• Hi everyone who is still there or checking in !

    It does seem that our conversation all around was so intense that we crashed the server. That’s how I look at it as well. But, I wanted to thank all of you so much for such a compelling discussion. Bev & the folks at the Lake – as always you are outstanding examples of people that care to know and know to care about these important issues and the history behind them. Bill – you remain an inspiration to me.

    Please do consider checking out All the Presidents’ Bankers – either buying it on B&N or locally, or on kindle or getting your local library to stock it. We only covered a very small component and I must say, that even though I’ve written several other books, I continue to earn the most from re-reading this one (not just the wider themes, but some of the actual stories of personal interactions are fascinating to me) and I hope you will, too.

    Have a wonderful rest of your weekend everybody!
    Nomi

  • Yes absolutely we missed the window for meaningful reform, not least because the Dodd-Frank act was touted as reform by Obama which will be seen as a major historical embarrassment as was Glass-Steagaal repeal for Clinton at some point in the future. Rather than reducing the power of the political-finanical alliance and the concentration in the hands of a few players, we exist now in the wake of a crisis that has made – the big banks bigger. The Big Six now have a greater concentration of the nation’s deposits, bank assets, and derivatives than ever before. That is another crisis waiting to happen period. Add to that, the fact that the loans underlying the securities that instigated the crisis, have not for the most part been restructured to the benefit of the borrows, but instead $1.6 trillion of the end securities have been purchased by the Fed in return for lavishing more capital on the big banks, and again, that is another crisis waiting to happen. Our priorities could not be more wrong, the subsidies provided to reckless big banks, and their leaders, could not be more misguided, and the probability of another crisis could not be bigger. The timing, I’m not sure of. The catalyst will have something to do with credit , as it always does, and inter-dependent transactions across the US & world’s major banks. It could start around the Ukraine, or a succession of emerging market meltdowns, or with consumers, but it will happen and I give it not more than a few years.

  • Yes he was, I go into a lot of that in my first book, Other People’s Money which came out in 2004, advocating Glass-Steagall resurrection in the face of what was then a growing CDO and credit derivatives market that I said would implode, no way around it. The subprime crisis extended from there. Dorgan was sane and did not vote for Glass-Steagall repeal in 1999.

  • Thank you so much for your involvement and excellent comments and questions.

  • Nixon and Carter (and for the other question about the brief presidency of Carter)

    Some points: Nixon did not have a cozy relationship with the bankers, despite being a Republican. Indeed, he didn’t’ really have a cozy relationship with most people. So coming after LBJ who had an extremely friendly relationship with every major banker (there are reams of documents I examined at his library in Austin on this – I had to return there 3 times), he had no interest in cultivating one really. That did not sit well w/Walter Wriston a major free-market deregulation guy or David Rockefeller, who had come to take over Chase when Nixon came to power (after much of the decade of Chase leadership being from the Aldrich-Rockefeller family and proteges). Nixon did ask both of them to be his TS, but not personally and this offended them. They took to going around him to invoke the dissolution of the Gold standard (which they pushed and accomplished) and otherwise used their time while he was in office to expand into the Soviet Union, China (rockefeller opened a branch there before Nixon’s visit), and the Middle East. By the time Carter came along, Rockefeller was really running foreign-financail policy . The Iran hostage crisis account in my book was the result of perusing old National Security files and seeing Rockefeller all over them, not just his relationship with the Shah of Iran which was well documented but the role his bank played in inflaming hostage negotiations, which eventually came down to money, and lost Carter the re-election. One of my favorite chapters.

  • OH that’s great to hear.Also, the book sold out on Amazon after a week and a half (it was out officially on April 8th), but you can get it on kindle, and Barnes and Noble still has it in stock, as well as some local book stores. I’ve been trying to find the local ones that had stock along the way of my book tours and radio appearances, but you can check out your favorite one too. For instance, Just came back from Portland and Powells was replenishing their stock.

  • Sorry I stand corrected, my fingers work faster than my brain sometimes….and I just came back from addressing a Town Hall in Seattle where I was having a great conversation about all of this with one of Senator Cantwell’s aids that attended. Your links are good for people to follow. Also, it should be noted, that this issue of bank regulation should not be one of party lines, deregulation certainly was bipartisan, but rather that many classic conservatives don’t believe we should have a system that rewards failures.

  • Question for the crowd – is there a particular president in the 20th century whose specific relationships with key bankers of his time you want me to address in some more detail that we haven’t covered?

  • Totally agree. If bankers truly believed that their actions would come back to bite them in the ass, they’d adopt a different, slightly more prudent stance, as some have in the past. The abominations we’ve witness in terms of bailouts and subsidies and every single political decision that further concentrates capital and power in the hands of a few men and firms have given them more rope, but they are not hanging yet.

  • And where the system breaks down further is when not only is the government at its highest levels not playing the cop on the beat, but it’s playing the enabler of the bad practices, because of long-held collaborations and alignments mixed with sheer stupidly about the nature of risk the current financial system poses on the world.

  • And then, we had the more recent joke of Jaime Dimon being hauled in front of a congressional committee for a hearing on the London Whale Trade which was a bad bet that used depositors money at its core to pull off (badly)….and they started asking him for financial advice (also televised on CSPAN). It would not surprise me in the least if Hillary Clinton were to win, that she’s appoint him Treasury Secretary, or at least float the idea around.

  • Bankers have always wanted less restrictions on their business, except in the 1930s where as I’ve mentioned they considered it intrinsic to sustaining their business and advocated banking regulations that were quite strong. So yes, they are part of the philosophy that goes back a long way – in WWI after the Fed was created, Jack Morgan told Woodrow Wilson that he’d support the war efforts (which he wanted to do anyway, it would give him more global financial power later), but he wanted Wilson to ensure that the Clayton Antitrust Act snaking through Congress be softened. Wilson agreed .As a result, just like Teddy Roosevelt in 1907 busted other industries but not banks. Wilson let the banks stay concentrated. The other history since follows. But it’s not republican vs. democrat at the White House levels, the philosophy holds true for presidents of both parties.

  • On the national level, there are initiatives by Elizabeth Warren, Maria Cantwell, Bernie Sanders, John McCain that want a resurrection of Glass-Steagall so keeping the pubic discourse attuned and supportive of their efforts is important. Through getting on their lists, twitters, etc. the more clout it looks like people like these have, the more other ears will have to open. On the local level, anything we can do to discuss and support public banking initiatives , local credit unions, even local business and bookstores, does a little bit each time to chip away at power. There are no easy answers, and this may take decades, but doing nothing will most assuredly be a worse tactic.

  • Yes, it might have solved the problem of bankers’ direction of policy vis a vis their government friends being detrimental to the population. But the bigger point that I examine in the book, is that these big politically connected private banks don’t operate in a vacuum where they push and the presidents receive. The decisions that have enabled the concentration of politiical-financial power in the hands of a few bank leaders and institutions primarily, are imbedded in the DNA of the country. That’s why I say that in order to have a healthier, safer country , we need not just to break the banks (a given), but also break the kind of alliances that allow them to thrive in this manner. The reason that legislative reform on banking came in the 1930s, had a lot to do with the relationships of bankers to FDR. FDR wanted to sustain banking for the friends that he had coming into prime positions as new leaders of National City and Chase, he had no interest in mitigating their power, not mitigating the destructive elements – which is still better than nothing.

  • Clinton in his memoirs talks of how smart he thought Robert Rubin and his vision was, I don’t remember the exact quote I used from him, but it’s in the book. Again, Clinton’s signing of that legislation was a culmination of years of bankers/presidents believing and working towards deregulation the big banks and enabling them to increase their concentration of power, risk and assets. When the 1994 Riegle Neal Act was signed by Clinton, there are documents of jubilation at having done what the past three presidents (from Carter) couldn’t, which was deregulation interstate banking allowing more mergers across states. At the signing ceremony , Clinton praised two major bankers. This act was a legacy plus is his estimation at the time. Contrast to the Glass Steagall Act signed in FDR”s time and promoted by two major bankers as necessary reform to increase confidence in the banking system – and during a time where the population was mightily pissed off at being so screwed and made that clear with their votes. FDR was accountable to them. Obama is not accountable to the idea of the stability that FDR promoted. So we need to be that much more knowledgeable and louder . The sad truth though, is that we will undergo a larger crisis before that happens.

  • Yes, the City of London is certainly a dumping ground of poor practices and shadiness and has been since the Cold War, which was how it resurrected itself – also during the 1960s and beyond American bankers set up shop their to access the Middle East and other places, without having to bring funds through US regulations, it remains a shadow banking outpost, but not one that has benefitted the power position of UK banks per ce,

  • The other reason Wall Street isn’t threatened besides the long-term political-finanical alliances and sheer concentration of capital it commands, is that money and government are simply more intertwined and codependent than technology or produces and government. Mark Zuckerberg will never have the power of J.P. Morgan or Jaime Dimon at their peaks, because their legacies represent something much more than money.

  • I don’t believe it is, and part of the reason is this legacy of political-financial alliances and like-mindedness, as big as some banks are in terms of deposits or assets or even political influence in other countries, there is nowhere in the world that compares with the US alliances, historically and currently between government and private banking (and include the Fed as an entity which was designed by bankers to support bankers)….

  • It wasn’t always entirely coincidental, the alignment. In the 1950s for example, the alignment of Eisenhower and the bankers mutually reinforced the Cold War position – Eisenhower from a military perspective, also wanted economic liberalism with countries that swung capitalist, and so did the bankers, because they used military support and political will to back them as they expanded into these same countries. The branches they set up were supported as part of American expansionism generally but they also believed that economic stability at home was required to elevate their growing position abroad. As they got more cocky, and particularly discovered the use of oil profits as extra capital for converting to third world loans, the internationalism of the banks surpassed that of the government and they became increasingly detached ideologically and monetarily from caring whatsoever at all about the population, or any population.

  • Yes, and also it signified the start of a chaining mentality on the part of the new bankers taking their roles at the helms of these banks, as I mentioned in the book. With having shared a Great Depression / War experience, they only cared about how much they could accumulate – not just in terms of money, but influence and that influence wasn’t used for purposes that benefited the country in any way – just them.

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