Blue State Blues: Why Democrats Are 'Better' at Corruption

Blue State Blues: Why Democrats Are 'Better' at Corruption

This story begins with the first bailout the Tea Party ever stopped. 

In May 2010, I helped the Illinois Tea Party organize a demonstration on LaSalle Street in downtown Chicago outside the offices of Shorebank, which was about to be bailed out by the federal government and Wall Street’s biggest banks. The bank was meant to have been closed down already by the FDIC, given its staggering spiral of bad debts, but the day of reckoning had been delayed while its friends in the White House and on Capitol Hill tried to find a way to save it.

Those friends included Rep. Jan Schakowsky (D-IL), whom I challenged in the 2010 election, and Sen. Dick Durbin (D-IL). They tried, unsuccessfully, to convince the State of Illinois to bail out the bank. They tried using their contacts in the White House–the president and first lady had been neighbors to Shorebank executives–to forestall the bank’s collapse. And through FDIC chair Sheila Bair, they called the same big banks they were browbeating in Congress–including Goldman Sachs and J.P. Morgan–to bail out their precious Shorebank.

It might have happened. But the Tea Party protest gained some local media attention, and the interest of former Rep. Judy Biggert (R-IL) and Rep. Darrell Issa (R-CA), who demanded answers as to whether, and how, the Obama White House was protecting Shorebank. Republicans asked the FDIC inspector general to investigate, and the Treasury and Federal Reserve began backing away. The bank was shut down and taxpayers took over its bad assets–but its managers were permitted to buy the good ones, reopening as Urban Partnership Bank.

The FDIC inspector general concluded, incredibly, that there had not been inappropriate political influence–that the Wall Street banks agreed to help, for instance, because they “believed in ShoreBank’s mission and they did not feel pressure to invest as a result of the FDIC chairman’s calls.” 

That is a joke: the banks are required to “believe” in banks like Shorebank due to the Community Reinvestment Act, as well as by the daily bullying of politicians and the thuggish tactics of far-left groups like the Neighborhood Assistance Corporation of America.

Now, the FDIC is suing Shorebank for $73 million over its bad loans. Yet it is not suing Shorebank’s directors. Rather, it is suing the lowly loan officers. That is “a highly unusual omission,” notes Steve Daniels of Crain’s, “as board members have been sued in all but one of the 70-plus FDIC suits filed since July 2010.” 

The FDIC claims that Shorebank’s board members did not actually approve the loans. But that’s not what the loan officers say. And so the question of the cozy relationships between the directors and the government has arisen once again.

Initially, I found the Shorebank scandal interesting because Schakowsky’s husband, Robert Creamer, had used Shorebank as part of a check-kiting scheme that he used to fund his left-wing organizing operations. He eventually went to federal prison for several months in 2006-7, where he began work on the political manifesto that laid the foundations for selling Obamacare to the public after an anticipated “progressive” presidential win in 2008 (“To win we must not just generate understanding, but emotion–fear, revulsion, anger, disgust.”).

After he left prison, Creamer was hired by the Obama campaign to train its volunteers and continues to play a role in Democrat strategy on issues such as immigration reform, as well as in political campaigns around the country. There was no evidence of any quid pro quo in Creamer’s dealings with Shorebank–a point he stressed to me when I met Schakowsky for a debate held by the League of Women Voters. Yet Schakowsky’s personal interest in the fate of Shorebank–which was not the only troubled community bank around–remains a mystery.

While Shorebank cost the FDIC half a billion dollars, the scandal was largely overlooked, save by the Tea Party and a few journalists–notably Steve Daniels of Crain’s and Becky Yerak of the Chicago Tribune

Democrats often excel at making such scandals disappear. The IRS scandal is a case in point: the Obama administration assigned an Obama donor to lead the internal investigation, and has now rewritten the rules governing 501(c)4 non-profit groups so that many of the abuses by the IRS in the past would be legal in the future–and forgotten.

In contrast, subpoenas have been issued in New Jersey to investigate lane closures on the George Washington Bridge that members of Gov. Chris Christie’s staff are alleged to have ordered as a form of political retaliation against a local Democrat mayor who would not endorse the governor’s re-election. 

If true, the allegations are grave. Yet they are no worse than what the Obama administration has done–not just in the IRS scandal but as a matter of routine practice, as when it shut down open-air national monuments last fall to hurt Republicans.

There is a media double standard, but there is more to it than that. The emails (!) allegedly sent by Christie’s staff have an amateurish tone, reminiscent of the clumsy tactics of Richard Nixon’s team of “Plumbers,” whose botched burglary at the Watergate Hotel brought down that administration. It may be that Republicans are simply worse at corruption and abuses of power. Democrats occasionally get caught but seem better at covering their tracks. (Who remembers how close Obama was to Tony Rezko? Who is Tony Rezko, anyway?)

Democrats are the party of government, so they understand it better, at least when it comes to using it for a political self-interest. They know that punishing your enemies is only part of the game: the more important part is rewarding and protecting your friends. 

Most know that government is inefficient at achieving anything of use (e.g., Obamacare), but when it comes to spending money and spreading favors, it must be, in the words of David Axelrod, a “well-oiled machine.” That is how Democrats govern, and few manage to get into trouble.

Republicans like Christie and Nixon understand the punishment part but not the reward part. Like the leaders of formerly colonized third world countries, when they gain power they cannot help but imitate the old regimes, but seem to reproduce only their worst aspects. 

Democrats learn quickly–Obama’s best models were Chicago mayors–how to couch self-dealing in the public interest. They still believe, or pretend, there is a difference between “honest graft and dishonest graft.” And–best of all–they heap praise on each other for their “service.”

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