Posts Tagged ‘13 Bankers’

The new American oligarchy

May 30, 2010

About two months after President Obama was inaugurated, he met with the CEOs of the 13 largest financial institutions to ask for their cooperation in averting financial collapse. The U.S. government was engaged in a major financial rescue effort to save the U.S. banking industry from collapse. In return, he asked that the bank CEOs hold off on big pay raises and bonuses that enrage the public. “We’re all in this together,” he reportedly said. “Help me to help you.”

He was pleading with them as if they were a sovereign power in their own right. “This administration is the only thing standing between you and the pitchforks,” he reportedly said.  The bank CEOs balked at Obama’s requests and since then have mobilized against even modest financial reforms.

This story is told in 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, by Simon Johnson and James Kwak. Simon Johnson is a former chief economist for the International Monetary Fund. His brother-in-law, James Kwak, has had a successful career as a software entrepreneur and business consultant. In many ways, they argue, the United States fits the profile of faltering Third World oligarchies the IMF has had to bail out. And Obama, so far, has not challenged this.

Their definition of an oligarchy is a nation in which economic power generates political power, and vice versa. They show how, for the past 30 years, a financial oligarchy has emerged and, under Democrats and Republicans alike, has steadily freed itself of governmental control while continuing to demand and get government bailouts. The recent bailout is only the latest and biggest of a long series, and is unlikely to be the last unless big changes are made.

The savings of Americans, instead of being invested in American industry and contributing to the nation’s economic growth, have been diverted to a kind of high-stakes poker game that benefits nobody but the winners, and in which the big losers are bailed out.  This will not end, they say, until the big banks are broken up, as President Theodore Roosevelt broke up the Standard Oil trust.

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