paid to the toll these low rates — and now negative rates — are taking on the ability of investors to save and plan for the future. People need to invest more today to achieve their desired annual retirement income in the future. For example, a 35-year-old looking to generate $48,000 per year in retirement income beginning at age 65 would need to invest $178,000 today in a 5% interest rate environment. In a 2% interest rate environment, however, that individual would need to invest $563,000 (or 3.2 times as much) to achieve the same outcome in retirement.
This reality has profound implications for economic growth: consumers saving for retirement need to reduce spending if they are going to reach their retirement income goals and retirees with lower incomes will need to cut consumption as well. A monetary policy intended to spark growth, then, in fact, risks reducing consumer spending.