There has been much comment recently about the popular anger over Wall Street bailouts, executive bonuses, and financial fraud. Particularly galling is the image of our freshly elected president seemingly impotent in the face of it all. There have been calls for the Treasury Secretary’s head even though he’s been on the job less than two months. What’s driving this extreme anger when Barack Obama and his merry men seem to be getting either pretty high marks or an outright pass on just about everything else? More importantly, what can be done to placate the mob?
In the most recent issue of the New York Review of Books, Michael Tomasky has a review of So Damn Much Money: The Triumph of Lobbying and the Corrosion of American Government by Robert Kaiser. (Sadly it’s not available on the Review‘s website.) The article chronicles the rise of big money lobbying in Washington, which didn’t really begin ramping up until after Watergate. It’s a tale that’s been told before, but that doesn’t make the numbers contained within any less eye popping. In 1974 the total amount spent by all candidates for House and Senate was $77,000,000, by 1982 that number had risen $343,000,000, and for 2008 it was a whopping $1,400,000,000. That is a staggering increase in the amount of cash it takes to successfully run for political office; it had to come from somewhere.
That’s a useful thing to bear in mind while reading Matt Taibbi’s AIG story in Rolling Stone. Basically, Taibbi takes the incompetent and amazingly arrogant AIG apart, and while his piece can come off as extremely harsh, if anything he’s much too soft on these people. They were, after all, taking money that wasn’t theirs and using it in what amounted to an elaborate confidence scam. Not only are a lot of these financial wizards criminals, in any semi-honest definition of the word, but they aren’t particularly good criminals. They aren’t even tough criminals:
The bonuses are a nice comic touch highlighting one of the more outrageous tangents of the bailout age, namely the fact that, even with the planet in flames, some members of the Wall Street class can’t even get used to the tragedy of having to fly coach. “These people need their trips to Baja, their spa treatments, their hand jobs,” says an official involved in the AIG bailout, a serious look on his face, apparently not even half-kidding. “They don’t function well without them.”
To cite our most prominent recent example, Bernard Madoff (fuck anyone who calls him Bernie) was not a very good criminal. Good criminals may not always get away, but they at least have an escape plan. Ditto buffoonish Texan also-ran, Allen Stanford and now, it appears, American International Group’s Joseph Cassano. Cassano may not have been running a straight up Ponzi scheme, but the fact remains that he got people (in this case his bosses) to trust him with a lot of money by misrepresenting what he was able to do with it. Then he played with it for awhile (rewarding himself handsomely for doing so) and now has nothing to show for it.
In other words, these guys stole a shitload of money by lying to the rightful owners, that’s what makes them criminals; but they did so in a way that virtually guaranteed that they’d someday be caught, and that is what makes them bad criminals. This is, from a logical and decision making point of view, almost the exact same shit that Andrew Fastow pulled at Enron: take the cash, hide the bullshit, pray for luck. Of course, luck eventually runs out and in a time of endless e-mails, searchable databases and terabyte hard drives it’s next to impossible to hide all the bullshit. The only thing that remains is missing money.
But the missing money is not the cause of the public anger. The real cause is that this is now the third time in just over twenty years that Wall Street, broadly defined, has come screaming to the government begging for help lest the economy implode. In the late eighties it was the Savings & Loans, in the late nineties it was Long Term Capital Management, and now it’s big name banks and insurance companies. These crises have been occurring like clockwork at the end of each of the last three decades. Each time it happens, doom and gloom scenarios are raised (some of which are now coming true) and the public at large is reminded that the people who run the economy are just as short sighted and stupid as the rest of us.
That is a very disconcerting feeling and what’s worse, this is now the third time it’s happened. Fool us once, shame on you; fool us twice shame on us; fool us three times and . . . well, the widely circulated image below says it all, doesn’t it?
That pretty well covers it.
What the public wants, and it’s really the only thing that will genuinely soothe public anger, is an honest and credible statement that this will never happen again. Granted, never is a long time, but this country made it from roughly the mid-thirties to roughly the mid-eighties without a major crisis in banking, and at this point it seems safe to say that most people would gladly take fifty years of stability.
The populace is aware, on a gut level, that a lot of that money Tomasky mentions, that $1.4 billion that we spent to elect this Congress, came from the same people who now have their hands in the government’s pockets. The same people whose scams seem so utterly stupid when exposed to the light of day. The same people whose greed and foolishness is being rewarded instead of punished. Right now, the White House is doing very little in the way of reassuring people that is won’t happen again. Take a look at the transcript from Obama’s financial/economy prime time press conference last week. Regulations appear in only two questions and neither is what you’d call a strong statement. The word “never” appears only twice, once about the budget and once about the Israeli-Palestinian mess.
One of the operating assumptions of our society is that most of the people who live substantially above the median in terms of income and wealth do so for reasons which are in some basic way just. Instead, some of the most prominent of those people appear to be, despite the scale of their theft, nothing more than middling con artists. That is where the anger comes from; that is the main nerve that runs through all of the public outcry and disgust over the ever widening economic mess. Having Timothy Geithner ask Congress for more powers is probably a step in the right direction, but it needs to be done with much greater fanfare, much greater force, and a hell of a lot more conviction.
