Gov. Rick Perry (R-TX) recently signed a Health Care Compact bill into law. But just as the group begins to gain ground, Leo Linbeck III — the wealthy heir to the Linbeck construction fortune in Houston financing the Health Care Compact group — is signaling that organizers may look beyond health care soon. Linbeck, an active participant in public online forum on Pajamas Media called the Belmont Club, described his next steps in posting on July 18 (view a screenshot here):
The cancer is well-advanced. Therapies that rely upon the federal government to self-restrain will not work. The states must engage. We are left, then, with two broad options:
1. Compacts, that allow for piecemeal deconstruction of the federal state (BTW: Gov. Perry signed the Health Care Compact yesterday, making it the fourth state to join. There will be a big push in 2012 in many more states, and we are adding an Education Compact and Banking Compact to the mix.)
If the Banking Compact looks anything like Linbeck’s Health Care Compact, he could obliterate what’s left of the Securities and Exchange Commission, the Commodities Futures Trading Commission, and the other financial regulators that are already under-staffed and partially captured by bank lobbyists. Linbeck’s “piecemeal deconstruction of the federal state” will be as disastrous for banking regulation as it is for health care.
Moving authority for banking regulation from the federal government to the states has been tried, with results that have hurt consumers and enriched financial industry corporations. For instance, credit card deregulation in the 70s allowed credit card companies to comply only with the regulations of the state they are based in. Credit card executives lobbied the South Dakota and Delaware to lift the cap on interest rates, which averaged about 12 percent in most states before deregulation, and before long credit card companies had the power to hike rates as high as they wanted. While President Obama has made steps to finally reign in out of control usury, with credit card reform and the Dodd-Frank Act, a move back to state-based regulation will amount to an even greater level of bank-led cartels.
Linbeck has aligned himself with a network of front groups associated with the Tea Party billionaires Charles and David Koch. Linbeck’s top operative, Eric O’Keefe, has spent a career setting up libertarian and anti-government front groups on behalf of his wealthy patrons. And while Linbeck does not call himself a Tea Party activist, he characterizes Obama’s slightly left-of-center approach with doomsday rhetoric. “Should Obama win and enter Washington as Napoleon entered Moscow, the question is how our nation will respond,” he warned before the 2008 elections.