The Idaho Senator Who Won’t Save America

Senator Mike Crapo could take on Wall Street, like his predecessors did when America was facing financial catastrophe. He won’t. We know why. 

The Senate Committee on Banking, Housing and Urban Affairs doesn’t often get media attention, but its jurisdiction over Wall Street and the banking industry is incredibly important.

Witness testimony and investigations conducted by the Senate into Wall Street happens in this committee. Legislation related to regulation of the industry to control corruption and financial manipulation starts in this committee.

The Chairperson of any committee is a prestigious position. Appointed by the majority party, a chairperson can wield significant influence over what hearings will be held and who will be called as witnesses.

The current Chairman of the Senate Banking Committee is a fourth term Republican senator from Idaho.

Who is Mike Crapo?

Sen. Mike Crapo (pronounced Cray-Poe) is 69 years old and a lawyer educated at Harvard Law School. Crapo was active in Republican politics while he practiced law, well before he was elected to the U.S. House of Representatives in 1993. He ran for U.S. Senate in 1998 and has been there since.

Crapo’s most significant contribution to legislation is as sponsor of the Economic Growth, Regulatory Relief, and Consumer Protection Act that was signed into law in 2018.

Despite its name, the bill removed regulations on Wall Street and ended provisions that had been enacted after the 2008 financial crisis as an effort to place barriers between commercial banking and investment banks and thereby reduce risk in the system.

Crapo should be investigating bankers and protecting the American economy. Instead, he is a dogmatic de-regulator with significant alignment with the President.

While this may seem par for the course in America today, it wasn’t always like this.

Senate Response to Wall Street Crash of 1929

The Senate’s response to the market crash in 1929 was quite different from that body’s response to the 2008 financial crisis.

In 1932 the Senate Banking Committee was investigating the causes of “Black Monday” and “Black Tuesday,” October 28 and 29, 1929, when the market lost 30 percent of its value.

After the crash of 1929, the financial infrastructure of America continued to worsen until the presidential election in 1932. The Democratic Party nominee, Franklin Delano Roosevelt, carried 42 states with 57.4 percent of the popular vote while Democrats gained 11 seats in the U.S. Senate to regain majority control.

Senator James Couzens Chairman Duncan Fletcher Ferdinand Pecora 1 - 1
Sen. James Couzens, Chairman Duncan Fletcher, Ferdinand Pecora, 1933. c/o Library of Congress

Ferdinand Pecora

In January 1933, Chairman Peter Norbeck, a South Dakota Republican, appointed a new lead legal counsel for the committee, Ferdinand Pecora.

Pecora, who turned 50 years old just prior to starting as the committee’s lead counsel, was a Sicilian immigrant who arrived in New York with his family at five years old. He was a lifelong Democrat and had previously earned a reputation for cross-examination as deputy prosecutor in New York City.

After FDR’s inauguration and control of the Senate shifting to Democrats, the new Senate Banking Chairman, Florida Democrat Duncan Fletcher, retained Pecora as committee counsel.

By the end of the Senate investigation in 1934, it became known as the Pecora Commission.

Richard Whitney testifying before the Pecora Committee - 2

Richard Whitney, president of New York Stock Exchange, testifying before the Pecora Committee
c/o Library of Congress

Wall Street on Trial

Pecora compelled testimony from several witnesses including the biggest names in banking of the era:

Just one example of the absurd corruption that occurred in the years leading up to the market crash in 1929 occurred at National City Bank.

To avoid the legal prohibition on commercial banks selling stocks and bonds, Mitchell and his top executives founded a company, called National City Company, as a trust. The top three executives at the Bank were each required to be the three executives that oversaw the Company.

Under questioning from Pecora, Mitchell attempted to deny that the two entities were the same. After persistent questioning, like many of the witnesses, Mitchell eventually came clean — the commercial bank, which took deposits and issued loans, was inextricably linked to the Company, which sold securities, including corporate stocks and bonds. The investigation revealed Mitchell made illegal stock transactions, speculated on its own securities and evaded income tax at National City.

The testimony of the banking executives, and Pecora’s exposing of the facts, was shocking to much of America. In the midst of bank failures, panic and economic devastation, public opinion turned harshly against Wall Street.

By the time the Pecora Commission investigation was completed in June 1934 (download full report), its exposure of corruption led to New Deal legislation. Two bills passed before the investigation was completed and another two after its conclusion: The Banking Act of 1933, The Securities Act of 1933, The Securities Exchange Act of 1934 and The Public Utility Holding Company Act of 1935.

ferdinand pecora - 3

Ferdinand Pecora

What Changed?

Several books were written about Ferdinand Pecora after the 2008 Financial Crisis, including the 2010 release,The Hellhound of Wall Street.” In 2009, author Ron Chernow wrote in the New York Times, that “Bankers had been demigods in the 1920s” but “Pecora defrocked these high priests, making them seem small and shabby.”

While we won’t know until November, some analysts see the Democrats as slightly favored If that were to happen, current Senate Banking Committee Chairman, Mike Crapo, will be the outgoing chairman, just like Sen. Norbeck was in 1933 when he appointed Pecora.

The cold reality of Washington today is that a politician’s donors are an indication of future behavior. No serious observers think that Crapo will do much of anything. Certainly not anything that will benefit working people.

In his last two re-election campaigns, Crapo raised $10,729,847 in campaign funds.

Of his total funds, $2,493,339, or 23 percent, came from the broad category of the Finance, Insurance and Real Estate industries.

This is just one reason why we need a major new political party that represents working people, not Wall Street, that is free from corporate and billionaire money.

Here are Mike Crapo’s top 100 donors over his last two re-election cycles.

Donor Total Contributor Type
UNITEMIZED DONATIONS 162,825 OTHER
2009 SENATORS CLASSIC CMTE $81,217 NON-INDIVIDUAL
2011 SENATORS CLASSIC CMTE $49,599 NON-INDIVIDUAL
2015 SENATORS CLASSIC CMTE $41,603 NON-INDIVIDUAL
NAIFA GEORGIA $40,500 NON-INDIVIDUAL
2016 SENATORS CLASSIC CMTE $38,413 NON-INDIVIDUAL
CUNA MUTUAL GROUP $27,000 NON-INDIVIDUAL
AMGEN $25,000 NON-INDIVIDUAL
CAPITAL ONE FINANCIAL CORP $24,000 NON-INDIVIDUAL
JPMORGAN CHASE HOLDINGS $23,500 NON-INDIVIDUAL
WELLS FARGO $23,031 NON-INDIVIDUAL
WEYERHAEUSER CO $23,000 NON-INDIVIDUAL
KPMG (KLYNVELD PEAT MARWICK GOERDELER) $22,500 NON-INDIVIDUAL
21ST CENTURY MAJORITY FUND $20,000 NON-INDIVIDUAL
AMERICAN COUNCIL OF LIFE INSURERS $20,000 NON-INDIVIDUAL
CITIGROUP $20,000 NON-INDIVIDUAL
DELOITTE TOUCHE TOHMATSU $20,000 NON-INDIVIDUAL
GENERAL ELECTRIC CO $20,000 NON-INDIVIDUAL
GOLDMAN SACHS $20,000 NON-INDIVIDUAL
MONSANTO $20,000 NON-INDIVIDUAL
NATIONAL ASSOCIATION OF HOME BUILDERS $20,000 NON-INDIVIDUAL
NEW YORK LIFE INSURANCE COMPANY $20,000 NON-INDIVIDUAL
PRICEWATERHOUSECOOPERS $20,000 NON-INDIVIDUAL
UNION PACIFIC CORPORATION $20,000 NON-INDIVIDUAL
WINE & SPIRITS WHOLESALERS OF AMERICA $20,000 NON-INDIVIDUAL
DEFEND AMERICA PAC $20,000 NON-INDIVIDUAL
DIRIGO PAC $20,000 NON-INDIVIDUAL
HAWKEYE PAC $20,000 NON-INDIVIDUAL
ORRIN HATCH CAMPAIGN CMTE $20,000 NON-INDIVIDUAL
ALAMO RENT-A-CAR $20,000 NON-INDIVIDUAL
CREDIT SUISSE SECURITIES USA $20,000 NON-INDIVIDUAL
UBS AMERICAS $20,000 NON-INDIVIDUAL
ROCK CITY PAC $20,000 NON-INDIVIDUAL
MAKING BUSINESS EXCEL PAC $20,000 NON-INDIVIDUAL
AUTOMOTIVE FREE INTERNATIONAL TRADE $20,000 NON-INDIVIDUAL
NEXT CENTURY FUND $20,000 NON-INDIVIDUAL
AMERICAN PROPERTY & CASUALTY INSURANCE ASSOCIATES $19,750 NON-INDIVIDUAL
AMERICAN BANKERS ASSOCIATION $19,500 NON-INDIVIDUAL
TENN PAC $19,417 NON-INDIVIDUAL
FIDELITY INVESTMENTS $19,000 NON-INDIVIDUAL
METROPOLITAN LIFE INSURANCE $19,000 NON-INDIVIDUAL
MORGAN STANLEY $19,000 NON-INDIVIDUAL
ERNST & YOUNG $18,500 NON-INDIVIDUAL
NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT TRUSTS $18,500 NON-INDIVIDUAL
PFIZER $18,500 NON-INDIVIDUAL
THRIVENT FINANCIAL FOR LUTHERANS $18,500 NON-INDIVIDUAL
LPL FINANCIAL $18,400 NON-INDIVIDUAL
PRUDENTIAL FINANCIAL $18,000 NON-INDIVIDUAL
ECOLAB INC $18,000 NON-INDIVIDUAL
MANAGED FUNDS ASSOCIATION $18,000 NON-INDIVIDUAL
KNIGHT CAPITAL GROUP INC $18,000 NON-INDIVIDUAL
NATIONAL ASSOCIATION OF REALTORS $17,990 NON-INDIVIDUAL
AMERICAN FAMILY LIFE ASSURANCE COMPANY / AFLAC $17,500 NON-INDIVIDUAL
MASS MUTUAL $17,500 NON-INDIVIDUAL
POTLATCH CORPORATION $17,500 NON-INDIVIDUAL
INVESTMENT COMPANY INSTITUTE $17,500 NON-INDIVIDUAL
TALLATCHEE CREEK INC $17,500 NON-INDIVIDUAL
ABBOTT LABORATORIES $17,000 NON-INDIVIDUAL
HEWLETT PACKARD $17,000 NON-INDIVIDUAL
REGIONS FINANCIAL CORP $17,000 NON-INDIVIDUAL
TOTAL SYSTEM SERVICES $17,000 NON-INDIVIDUAL
AMERIPRISE FINANCIAL $17,000 NON-INDIVIDUAL
BANK OF AMERICA $16,500 NON-INDIVIDUAL
BOEING CO $16,500 NON-INDIVIDUAL
EDWARD JONES $16,500 NON-INDIVIDUAL
UNITED PARCEL SERVICES / UPS $16,500 NON-INDIVIDUAL
HOUSEHOLD INTERNATIONAL $16,500 NON-INDIVIDUAL
REINSURANCE GROUP OF AMERICA $16,500 NON-INDIVIDUAL
BARCLAYS BANK DELAWARE $16,500 NON-INDIVIDUAL
NATIONAL MULTIFAMILY HOUSING COUNCIL $16,500 NON-INDIVIDUAL
SENIORS HOUSING $16,500 NON-INDIVIDUAL
AMERICAN HEALTH CARE ASSOCIATION $16,000 NON-INDIVIDUAL
LOCKHEED MARTIN $16,000 NON-INDIVIDUAL
BANK OF NEW YORK MELLON $16,000 NON-INDIVIDUAL
MERCK & CO $16,000 NON-INDIVIDUAL
NATIONAL ROOFING CONTRACTORS $16,000 NON-INDIVIDUAL
NORTHWESTERN MUTUAL LIFE INSURANCE $16,000 NON-INDIVIDUAL
PACIFC LIFE INSURANCE $16,000 NON-INDIVIDUAL
NATIONAL BEER WHOLESALERS ASSOCIATION $16,000 NON-INDIVIDUAL
NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION $16,000 NON-INDIVIDUAL
AMERICAN ASSOCIATION OF ORTHOPAEDIC SURGEONS $16,000 NON-INDIVIDUAL
AMERICAN COLLEGE OF SURGEONS PROFESSIONAL ASSOCIATION $16,000 NON-INDIVIDUAL
SAFEWAY INC $15,500 NON-INDIVIDUAL
USAA $15,500 NON-INDIVIDUAL
MICRON TECHNOLOGY $15,300 NON-INDIVIDUAL
AMERICAN SOCIEITY OF PLASTIC SURGEONS $15,000 NON-INDIVIDUAL
ASSOCIATED BUILDERS & CONTRACTORS / ABC $15,000 NON-INDIVIDUAL
CHARLES SCHWAB CORPORATION $15,000 NON-INDIVIDUAL
COMPASS BANK $15,000 NON-INDIVIDUAL
HOME DEPOT $15,000 NON-INDIVIDUAL
HUMANA $15,000 NON-INDIVIDUAL
JOHN DEERE & CO $15,000 NON-INDIVIDUAL
LIBERTY MUTUAL CO $15,000 NON-INDIVIDUAL
UNITEDHEALTH GROUP $15,000 NON-INDIVIDUAL
AMERICAN CRYSTAL SUGAR $15,000 NON-INDIVIDUAL
FINANCIAL SERVICES ROUNDTABLE $15,000 NON-INDIVIDUAL
NATIONAL AUTOMOBILE DEALERS ASSOCIATION $15,000 NON-INDIVIDUAL
COUNTRY FIRST $15,000 NON-INDIVIDUAL
COUNCIL OF INSURANCE AGENTS & BROKERS $15,000 NON-INDIVIDUAL
COMMON VALUES $15,000 NON-INDIVIDUAL
Donor
UNITEMIZED DONATIONS
$162,825
2009 SENATORS CLASSIC CMTE
$81,217
2011 SENATORS CLASSIC CMTE
$49,599
2015 SENATORS CLASSIC CMTE
$41,603
NAIFA GEORGIA
$40,500
2016 SENATORS CLASSIC CMTE
$38,413
CUNA MUTUAL GROUP
$27,000
AMGEN
$25,000
CAPITAL ONE FINANCIAL CORP
$24,000
JPMORGAN CHASE HOLDINGS
$23,500
WELLS FARGO
$23,031
WEYERHAEUSER CO
$23,000
KPMG (KLYNVELD PEAT
MARWICK GOERDELER)
$22,500
21ST CENTURY MAJORITY FUND
$20,000
AMERICAN COUNCIL OF
LIFE INSURERS
$20,000
CITIGROUP
$20,000
DELOITTE TOUCHE TOHMATSU
$20,000
GENERAL ELECTRIC CO
$20,000
GOLDMAN SACHS
$20,000
MONSANTO
$20,000
NATIONAL ASSOCIATION OF HOME BUILDERS
$20,000
NEW YORK LIFE INSURANCE COMPANY
$20,000
PRICEWATERHOUSECOOPERS
$20,000
UNION PACIFIC CORPORATION
$20,000
WINE & SPIRITS WHOLESALERS OF AMERICA
$20,000
DEFEND AMERICA PAC
$20,000
DIRIGO PAC
$20,000
HAWKEYE PAC
$20,000
ORRIN HATCH CAMPAIGN CMTE
$20,000
ALAMO RENT-A-CAR
$20,000
CREDIT SUISSE SECURITIES USA
$20,000
UBS AMERICAS
$20,000
ROCK CITY PAC
$20,000
MAKING BUSINESS
EXCEL PAC
$20,000
AUTOMOTIVE FREE
INTERNATIONAL TRADE
$20,000
NEXT CENTURY FUND
$20,000
AMERICAN PROPERTY &
CASUALTY INSURANCE ASSOCIATES
$19,750
AMERICAN BANKERS ASSOCIATION
$19,500
TENN PAC
$19,417
FIDELITY INVESTMENTS
$19,000
METROPOLITAN LIFE INSURANCE
$19,000
MORGAN STANLEY
$19,000
ERNST & YOUNG
$18,500
NATIONAL ASSOCIATION OF REAL ESTATE
INVESTMENT TRUSTS
$18,500
PFIZER
$18,500
THRIVENT FINANCIAL
FOR LUTHERANS
$18,500
LPL FINANCIAL
$18,400
PRUDENTIAL FINANCIAL
$18,000
ECOLAB INC
$18,000
MANAGED FUNDS
ASSOCIATION
$18,000
KNIGHT CAPITAL
GROUP INC
$18,000
NATIONAL ASSOCIATION OF REALTORS
$17,990
AMERICAN FAMILY LIFE
ASSURANCE COMPANY
/ AFLAC
$17,500
MASS MUTUAL
$17,500
POTLATCH CORPORATION
$17,500
INVESTMENT COMPANY
INSTITUTE
$17,500
TALLATCHEE CREEK INC
$17,500
ABBOTT LABORATORIES
$17,000
HEWLETT PACKARD
$17,000
REGIONS FINANCIAL CORP
$17,000
TOTAL SYSTEM SERVICES
$17,000
AMERIPRISE FINANCIAL
$17,000
BANK OF AMERICA
$16,500
BOEING CO
$16,500
EDWARD JONES
$16,500
UNITED PARCEL
SERVICES / UPS
$16,500
HOUSEHOLD INTERNATIONAL
$16,500
REINSURANCE
GROUP OF AMERICA
$16,500
BARCLAYS BANK
DELAWARE
$16,500
NATIONAL MULTIFAMILY
HOUSING COUNCIL
$16,500
SENIORS HOUSING
$16,500
AMERICAN HEALTH CARE
ASSOCIATION
$16,000
LOCKHEED MARTIN
$16,000
BANK OF NEW YORK
MELLON
$16,000
MERCK & CO
$16,000
NATIONAL ROOFING CONTRACTORS
$16,000
NORTHWESTERN MUTUAL
LIFE INSURANCE
$16,000
PACIFC LIFE INSURANCE
$16,000
NATIONAL BEER
WHOLESALERS
ASSOCIATION
$16,000
NATIONAL RURAL ELECTRIC
COOPERATIVE ASSOCIATION
$16,000
AMERICAN ASSOCIATION OF
ORTHOPAEDIC SURGEONS
$16,000
AMERICAN COLLEGE
OF SURGEONS
PROFESSIONAL
ASSOCIATION
$16,000
SAFEWAY INC
$15,500
USAA
$15,500
MICRON TECHNOLOGY
$15,300
AMERICAN SOCIEITY OF
PLASTIC SURGEONS
$15,000
ASSOCIATED BUILDERS &
CONTRACTORS / ABC
$15,000
CHARLES SCHWAB CORPORATION
$15,000
COMPASS BANK
$15,000
HOME DEPOT
$15,000
HUMANA
$15,000
JOHN DEERE & CO
$15,000
LIBERTY MUTUAL CO
$15,000
UNITEDHEALTH GROUP
$15,000
AMERICAN CRYSTAL SUGAR
$15,000
FINANCIAL SERVICES ROUNDTABLE
$15,000
NATIONAL AUTOMOBILE
DEALERS
ASSOCIATION
$15,000
COUNTRY FIRST
$15,000
COUNCIL OF INSURANCE
AGENTS & BROKERS
$15,000
COMMON VALUES
$15,000

Additional Sources:

Pecora, Ferdinand. Wall Street Under Oath: The Story of Our Modern Money Changers. Graymalkin Media, 2014.

All donor information from Follow the Money

The Man Who Busted the ‘Banksters’, Smithsonian Magazine

Subcommittee on Senate Resolutions 84 and 234, Senate.gov