Nothing better illustrates the core critique of the Occupy Wall Street movement against the financial sector’s dominance of our political institutions than the spectacle of high-profile Democrats, like former Pennsylvania governor Ed Rendell and Newark Mayor Cory Booker, fretting over the “tone” of the Obama campaign’s advertisements targeting Mitt Romney’s days as a vulture capitalist at Bain Capital.
The only political outcome of this internal bickering coming from Democrats who want their party to uncritically service Wall Street’s interests is to remind us that the Democrats were equally responsible for setting the stage for the financial meltdown that threw 8 million people out of work and continues to degrade the quality of American life.
Most people make no distinction between a “private equity” firm, a big investment bank, or a “financial services” corporation. All they remember is that taxpayers were left holding the bag on an $825 billion “bail out” to shore up Wall Street’s biggest banks (and the Federal Reserve opened the cash drawer to the tune of $7 trillion) while the rest of us got unemployment, underwater mortgages, austerity through budget cuts at the state and local level, and a general sense of economic insecurity.
Commentators have presented the thumbnail history of what led to our current economic malaise with dreary repetition: In the late 1990s, the Bill Clinton administration (and a Republican Congress) enthusiastically deregulated the financial sector gutting the 1933 Glass-Steagall wall of separation between commercial and investment banks and ensuring that “over the counter” derivatives would be regulation free. Clinton’s Treasury Secretaries, Robert Rubin and Larry Summers, along with Alan Greenspan (who Clinton reappointed as Fed chairman), showed zero concern about the potentially disastrous effects of their deregulatory zeal. They had dollars signs in their eyes. To these men, Wall Street’s interests always superseded the nation’s. They lit a fuse that blew up the economy in 2008, requiring a deeply unpopular taxpayer bailout or else (we were told) we were heading into another Great Depression.
The nation experienced a series of financial crises that would not have been possible had the regulatory laws been left in place: the dot-com bubble; the collapse of Enron, Worldcom, Tyco, Adelphia, Global Crossing, and many other corporations that traded derivatives; the mortgage/housing bubble; John Corzine’s MF Global; and JP Morgan’s credit default swap (CDS) loss, which will be followed by the next crisis, and the next one after that, and the next one after that.
And when President Obama turned to Larry Summers and his apprentice Timothy Geithner and other Wall Street hacks to manage his economic team, it showed that “Hope” and “Change” really meant “Business As Usual.”
Understandably, as the 2012 presidential campaign heats up the Obama people want to tap into the deep contempt held by most Americans toward anything involving Wall Street. They want to highlight the record of the president’s Republican opponent who boasts about his business acumen yet was among the most rapacious elements on the Street at the time when he built his vast fortune. Bain Capital is “fair game” we are told.
But Obama’s chumminess with people identical to those who ran Bain Capital in its glory days and the pathetic dependence of most Washington Democrats on Wall Street money undermines his populist appeal. It’s an uphill climb for Obama to even mildly criticize Mitt Romney for being a vulture capitalist given his lack of accomplishment in holding anyone on Wall Street accountable for the economic carnage they wreaked and for maintaining the bipartisan servitude to the big banks (even when the public was ready to tear them apart).
The whining of Ed Rendell and Cory Booker and others about Obama’s campaign ads poor-mouthing Bain is a reminder that through legalized bribery and their control of more money than god financial kingpins have not only captured the federal regulatory apparatus but key politicians from both parties.
Immunity for the big banks was the whole point of deregulating financial services in the first place.
JP Morgan Chase’s recent $3 to $5 billion loss in credit default swaps shows that the reckless casino gambling using publicly insured money continues unabated. Whatever the Obama campaign says about Romney’s time at Bain Capital, JP Morgan CEO Jamie Dimon and others like him still hold a “Get-Out-Of-Jail Free” card. When news that Dimon’s CDS bet went sour what followed was the age-old pattern white-collar corporate criminals have been using for years:
- First, deny there’s a problem, tell the public there’s nothing to worry about; it’s “a tempest in a teapot,” Dimon said.
- Second, say you’re “investigating” the problem and like everyone else you want to “get to the bottom of it.”
- Third, blame subordinates, engineer a few high-profile resignations, and throw some expendable people “under the bus.”
- Fourth, spin it as an “error,” or the result of “sloppiness,” or even “misjudgment,” while admitting no liability and claiming your people had the best of intentions, and no crimes were committed, (i.e. “mistakes were made”).
- Fifth, use your money, power, and influence over the Federal Reserve, the Treasury Department, the S.E.C., the Obama Administration and the Congress to sweep the whole thing under the rug (while saying you want to “move forward” and “look ahead”).
With toothless federal oversight and a long tradition of immunity for rich and powerful people like Jamie Dimon this predictable pattern is sure to run its course.
Financial shocks today are like streetcars but with each go-around the giant banks become more consolidated, more concentrated, more powerful, too big to fail, too big to manage — too big PERIOD. Wall Street money has so corrupted our political system that there can never be even the hint of using existing Anti-Trust law to break up these behemoths, which can bring down the whole house of cards at any given time if their casino bets go south.
The bailouts were deeply unpopular. Millions of Americans are feeling more insecure about their economic wellbeing and their futures and it’s affecting their political attitudes and their view of the role of government. Wall Street’s immunity, as soon as it became clear that the Obama administration was not going to do anything substantial to hold people accountable, spawned an enormous and spontaneous social movement that literally occupied Wall Street and spread like wildfire to cities across America.
The evidence is mounting that the 1 percent controls both of our major political parties. And now the corporate wing of the Democratic Party is getting pissy about the “tone” that its standard bearer is showing toward vulture capitalism? It’s going to be a long campaign.
Joseph Palermo’s Blog
Posted: Thursday, 24 May 2012