How corrupt Chicago politics fueled the high-frequency trading mess

By DAVID SIROTA, at Pando 

The New York Times this week reports that the buzz surrounding Michael Lewis’s new book “Flash Boys” has “revived support in some quarters for a tax on financial transactions, with backers arguing that a tiny surcharge on trades would have many benefits.” Noting that President Obama’s argument against such a tax is that financial firms would inevitably circumvent it, the Times’ editorial boardsays that translates into: “No politician has the courage to enforce a tax on Wall Street,” at least “until campaign finance reform is a reality.”

Not coincidentally, Obama’s hometown seems to prove this truism. In the course of Pando’s recentinvestigation into Chicago Mayor Rahm Emanuel (D) and his ties to high-frequency traders like Kenneth Griffin, the link between campaign cash and giveaways to the financial industry was a recurring theme. One of those giveaways, in fact, occurred at the intersection of taxation, technology and financial speculation at various securities exchanges in Chicago.

Before getting to that story, recall that back in 2011, Chicago’s Inspector General issued a report noting that with more than 3 billion stock trades passing through the city, and with the Chicago Mercantile Exchange (CME) now “the largest derivatives exchange in the world,” the city could raise roughly $37 million a year with a tiny $.01 tax on each contract traded. It was a proposal championed by, among others, the Chicago Political Economy Group.