Summary: We cannot fix America until we understand what ails it. Some of our problems are systemic. Some result from external rivals, even foes. Some result from our weakness. Some result from internal enemies of the Republic. Some result from lust for power and wealth by our fellow Americans. Our bankers fall into the last group, and have for many generations.
“The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson — and I am not wholly excepting the Administration of W. W. {Wilson}. The country is going though a repetition of Jackson’s fight with the Bank of the United States — only on a far bigger and broader basis.”
— Letter by FDR to Colonel House, dated 21 November 1932
The struggle of bankers for control of America is an enduring theme in American history since the founding. Defeat of the southern aristocracy during the Civil War unbalanced the political balance, giving Northeastern bankers unprecedented dominance. They used this to implement a policy of tight money. The resulting shortage of currency reduced much of rural America to barter (cattle sales to the Indian Agents were one of the few sources of cash in the West; eastern villages were reduced to barter with general stores as clearinghouses). This resulted in a boom-bust pattern of growth and deflation which almost exterminated the small farmer and merchant classes.
The results were a massive concentration of wealth and power, continuing until they overreached themselves. The political convulsion of the Great Depression restored a more balanced distribution of political and social power. Starting in the 1980’s the banks gradually rebuilt their political influence with both parties by means of massive campaign contributions, armies of lobbyists, and well-funded advocates at think-tanks. This effort produced large gains:
- Regulation Q was repealed in 1980.
- FDIC insurance was increased from $40 thousand to $100 thousand in 1980, and to $250 thousand in 2008.
- Glass-Steagall was repealed in 1999.
- Scores of other regulations limiting their reach and profits were explicitly repealed, weakened, or no longer enforced.
As a result financial profits (including the financial divisions of non-bank companies) grew to 40% plus of total business profits, and the banking sector (broadly defined) grew to one of the greatest centers of power in the nation.
“And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”
— Senator Dick Durbin (D-IL), interview on WJJG 1530 AM’s “Mornings with Ray Hanania”, 27 April 2009
A broad majority of the public opposes the banks in some sense (see here for links). All who oppose them are crushed or co-opted. As we saw with the Tea Party movement. Born as a protest to the bank bailouts (see here), they became shock troops for a GOP devoted to serving the banks.
“In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”
– Spencer Bachus (R-AL), Chairman of the House Banking Committee, The Birmingham News, 9 December 2010
Now the Occupy Wall Street movement arises to challenge the banks. Will they be co-opted by the Democratic Party? Will they develop specific political goals, or merely serve to vent peoples stress? Might the movement mutate into some monstrous mass movement? The internet overflows with people making wild guesses about the unknowable. You can pitch in to help determine the answer — by working local campaigns.
“All peoples have the government that suits them.” “Every country has the government it deserves”
— Joseph-Marie, comte de Maistre. From Étude sur la souveraineté (1794) and Lettres et Opuscules (1811)
About our corrupt financial system
- Slowly a few voices are raised about the pending theft of taxpayer money, 21 September 2008
- The Paulson Plan will buy assets cheap, just as all good cons offer easy money to the marks, 30 September 2008
- A reminder – the TARP program is just theft, 24 November 2008
- A solution to our financial problems: steal wealth from other nations, 2 February 2009
- Stand by for action – more theft of our money being planned in Washington, 4 February 2009
- Update: yes, the Paulson Plan was just theft, 14 February 2009
- Locked into the bailout state, 4 March 2009
- Now is the time for America to get angry, 24 March 2009
- America on its way from superpower to banana republic, 28 March 2009
- Bush’s bailout plan is now Obama’s. His quiet eloquence guides the sheep into the pen, 30 March 2009
- The best way to rob us is to own a bank, 10 April 2009
- “The Greatest Swindle Ever Sold”, by Andy Kroll in The Nation, 28 May 2009
- Please read this. For the sake of yourself, your children, and their children, 2 June 2009 — Taibbi’s first article about Goldman.
- About Goldman Sachs, the exemplar of our financial system, 21 July 2009
- More about “Government Sachs” (they own America; we just live here), 31 July 2009
- It’s official. TARP is just theft., 1 May 2010
- Matt Taibbi helps us see ourselves, and the leaders we elect to run America, 29 May 2010
Nice article FM.
I agree, nicely stated.
Well it seems the banks are responsible for the economic collapse we are now entering into. Bailouts for them while austerity for the rest of us. And when they screw up the blame and responsibility gets pushed on to us the people.
“Well it seems the banks are responsible for the economic collapse ”
NO! We have a system of State Capitalism, erected by our ruling elites during the past few generations. Private profits; public losses. Banks are, as you describe, at the center of this.
But banks are not responsible for the fate of the Republic. We, the citizens, bear the responsibility. The Republic will be on the road to renewal when we realize and accept that burden.
If we continue to shirk it — such as by sitting on the couch whining about the banks — then the Republic is doomed.
That is why public anger and involvement like the Tea Party and Occupy Wall Street movements might be good first steps. But anger and protests are insufficent and potentiall counter-productive. We must have a clear vision of where we went wrong and what must be done. Otherwise we’re just peasants rioting outside the Palace. Annoying, perhaps dangerous — but not a threat to our rulers.
AS ALWAYS, PLEASE CORRECT ME IF WRONG.
I still don’t see how FM’s “take personal responsibility” finger-pointing-mantra is anything but a partial truth (reflecting Straussian classicism, or whatever). Clearly no one is alive today that could “take responsibility” for failing to resist the “system” of bank takeovers that started 150+ years ago! (or the move toward absolutism 500 years ago) The problem is deeply structural, as well as “spiritual”. A Holistic perspective that integrates both “personal responsibility” and fierce opposition to “structural evils” would seem to be the best strategy. The larger question is: can americans set aside the usual, pointless squabbling about such differences and find common ground and “higher purpose” ? FM provides no model for transcending differences and finding such a higher purpose as far as I can tell.
please comment: Ben Grierson, Actual Hero” By Gary Brecher (The War Nerd), Exiled Online, 16 October 2011 — excerpt:
This is not relevant to this post, and was re-posted on the current “Question Time” thread.
Actually, it is relevant. It focuses the question of which methods to use in “taking personal responsibility” for distributed problems. One inescapable answer is: don’t over value the stuctural, i.e., business to the extent we’ve been taught to. Instead, bring back valuation of inventing the social catalysts which improve the quality of distributed decision making.
We did something like this with the EPA, and the requirement for Environmental Impact Statements. People hated ’em initially, but they’ve warded off a host of problems – when done lean & correctly. Instead of an overfocus on business, we need more citizens trained to constantly do “Context Impact Assessments” above & beyond business requirements alone. They’re both forms of “thinking ahead.”
(classical liberalism warning) re: resistance to absolutism and central statism: “THE HISPANIC TRADITION OF LIBERTY: THE ROAD NOT TAKEN IN LATIN AMERICA“, Professor Leonard P. Liggio (Atlas Economic Research Foundation), Mont Pelerin Society Regional Meeting (Antigua, Guatemala), 12 January 1990 — ABSTRACT:
Example a “non-leftist” approach to transpartisan politics and concrete political reforms. {more stuff}
Attempt at constructive debate between left and right on locating evil in Big Government vs. Big Business: excerpt:
Click here for the video. Coffee Party, 21 Jan 2001 {link}
Podcast: Simon Johnson on the Financial Crisis:
Secret Fed Loans Gave Banks Undisclosed $13B, Bloomberg, 28 November 2011 — “The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.”
from year ago: “Federal Reserve’s ‘astounding’ report: We loaned banks trillions“, Christian Science Monitor, 1 December 2010 — “The Federal Reserve offers details on the loans it gave to banks and others at the height of the financial crisis. One program alone doled out nearly $9 trillion.”
from last summer: “Audit: Fed gave $16 trillion in emergency loans“, Ray Story, 21 July 2011
“All bank regulators are captured“, Felix Salmon, Reuters, 2 November 2011 — Excerpt: