On Friday I got a call from a former lawyer who is my former lawyer. He was actually looking for my business partner to play golf. That’s how he became my former lawyer. My business partner and I had a minor legal matter and we hired him to handle it. Some time after he had a moral crisis over the law and quit. He also quit his marriage and wandered off to parts unknown. He now has a small business specializing in estate dissolution. His moral crisis looks a lot like a nervous breakdown to me, but I play along to be polite.
He is a also a foaming at the mouth Progressive fanatic. I mean full blown Bush Derangement Syndrome. No matter what the topic, he will bring it back to how the Republicans are ruining the world, killing poor people, slapping babies, you name it. You would think they would have moved on by now. Even Obama has stopped blaming Bush, but that’s not the case. A certain segment of the loony tunes crew still obsesses over Bush like it was their glory days of 2006. Soon after talking to my former lawyer, I got this in my e-mail.
“It no longer matters who sits in the White House,” former Goldman Sachs managing director Nomi Prins writes in her new book “All the Presidents’ Bankers: The Hidden Alliances That Drive American Power.” “Presidents no longer even try to garner banker support for population-friendly policies, and bankers operate oblivious to the needs of national economies. There is no counterbalance to their power.”
Prins, who also worked for Bear Stearns, Lehman Brothers and Chase Manhattan Bank, is now a fellow at the think tank Demos and a member of Sen. Bernie Sanders’ Federal Reserve Advisory Council. Salon spoke with Prins about a century of presidential coziness with bankers; Barney Frank’s defense of big banks’ power; and how to “break the alliances” before they “break us.” A condensed version of our conversation follows.
I’ll just note that Bernie Sanders thinks we need extermination camps for the non-conforming members of the society. Demos is, unbelievably, a Marxist outfit. You know Marx, the guy who inspired 100 million murders and counting.
It’s no secret that big banks play a big role in shaping U.S. banking policy. Your book argues they play a big role in all kinds of areas, like foreign policy. How broad, deep and consistent is the role of big banks in U.S. policymaking?
Throughout the century that I examined, which began with the Panic of 1907 … what I found by accessing the archives of each president is that through many events and periods, particular bankers were in constant communication [with the White House] — not just about financial and economic policy, and by extension trade policy, but also about aspects of World War I, or World War II, or the Cold War, in terms of the expansion that America was undergoing as a superpower in the world, politically, buoyed by the financial expansion of the banking community.
The convergence of fanatical and conspiratorial is not well discussed by academics and others. I’ve often noticed that the further you go down the fanatical road, the more conspiracy minded you pick up along the way.
And in what direction did that move policy? How did those policies become different than they would have without the bankers’ influence?
It was more a question of each group, in government and in the financial community, working together to push the same policies.
So, for example, in the beginning of World War I, Woodrow Wilson had adopted initially a policy of neutrality. But the Morgan Bank, which was the most powerful bank at the time, and which wound up funding over 75 percent of the financing for the allied forces during World War I … pushed Wilson out of neutrality sooner than he might have done, because of their desire to be involved on one side of the war.
Now, on the other side of that war, for example, was the National City Bank, which, though they worked with Morgan in financing the French and the British, they also didn’t have a problem working with financing some things on the German side, as did Chase …
When Eisenhower became president … the U.S. was undergoing this expansion by providing, under his doctrine, military aid and support to countries [under] the so-called threat of being taken over by communism … What bankers did was they opened up hubs, in areas such as Cuba, in areas such as Beirut and Lebanon, where the U.S. also wanted to gain a stronghold in their Cold War fight against the Soviet Union. And so the juxtaposition of finance and foreign policy were very much aligned.
So in the ‘70s, it became less aligned, because though America was pursuing foreign policy initiatives in terms of expansion, the bankers found oil, and they made an extreme effort to activate relationships in the Middle East, that then the U.S. government followed. For example, in Saudi Arabia and so forth, they get access to oil money, and then recycle it into Latin American debt and other forms of lending throughout the globe. So that situation led the U.S. government.
There you have it. The only thing missing here is a catchy name for the secret cabal running America.
You note that banks played a significant role in supporting both the initial passage of Glass-Steagall, and decades later, the repeal of Glass-Steagall … You also write that the power of the president “receded relative to that of the bankers, during the post-Nixon period.” How do you explain those shifts?
The banking community — in particular Chase, led by David Rockefeller — expanded very aggressively into the Middle East to be involved in recycling petro-dollars. There also became a shift in the alignment of working with presidents [from] more public-interest and national-interest goals, and it became much more of a private goal club. And then they have this whole other pool of money, and that was an instigator to moving aggressively forward, and not necessarily needing to be fully aligned with public policy, either supporting it or having it.
But then, toward the ‘80s and ‘90s, they — because they had aggressively now recycled this oil money into Latin American debt, and realized they were facing a Latin American third-world debt crisis — they went back to the U.S. government, and to Reagan and George [H.] W. Bush, and said, “You know, we have a problem: We now need your support, we need you to back the World Bank; we need you to back the IMF; we need you to back us, because we don’t want to lose the money we just very aggressively recycled.”
So then they snapped back, and then they also realized — because they got that government support, and that bailout of third-world debt — they realized it was time to sort of push forward into dismantling aspects of regulation that had also bound them.
Glass-Steagall has taken on mystical qualities with the Left. My communist office manager blames the repeal for everything. My wacko friend Jim, who went completely insane during the Bush years, gets misty eyed when the phrase is uttered. The fact that the repeal was championed by Bill Clinton and both parties in Congress is never mentioned.
How does Barack Obama fit into the history that you assess in your book?
First of all, Obama’s economic and financial policy, Cabinet and advisers are largely retreads of the Clinton administration. So from the standpoint of the banking community, and connections to the banking community, there was very much an overlap, if not a complete overlap, of individuals who were all key to the deregulation of the banking industry, and who either came from, or now speak for, large sums of money through the banking industry …
The policies of not just lax regulation of banks, but subsidizing their failures — which the Clinton administration did after the 1994 Mexican Peso Crisis, and which the Bush administration even before that, did with the third-world debt crisis — was magnified many times under the Obama administration. His favorite banker was said to be — by the New York Times — Jamie Dimon. The number of visits, which I document in the book, between the White House and the key leaders of the big six Wall Street banks, increased five- to tenfold under Obama versus under George W. Bush.
Now, when he was campaigning he talked very strong about reforming Wall Street. And when the Dodd-Frank Act was signed in July 2010, he talked about it being the greatest reform since the Glass-Steagall Act of FDR’s time. But it was nothing remotely like that.
So the way I look at Obama is that his policies were a continuation of Clinton’s policies with respect to banking and finance, which were a continuation of George Bush’s policies, and Reagan’s policies, as they were actually shaped by Bush’s banking friends of the time.
So, the heart of the conspiracy is the Bush clan. It is always the Bush clan with these people.
My former lawyer, in our conversation, went on a tear about how a small group of families, never listed on the Forbes 400, control 99% of the wealth in America. I’ve heard some version of this from left cranks a few times. One day I’ll research it.
I think one inevitable outcome of utopianism is conspiracy mongering. You believe the glorious future is inevitable. You and you cohorts work tirelessly to bring it on and it fails to materialize. The only reason must be a secret cabal thwarting your efforts. What else could it be? The hunt for the conspirators is what leads to the murder and mayhem.
