Kelly Williams and Laura MacCleery of the Brennan Center write up an extensive analysis for The Hill's Congress Blog of the role campaign cash played in engineering the current economic crisis we find ourselves in, and why Fair and Clean Elections policy must be enacted at the federal level to safeguard against history repeating itself.

Some choice excerpts:

Does campaign cash influence legislation and regulation? When Congress last debated regulation (or rather, de-regulation) of the financial industry in 1999, a study by the Center for Responsive Politics showed that members of Congress who supported the Gramm-Leach-Bliley Act received twice as much money from commercial banks, investment banks, and insurance companies as those who opposed the measure. The Gramm-Leach-Bliley Act was the product of many years of lobbying by the financial industry and allowed for the loosening of bank regulations that had been in place since the Great Depression.

Even more worrisome, in hindsight, is how campaign cash from generous industry donors might have influenced the lack of legislation, regulation and oversight. Since 2000, when passage of the Commodity Futures Modernization Act (CFMA) ensured that the credit default swap market would remain unregulated, the market for credit default swaps grew from $900 billion to $45.5 trillion, or twice the size of the entire U.S. stock market. Unregulated and private, difficulties valuing the instruments contributed to the current collapse and were the direct cause of the now-failed American Insurance Group’s problems. Bank examiners, a few economists and others had expressed concerns, but Congress never seriously considered a proposal to allow proper oversight of the market. Passage of the CFMA was furtively pushed through by then-Senator Phil Gramm, himself a beneficiary of industry largesse while in office who, since leaving the Senate, has become vice-chairman of the investment bank UBS.

As the rejiggered bailout plan makes its way through Congress today it includes rather less oversight than those of us ponying up the $700 billion might have liked, and does nothing to address the underlying role Wall Street's campaign contributions played in influencing bad policy.  That's why we need the Fair Elections Now Act:

Just last week, the Fair Elections Now Act, which would establish a system of voluntary public financing for Congressional elections, was introduced with bi-partisan support in the House. Last year, Senators Durbin (D-Ill.) and Specter (R-Pa.) introduced the Senate version of the Fair Elections Now Act, which would create a voluntary public financing system for Senate candidates. With the introduction of its House counterpart this week by Representatives Larson (D-Conn.) and Jones (R-N.C.) (both from Clean Elections states), lawmakers are presented with a bipartisan, bicameral effort to undertake serious and lasting structural reform. Public financing would eliminate the perils of special interest cash by establishing strict spending limits, enabling small donors and greatly increasing the power of ordinary voters to hold Congress accountable. Dependent on Wall Street cash, Congress has proven incapable of effectively regulating the financial system; Congressional public funding offers voters a timely way to insist that Congress end the reign of big-money politics.