from Nomi Prins' All The Presidents' Bankers

From All the Presidents’ Bankers (p. 422-423)

In a November 2009 interview with London’s Sunday Times, Lloyd Blankfein was asked about the size of his firm’s staff bonuses. He claimed that he was just a banker doing "God’s work.” As for the economic disparities that “work” engendered, he said, “We have to tolerate the inequality as a way ot achieve greater prosperity and opportunity for all.” After all, he explained, Goldman Sachs is helping “companies to grow by helping them to raise capital. We have a social purpose."  His words, which he noted as tongue-in-cheek later, echoed so false against the backdrop of a deflated public economy that all manners of media slammed them. 

But there was a kind of truth to what he said. 

There have been times when the biggest bankers shattered public trust and times when the public believed that bankers’ interests somewhat aligned with their own. In those periods, bankers took public service roles that weren’t just related to the economy, and they didn’t flaunt their wealth. The Great Depression provoked a climate of social responsibility. Related bank regulation lasted for decades. During World War II, many Americans even equated bankers with patriotism. 

Today no such attitude prevails. Never before have the government and the Federal Reserve collaborated so extensively by propping up the banking system to the detriment of the population. Never has the world been so quick to push austerity on countries whose only crime was standing in the way of banker speculation. Never have bankers thought this was copacetic. Never have their 

political alliances been so widespread yet so impersonal. Never have their rewards been so high.

When money has no cost, the consequences of using it irresponsibly have no cost either. The bankers’ bets and actions crushed the global economy before, and they will again. The most powerful ones emerged unscathed. They had proven to be as influential, if not more so, than their alliances. But they cannot be allowed to continue. For absent a true shakeup in the structure of the financial industry and realignment of the power bankers wield over the general economy, we will surely face more financial crises in the years to come.

The nature of twenty-first-century political-financial alliances will reinforce and fortify the bankers’ power, even as bankers continue to behave in ways that will lead to more widespread economic pain. The reality is that financial crises will worsen and may spread to Latin America, the Middle East, and Asia, for the mechanisms of global finance are more destructive.

US hegemony and the strength of Wall Street have been closely aligned for more than a century during which certain private bankers have achieved a position of greater power than the presidency (or central banks). The crises of the past decade were a manifestation of what happens when US bankers operate beyond the control of government, often enabled by the highest political office in the world. Whereas the mid-twentieth-century ushered in a sense of humility and unity between private finance and public service, by the 1970s that ship had sailed.

There’s a reason that the Fed bailed out the biggest banks, that Dodd-Frank was toothless, and that Obama dared even to consider Larry Summers, a tried-and-true Clintonian Rubinite, to head the Fed after Bernanke. After Summers’ withdrawal, on October 9, 2013, Obama similarly opted for Janet Yellen—a former chair of Clinton’s economic council while Glass-Steagall was being dismantled and Fed vice chair beside Bernanke, who advocated massive subsidy programs to buoy the banking system.

It no longer matters who sits in the White House. 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. And since Americas latest elected leader pressed the pretense of financial reform instead of actually pushing for real reform, bankers can do greater damage than ever before. Bankers dominate the globe using other people’s money, and presidents gain command through other people’s votes, but  in the ongoing game of influence and control, these are mere chips that grant players a seat at the table of power.

America operates on the belief that if its biggest banks are strong, the nation will be too. It is not US military might alone that evokes global trepidation; it is also US financial might, in the form of the alliance between the presidency and the major bankers.

No other Country on the planet is driven by such a critical symbiotic and costly relationship. This is why US hegemony, from a financial superpower perspective, is not in decline. The most elite US bankers and government officials understand that their positions are mutually reinforcing, with the Fed serving as a support vessel in the middle. The US bank heads retain more influence over global capital than any government, and their unique alignment with the presidency is a force that will fortify America’s power, often at the expense of populations the world over.

Our choice is simple: either we break the alliances, or they will break us.