Trotter on Labour’s electorate MPs

July 28th, 2014 at 8:32 am by David Farrar

writes:

Well, I say “” but, really, the hoarding facing us was all about Phil Goff. It was his ugly mug and buck-toothed smile that confronted the viewer, and his name in bold sans-serif that somebody had helpfully placed a big tick underneath. Oh sure, right down the very bottom you could, if you squinted hard enough, make out the Party’s slogan “Vote Positive”, and yes, there was even an exhortation to “Party Vote ”. But, seriously, nobody driving by is going to have time to register anything other than the local MP, Phil Goff, is soliciting their vote.

I’m told this is happening all over the country. That the hoardings erected by Labour electorate MPs are, overwhelmingly, self-promoting. Not the party (unless you have very good eyesight). And certainly not the Leader. (God forbid!) In spite of delivering the worst result in 90 years, the so-called “election strategy” of 2008, promote the candidate – not the party, is being idiotically repeated – by the same idiots!

Chris means 2011.

The fundamental message of the MMP system: Only the Party Vote matters! is, once again, being studiously ignored by MPs whose only concern is to retain their seniority in Labour’s faction-ridden caucus.

What this will produce, just as it did in 2008, is the absurdity of Labour plummeting to 27 percent in the Party Vote, but capturing 32 percent of the Electorate Vote. Had those figures been reversed on Election Night three years ago, Phil Goff would now be Prime Minister.

Well depends where they pick the party votes up from.

That Phil Goff is promoting himself alone, that his leader’s image is being relegated (as his own was in 2008) to the back streets, adds up, in my opinion, to just one bleak message.

Labour is heading for the worst defeat in its 98-year history.

We can only hope.

Danyl McL has also noted that very small Labour logos on the billboards.

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35 Responses to “Trotter on Labour’s electorate MPs”

  1. Fisiani (1,052 comments) says:

    Current polls suggest that Labour is heading for a defeat but current polls are not election results. The media, who want a close contest to lift ratings will seek to make up shit to spray at National whether it is a total beat up about travel expenses or a Green nutter misrepresenting Nick Smith just to take the last 24 hours. 51 days and 51 attempted smears will surely take place. The problem is getting people out to vote. If you want a strong John Key led National Government then you have to PARTY VOTE NATIONAL for it.
    The Labour hoarding campaign exhorts us to vote for the Positive Party and splashes the name of their candidate.I agree with Trotter, they are idiots.
    The Greens, even worse, tell us that if you do not vote Green then you do not love NZ. That’s a novel concept. Win votes by insulting voters!!!. According to Green hoardings they are opposed to coastal shipping, new roads to fix traffic jams, getting the raw materials for cell phones and computers and they hate jandals.

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  2. peterwn (3,338 comments) says:

    Labour’s hoardings were obviously designed by some central group as they are similar in general layout, but what central group and what was the underlying philosophy. Same goes for ordering – was there any conscious decision on what proportions of each type should be ordered or were local candidates able to order as they please.

    The Party Vote is everything, but Labour’s hoardings practice obviously does not reflect this.

    Something is obviously very wrong.

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  3. hj (7,184 comments) says:

    C T blames it all on Labours failure to vote down the employment contracts act. He doesn’t recognise multiculturalism (NZ shouldn’t be seen as “your” country etc).
    Labour achieved where Axis failed.

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  4. AG (1,834 comments) says:

    As I noted on Danyl’s comment thread:

    Two points …

    (1) Labour wants to show that it is “like National”, in that it has quality individuals who stand ready to represent you in every part of the country. That’s an important message it has to send, if it’s going to remain the assumed alternative leader of government. In this sense, they are different to the Greens, who pursue a pure party-vote-because-of-the-party strategy. It’s the difference between a holdover FPP party with traditions of electorate-based mobilisation and post-MMP parties that don’t.

    (2) If a candidate has money given to him or her as a candidate (after begging people to support his/her candidacy), then he/she has to spend it on “candidate advertisements” … so if I (hypothetically) give $500 to David Clarke (Labour’s Dunedin Nth candidate), he has to spend it on “vote for David Clarke!” stuff, not generic “vote Labour!” stuff. This means it’s not Labour “choosing” to direct its resources into these hoardings (in fact, the Labour Party isn’t allowed to pay for them directly) – rather, donors have given the local candidate the cash, and she or he has to spend it on his or her candidate ads.

    As for why Labour is hardly mentioned on the local candidate hoardings … again, that may be a resourcing issue. If a hording promotes both a candidate and the party, then the cost has to be allocated between the candidate and party (in proportion with the amount each is boosted). So by keeping Labour’s logo small on candidate hoardings, it minimizes the amount that Labour has to allocate towards paying for it – in fact, it maybe doesn’t have to pay anything at all (if the Electoral Commission applies some sort of de minimus rule).

    So why is National doing things different (by having John Key and “party vote National” on every candidate’s hoarding)? Well, couple of thoughts on this, too.

    (1) National probably has more money than Labour does. So it can afford to add central party resources to candidate-paid for ads.

    (2) If you’re National, you don’t want to promote your local candidate qua individual person. You just want people to see John Key everywhere. In fact, if people think that they’re actually voting for Key when they cast their candidate vote, so much the better! Cunliffe … not so much.

    Overall point being – it may be a poor campaign tactic, but the claim that it is MPs who are just trying to protect their own position at the expense of the party may be wrong.

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  5. RRM (10,104 comments) says:

    I don’t think Goff was/is any worse than the rest of them though…? I’m pretty sure that in 2011 their standard house style of hoarding was

    :arrow: CANDIDATE

    :arrow: LABOUR

    (Except with a ticked box where I’ve used an :arrow: )

    It seems VERY intellectually dishonest to me. No explanation of WHY you might want to vote for them, no zippy one-liner that sums up their philosophy for making the country better that sets them apart from the other team. No entreaty (“Please” / “Thank you.”) Not even the common courtesy of a respectful, grammatically correct full sentence.

    Just your voting instructions: Tick me. Tick Labour. Good little peasants. Do as you’re told.

    Well SCREW YOU HANS BLIX.

    Mind you, I have seen a few National billboards around the place with EXACTLY the same formula…

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  6. Pete George (23,833 comments) says:

    In Dunedin out of about a dozen Labour hoardings (David Clark and Clare Curran) I’ve seen one with Cunliffe/vote positive (on the reverse side of vote David Clark), some just Vote Positive and most promoting the candidates.

    Clark especially and Curran are expected to win their electorates but if they don’t would struggle to get in on the list.

    Even the hoardings with Cunliffe’s photo on them don’t have ‘Party Vote’ prominent.

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  7. hj (7,184 comments) says:

    National voters have what they want. The rest have what the dill brained liberal elite want.
    That’s a whole lotta prominent talking heads and boggers.

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  8. Rich Prick (1,750 comments) says:

    At this rate, and with their informal electorate only strategy, Mr 8% and his buddies run the risk of causing a parliamentary overhang. Who would have thought it?

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  9. david (2,194 comments) says:

    The funniest part of Trotters article was that on his weekly amble to Orvietta, he no doubt crossed out of his home suburb of Epsom and into the slum of Three Kings.

    Deep down Chris is as Chardonnay as any socialist you will ever meet.

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  10. iMP (2,457 comments) says:

    Fisiani (8:45 am) I agree with you, but you also have to PARTY VOTE CONSERVATIVE because there are insufficient votes on the center-right for John key to form a coalition govt. national’s election result is traditionally 6-7% below the polls.

    Labour will win Ohariu and there is no guarantee that 20-something candidate with the odd leader ACT will win Epsom.

    HUGE mistake if JK doesn’t assist the Conserves, however. Craig has made it very clear: he doesn’t like deals and accommodations.

    National ain’t gonna get 50% and govern alone. la la land.

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  11. kaykaybee (120 comments) says:

    Trotter reserves particular hatred for Goff as he is the only remaining cabinet member from the 4th Labour Govt that brought in all the “neolib” measures, floated the dollar, abolished most import tariffs, corporatised the PO, Air NZ, Telecom etc and “sold off all our assets”.

    Still, I was shocked he was so abusive. This has to be personal.

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  12. ShawnLH (6,707 comments) says:

    “Labour will win Ohariu”

    What do you base that on?

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  13. Changeiscoming (202 comments) says:

    Agree iMP – Even John Key on TV 1 this morning said they are not polling as high as they were this time before the 2011 election. People seem to be forgetting that fact. This election is not a done deal, it is going to be very close.

    I am picking National will get approx 45% so where is the other 5% going to come from? Either NZF or Conservatives so take your pick. With Mr Peters doing the usual non commit to anything, won’t rule out anything routine they are a coin toss at best.

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  14. peterwn (3,338 comments) says:

    AG – … which indicates that Labour Central are very short of funds whereas local seat candidates seem to be digging into their own pockets and relying on their close supporters to try and hold their seats. Their other options are rather grim:
    1. Hope they can land a job in the Leader’s office after the election.
    2. Revert to working for a union.
    3. Set up a charity and become its CEO.
    4. Get a job with an existing charity (eg Problem Gambling Foundation) which receives Government handouts.

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  15. AG (1,834 comments) says:

    @peterwn,

    Quite possibly! Being poor may be just as bad for Labour’s chances in September … but it’s not the same as local candidates deliberately choosing to deny their ties with the Party. Which is what Trotter (and, by endorsement, DPF) are claiming.

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  16. rouppe (984 comments) says:

    It was his ugly mug and buck-toothed smile that confronted the viewer

    He’s brave with the sneers when its not Helen Clark’s buck tooth smile he’s referring to, isn’t he?

    As an aside on Sunday I drove from Wellington to Ohakune and back for a days skiing and none of the Labour Party hoardings I saw had Cunliffe on them

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  17. Ed Snack (1,941 comments) says:

    iMP, but why would a sane person vote Conservative as a party vote, that splits votes off National (and maybe a few from NZF). That party has fairly far left economic views and socially conservative but confused social policies, in other words, for me at least, probably 100% the opposite of what i would want to support.

    I don’t go with the “Colin is a nutter” crowd, but the Conservative party is a “flake” party, with a grab-bag of populist policies and without a coherent philosophy.

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  18. David Farrar (1,437 comments) says:

    AG – I’ve never known a donation to the local candidate’s campaign to have a rider that it can not be used for the party vote campaign also. Sure it can’t be given to head office, but almost every candidate advertisement has (or should have) a party vote element to it so there is always some allocation. I’ve never known a (National) electorate to feel constrained by how they spend the local campaign fund.

    I also seriously doubt that Labour has enough funds to spend up to the central limit, so doubt electorates have been asked to not spend on the party vote.

    Your explanations are plausible, but unlikely.

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  19. peterwn (3,338 comments) says:

    Labour does not want the colour blind vote. That is the only conclusion I can draw from their Vote Positive hoardings.

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  20. Pete George (23,833 comments) says:

    Labour’s slogan” Vote positive”

    Labour’s message “Obviously not us”

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  21. publicwatchdog (3,162 comments) says:

    Good moaning Kiwibloggers!

    Had a wonderful day out in Piha yesterday (part of my future electorate as the (fiercely) Independent MP for Helensville :)

    I’m finding that an increasing number of people are supportive of giving me their electorate vote in Helensville, given that Prime Minister John Key (shareholder in the Bank of America – follow the dollar …..), is Number One on the National Party list, and would get in even if not a single Helensville person voted for him.

    Also – all the other candidates from other political parties are going for the PARTY vote, so folks can see the simple commonsense in giving their Helensville ELECTORATE vote to a proven ‘anti-corruption /anti-privatisation Public Watchdog’ such as myself :)

    RAW DATA: National’s full list

    John Key Helensville
    Bill English List
    David Carter List
    Gerry Brownlee Ilam
    Steven Joyce List
    Judith Collins Papakura

    Given that the highest ranked woman in the National Party list is, in my considered opinion, the CORRUPT Minister of Justice Judith Collins, who is ranked SIXTH, then I’m sure a lot of thinking, sensible, fair-minded voters would like to see a proven ‘anti-corruption /anti-privatisation Public Watchdog’ in the House, to help ‘even things up’ on a number of fronts?

    Whatever will Prime Minister John Key do, if I take his Helensville electorate seat off him?

    Because – let me be quite clear – I’m GOING FOR IT!

    What will be the effect of my campaign against John Key in Helensville, given that he is the reason why apparently 30% of people vote for National?

    Because, in my considered opinion, they’ve been sucked by all the spin doctors, and compliant media, who haven’t asked the HARD questions?

    Like – how much is John Key personally responsible for the Global Financial Crisis and collapse of the Irish economy, given his former role as Head of Derivatives for Merrill Lynch, and Foreign Exchange Advisor for the New York Federal Reserve, in November 1999, when the Glass Steagall Act was repealed, leaving the derivatives market completely without regulation?

    Nek minnit ……..

    Kind regards,

    Penny Bright

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  22. Rich Prick (1,750 comments) says:

    “Like – how much is John Key personally responsible for the Global Financial Crisis and collapse of the Irish economy … ”

    You forgot 9/11, WW2 and Kenedy’s assignation. Get with the conspiracy.

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  23. ShawnLH (6,707 comments) says:

    “Good moaning Kiwibloggers!”

    Your moaning is never good Penny. Mostly it’s just boring.

    “I’m finding that an increasing number of people are supportive of giving me their electorate vote in Helensville, ”

    2? 3?

    Seriously, you have zero chance of winning.

    “Because, in my considered opinion, they’ve been sucked by all the spin doctors, and compliant media, who haven’t asked the HARD questions?”

    Conspiracy theories are not “the hard questions” merely evidence of a deranged mind.

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  24. AG (1,834 comments) says:

    @DPF

    I’ve never known a donation to the local candidate’s campaign to have a rider that it can not be used for the party vote campaign also.

    It’s not a question of having “a rider” saying this – it’s rather that you can’t solicit funds for one purpose (“help me get elected as local MP!”) and then use it for another (“elect a National/Labour Government!”). That’s why there is the distinction between “candidate donations” and “party donations” in part 6, subpart 3 of the Act.

    And if the candidate is raising funds with the intention of using them to pay for the party’s election expenses (i.e. “party donations”), then she or he is in breach of s.207B by retaining them.

    Sure it can’t be given to head office, but almost every candidate advertisement has (or should have) a party vote element to it so there is always some allocation.

    Indeed. But who pays for that “allocation” for the party vote? If you’re saying that the local candidate is reaching into his/her account to do so, then there’s a problem. Because, as I read s.206A in its context, a candidate can only “incur expenses” for joint candidate/party advertising with respect to the bit that advertises the candidate.

    So, if a hoarding gives equal space to John Key/National and Michael Woodhouse (for example), the national National Party has to pay for 50% of it and Michael Woodhouse has to pay for 50% of it. He isn’t allowed to cover the full cost out of his own local campaign account.

    I’ve never known a (National) electorate to feel constrained by how they spend the local campaign fund.

    That may be true – but are you sure that they are doing what the Electoral Act says is OK, as opposed to simply behaving as they always have without thinking about the law’s impact (and no-one has ever challenged them on it)?

    I also seriously doubt that Labour has enough funds to spend up to the central limit, so doubt electorates have been asked to not spend on the party vote.

    I took it to be the other way – that Labour doesn’t have enough money to put towards paying for widespread joint electorate/party ads. So they are trying to keep the two separate … each electorate pays for as much candidate advertising as it can, while

    Your explanations are plausible, but unlikely.

    Sure. But, then again, we’re being asked to believe that Labour’s central election strategy team (which isn’t just MPs) has decided that all candidates must remove virtually all mention of Labour from their advertising because some MPs want this. So every explanation is relative.

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  25. Rex Widerstrom (5,013 comments) says:

    As rouppe points out, few political leaders have been oil paintings yet I can’t recall Trotter getting so snarky about it. The last person I recall trying to somehow equate physical attributes with political competence was Michael Laws; it was silly then and it was silly now.

    Yet no one seems to feel offended when the target is male… imagine the outcry if he’d made a similarly disparaging comment about Jacinda Adern or Claire Curran or Annette King.

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  26. burt (7,436 comments) says:

    rouppe nails it;

    He’s brave with the sneers when its not Helen Clark’s buck tooth smile he’s referring to, isn’t he?

    Trotter is a lost cause, a relic of the days when unions ran the county. Why is anyone even responding to him.

    Trotter – I’ve seen the enemy and I was underwhelmed.

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  27. burt (7,436 comments) says:

    The Labour billboards have a large blank red space on them – perfect for sticking a big sticker something like;

    Labour = Tax + Spend + Recession : Don’t do it NZ !

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  28. publicwatchdog (3,162 comments) says:

    So – ‘Sheepish Shorn’ – which FACTS do you particularly dislike about NZ Prime Minister John Key?

    That he IS a shareholder in the Bank of America?

    Try checking for yourself – NZ MP’s Register of Financial Interests.

    That John Key was the Head of Derivatives for Merrill Lynch in November 1999?

    That John Key was a Foreign Exchange Advisor for the New York Federal Reserve in November 1999?

    That the Glass Steagall Act 1933 was repealed in November 1999?

    That the effect of the repeal of the Glass Steagall Act was to leave the derivatives market without regulation?

    That the collapse of the derivatives market was the cause of the Global Financial Crisis?

    Here’s a wee hint – ‘Sheepish Shorn’.

    Try doing a bit of research for yourself, as I have done and see what FACTS you come up with?

    Just for the novelty factor?

    THINK FOR YOURSELF?

    (Meant of course in a caring way ….. :)

    PS: If my posts are so boring – why do you bother reading them – let alone commenting on them ?

    Kind regards,

    Penny Bright

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  29. duggledog (1,628 comments) says:

    Good old Trotter. I’ve heard him on National Radio ad nauseum – great guy I’m sure, knows a lot but I identify him as belonging to an age group and social strata of old school NZ society whose thought processes and politics are most likely now redundant for ever. I include Gary McCormick, Sam Hunt, most of the Labour Party in that layer. Whether we like it or not the Asian tidal wave of immigration that is logically coming our way in the next few decades is going to force us into becoming self reliant and responsible, because they don’t ‘do’ lazy, & irresponsible

    Might not be in my lifetime but I think we will look back on National of today as being very left wing and socialist

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  30. peterwn (3,338 comments) says:

    AG “Sure. But, then again, we’re being asked to believe that Labour’s central election strategy team (which isn’t just MPs) has decided that all candidates must remove virtually all mention of Labour from their advertising because some MPs want this. So every explanation is relative.”

    That team would not have decided this. A more likely explanation is the team is treated as little more than a joke.

    Labour obviously does not have a strong Jo de Joux like mother-figure to guide wayward candidates. The cat is as good as away, so the mice play.

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  31. AG (1,834 comments) says:

    That team would not have decided this. A more likely explanation is the team is treated as little more than a joke.

    Labour’s candidate advertising is done to a template design. That template design is dictated centrally. It’s not individual candidates choosing for themselves what their billboards/hoardings will look like. And to think that this central campaign body (which, again, is not just MPs) has decided “this election is lost, so let’s just save our local candidates by removing most references to Labour” is … a bit bonkers, actually.

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  32. peterwn (3,338 comments) says:

    AG – re template design – OK the central group does the template but at this point the whole operation starts to defy logic. Seems the group is stacked with ABC’s and is too weak kneed and does not have the guts to do what is best for the party. Seems electorates can order quantities as they see fit – try ordering an excessive number of electorate only signs from National head office – you would be asked to revise your order.

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  33. AG (1,834 comments) says:

    Seems the group is stacked with ABC’s and is too weak kneed and does not have the guts to do what is best for the party.

    That may be true. Or, alternatively, there may be legal/resource issues for the decision not to put Cunliffe on local candidate signage. That’s the debate that’s been had in the comment thread above.

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  34. Judith (8,534 comments) says:

    Labour is heading for the worst defeat in its 98-year history.

    Yes, it is looking that way – the lowest they have had in the past was 23.7% in the second term of the Labour party running.

    The lowest of the two major parties still goes to National (2002) at 20.93%, so it will be interesting to see if Cunliffe and co score lower than our current Minister of Finance did, when he was leader.

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  35. publicwatchdog (3,162 comments) says:

    Here you go ‘Sheepish Shorn’ – some FACTS for you to chew on …

    ________________________________________________________________________________________

    John Key IS a shareholder in the Bank of America:

    http://www.parliament.nz/resource/en-nz/00CLOOCMPPFinInterests20141/2e04287ad20ee5da12a308149e59bb16d7f47ce5

    Rt Hon John Key (National, Helensville)

    2 Other companies and business entities

    Little Nell – property investment, Aspen, Colorado

    Bank of America – banking

    ________________________________________________________________________________________

    John Key’s Wall Street banker background:

    http://www.parliament.nz/en-nz/mpp/mps/current/50MP78101/key-john

    Rt Hon John Key

    Member for Helensville, National Party
    Entered Parliament: 15 August 2002
    Member of the following Parliaments: 47th, 48th, 49th and 50th

    Career

    Investment banker, New Zealand for 10 years
    Investment banker, Merrill Lynch 1995-2001
    Member, Foreign Exchange Committee of the Federal Reserve Bank of New York 1999-2001
    __________________________________________________________________________________________________

    The deregulation of US Derivatives Markets and effects thereof:

    http://www.sourcewatch.org/index.php?title=Larry_Summers

    Documents Related to Summers’ Efforts to Deregulate U.S. Derivatives Markets

    The final report of the National Commission on the Causes of the Financial and Economic Crisis in the United States puts over-the-counter (OTC) derivatives “at the center of the storm,” and specifically cites the Commodities Futures Modernization Act as a major contributing factor.

    “The enactment of legislation in 2000 to ban the regulation by both the federal and state governments of over-the-counter derivatives was a key turning point in the march towards the financial crisis.”

    Read the report, pg. xxiv, here.[3]

    In the spring of 1998, Deputy Treasury Secretary Larry Summers called Brooksley Born, the head of the Commodity Futures Trading Commission (CFTC), and yelled: “I have 13 bankers in my office who tell me you’re going to cause the worst financial crisis since the end of World War II” if she moved forward with plans to bring transparency and reporting requirements to the OTC market.

    OTC derivatives were already causing huge loses around the globe.

    In 1994 Orange County California lost $1.5 billion speculating on OTC derivatives.

    Watch the Frontline investigation “The Warning” here.[4]

    Summers attacked Born publicly, testifying in Congress in July 1998: “As you know, Mr. Chairman, the CFTC’s recent concept release has been a matter of serious concern, not merely to Treasury but to all those with an interest in the OTC derivatives market.

    In our view, the Release has cast the shadow of regulatory uncertainty over an otherwise thriving market — raising risks for the stability and competitiveness of American derivative trading.

    We believe it is quite important that the doubts be eliminated.”

    “The parties to these kinds of contracts are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies.”

    Read Summers testimony here.[5]

    One of Summers primary arguments was that any new regulation could invalidate the burgeoning swaps market, yet Born made it clear in her release and in her testimony that new rules would be prospective.

    Previously the CFTC had generated prospective rules.

    “The release does not in any way alter the current status of any instrument or transaction under the Commodity Exchange Act.

    Any proposed regulatory modifications resulting from the concept release would be subject to rule making procedures, including public comment, and any changes that imposed new regulatory obligations or restrictions would be applied prospectively only.”

    Read the concept release here.[6]

    Even though the 1998 Long-Term Capital Management derivatives disaster shook regulators and demonstrated that derivatives deals could pose systemic risk to the entire economy, bank regulators and Congress ignored Born who cited “an immediate and pressing need to address possible regulatory protections in the OTC derivatives market.”

    Instead they placed a six month moratorium on any CFTC regulation and Born resigned in early 1999.

    Read Born’s speech on LTCM here.[7]

    Summers became Treasury Secretary in July 1999, receiving a congratulatory letter from Ken Lay, the President of Enron Corporation, addressed “Dear Larry.” In his response to “Ken” on May 25, 1999, Summers included a handwritten PS:

    “I’ll keep my eye on power deregulation and energy-market infrastructure issues.”

    Read the letters here.[8]

    Summers helped negotiate the World Trade Organization’s Financial Services agreement that opened global markets to derivatives and other financial products and made it harder for signatory nations to regulate banking in the public interest.

    In the WTO agreement, which was negotiated behind closed doors, the United States effectively pledged to get rid of the 1933 Glass-Steagall law, which was seen as a barrier to market entry by many foreign banks that were structured differently.[9]

    In 1997, Tim Geither urged Larry Summers to personally call the heads of America’s top five banks to seal the deal.

    See the Geithner memo to Summers here.[10]

    Summers pushed for the repeal of the Glass-Steagall, which was created after the Great Depression to wall off traditional commercial banking activity from the Wall Street casino.

    The repeal allowed commercial banks to merge with investment banks, securities firms and insurance companies, creating “too big to fail” behemoths and unleashing an era of reckless speculation.

    On November 5, 1999 Summers hailed the passage of the repeal:

    “Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st Century. This historic legislation will better enable American companies to compete in the new economy.”

    Read the statement here.[11]

    On November 9, 1999, Summers and other regulators issued a report that would serve as the Congressional blueprint for the Commodities Futures Modernization Act drafted the following year.

    The “President’s Working Group on Financial Markets” concluded that “under many circumstances, the trading of financial derivatives by eligible swap participants should be excluded from the CEA [Commodities Exchange Act].

    To do otherwise would perpetuate legal uncertainty or impose unnecessary regulatory burdens and constraints upon the development of these markets in the United States.”

    Read the Working Group Report here.[12]

    Summers personally reassured Ken Lay on November 22, 1999 that Enron’s derivatives trades would not be regulated, directing him to pages 34-35 in the Working Group report that reads “in light of their small market share and the apparent effectiveness of private counterparty discipline in constraining the risk-taking of such derivatives dealers, the Working Group is not recommending legislative action with respect to such derivatives dealers at this time.” Read the letter here.[13]

    Summers wrote to Congress on December 15, 2000 to “strongly support” the Commodities Futures Modernization Act.

    The bill that went even further than the legal changes called for in the President’s Working Group Report, exempting derivatives from regulation by any federal bank regulator not just the CFTC.

    Summers also allowed the “Enron Loophole” to be included in bill (over the objections of the CFTC), which exempted energy trading on electronic commodity markets from regulation and helped Enron to gouge billions of dollars from West Coast consumers.

    Read the letter in the Congressional Record here.[14]

    As energy prices skyrocketed in California, Summers opposed Governor Gray Davis’ plan to intervene with price controls, claiming:

    “This is classic supply and demand. The only way to fix this is ultimately by allowing retail prices to go wherever they have to go.”

    Enron filed for bankruptcy in 2001, putting 20,000 employees out of work and Ken Lay was convicted of 10 counts of securities fraud, wire fraud and other offenses.

    Read Kurt Eichenwald’s 2005 book on the collapse of Enron, “Conspiracy of Fools.”[15]

    Summers departed the Treasury in 2001 and went off to be the President of Harvard, where he ignored repeated warnings by expert staff and lost Harvard some $2 billion of its endowment funds, including $1 billion on toxic interest rate swaps.

    Read about it in the Boston Globe[16] and Bloomberg.[17]

    Back at the White House in 2009 as head of the National Economic Council, Summers was a chief architect of the generous bank bailout, the weak stimulus and the limited structural reforms in Dodd-Frank.

    Summers opposed numerous efforts to strengthen the bill, most tellingly, the President’s effort to include the “Volcker Rule.”

    Volcker’s aim was to put an end some of the riskiest practices by curtailing proprietary trading at U.S. banks and limiting their investments in private equity firms and hedge funds, but the rule was slow walked and weakened by Summers.

    Read Richard Wolffe’s book “Revival: The Struggle for Survival Inside the Obama White House.”[18]

    Summers was overheard in November of 2008 chastising Arthur Levitt (former head of the SEC under Clinton) for saying that Brooksley Born was right “I read somewhere you were saying that maybe Brooksley Born was right. … But you know she was really wrong.”

    Levitt confirmed the account, available here.[19]

    In the years that followed the 2008 meltdown, Clinton, Greenspan, Levitt even Rubin admitted they made mistakes or expressed some regret for these actions.

    Summers abided by his own advice to Geithner, as Geithner prepped for his confirmation session as Treasury Secretary, “don’t anyone admit we did anything wrong.”

    Read Ron Suskind’s “Confidence Men.”

    In 2012, Summers was grilled by a British reporter and defended his record on derivatives, saying “at the time Bill Clinton was president, there essentially were no credit default swaps.

    So the issue that became a serious problem really wasn’t an issue that was on the horizon… If you want to assign responsibility, If you take a market that essentially didn’t exist in the 1990s, that grew for eight years from 2001 to 2008, and then brought on a major collapse, if you were looking to hold people responsible, you would look to… officials of the Bush Administration.”

    Credit default swaps were invented by JP Morgan Chase to offset the risk of the Exxon Valdez disaster in 1994 and plenty of people were worried about them, including presidential adviser Joseph Stiglitz.[20] Watch the Summers interview here.[21]

    According to the Financial Crisis Inquiry Commission’s final report in the shadows, between 2000-2008, the OTC derivatives market grew from $95.2 trillion to $672.6 trillion (Report pg. 48 here.)

    notational value.[3]

    When the dark market deals started to go sour, the impact was felt around the world.

    ______________________________________________________________________________________________

    WHAT ROLE DID JOHN KEY PLAY IN THE DEREGULATION OF THE DERIVATIVES MARKET?

    Anyone else going to ask this question?

    If not – why not?

    Penny Bright

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