Wisconsin Governor’s Allies Ran a Toxic Bailout Bank… and Got Rich

Richard (RJ) Eskow – Consultant, Writer,  Senior Fellow with The Campaign for America’s Future – Posted: March 14, 2011 03:15 PM

People in Wisconsin are pulling their money out of Marshall & Ilsley (M&I) Bank because they know it’s been helping their Governor’s crusade against public employees and the middle class.

They might also like to know that M&I’s executives ran one of the most conspicuous dumping sites for toxic financial waste in the country. And that the same executives are about to get very rich, even though TARP rules supposedly don’t allow big bonuses for underwater bankers like the leadership at M&I.

These executives didn’t just contribute to Scott Walker’s campaign. They also helped the governor avoid the press — and his own constituents — by letting him use their bank’s underground tunnel, which leads directly from its parking lot into the Capitol Building in Madison. Using it for this purpose may have been a violation of the bank’s own Code of Business Ethics. [See update below.]

That tunnel’s not just a convenient way to help a political crony. It’s also one heck of a metaphor.

The M&I Bank’s behavior mirrored that of banks across the country who were rescued by the public, then used their money to lobby against the public interest. M&I executives have gone the extra mile for Scott Walker as he fights to strip employees of their benefits and cut vital services. Walker’s goal is to keep taxes low for wealthy Wisconsin residents by cutting services for the middle class — the same middle class that paid for M&Is bailout and keeps its money in M&I’s vault.

And once again, these bankers will benefit personally from the public’s sacrifice.

Toxic Avengers

M&I Bank had a dangerously high percentage of toxic assets — mostly crappy mortgages that aren’t worth nearly what these bank executives claimed they were worth. There are only two ways bankers can accumulate so many bad loans: either by being, shall we say, morally elastic, or by being bad at the fundamentals of their profession. (Although, com