Tim Walz’s Wall Street Cream Puff Missile

At first glance, H.R. 4617, the Separate Taxpayer Dollars from the Election Process Act, looks like a really tough blow to Wall Street. The bill, introduced to the House of Representatives by Minnesota Democrat Tim Walz, would require companies that got TARP bailout money to keep that money separate from other funds, and would forbid the use of those funds for political campaigning: “No person may use any Federal funds that are required to be segregated under section 137(a) of the Emergency Economic Stabilization Act of 2008 to make any expenditure or electioneering communication.”

Keeping bailout money out of political campaigns sounds like a great idea, all right. The problem is that H.R. 4617 won’t do the job.

Yes, bailout money would be kept in a separate fund, and the money in that fund couldn’t be spent on political campaign efforts. However, the presence of that bailout fund would allow a company to free up other money in other accounts that could then be spent to influence political elections. The effect is exactly the same.

It’s not as if bailout money was handed out to corporations in marked bills. The transactions involved are all electronic. It would be totally legal for a bank to take 1 billion dollars from the government bailout, then put that in a segregated account, and then spend 1 billion dollars from its general accounts on political campaigning, replenishing that amount with the bailout money from the segregated account. No, the segregated bailout wouldn’t be directly used for political campaigning, but the liquidity to support the electioneering would be 100 percent made possible by the bailout.

If this legislation is a missile lobbed at Wall Street, it’s a cream puff missile, making a scary appearance in the sky, then leaving a sweet confection behind at bankers’ doorsteps.