Book Review: 13 Bankers
I find libertarians to be an odd breed. They champion the wisdom and goodness of the free market with the sycophantic zeal of religious fundamentalists and insist that government should leave private corporations alone. Yet, the corporations themselves are not that consistent. According to Simon Johnson and James Kwak's 13 Bankers, since the Reagan administration, the banking industry has lobbied Washington for massive deregulation of derivatives and installed many of Wall Street's brightest minds in government positions during the Clinton years in order to convince Presidents that the what was good for the banks was good for America. The end result of their misadventures was a burst housing bubble that caused the worst economic crisis the world has seen since the Great Depression. With US banks on the brink of collapse, we could have taken the advice that Wall Street gurus had imparted to "emerging market countries" during their tenure as IMF structural adjustment package salesmen (have your government take over the banks and restructure them to cleanse out the cancerous oligarchies). But we didn't. We gave them a huge bailout at the US taxpayers expense with no return for the taxpayer other than a vague assurance that even though we'd spend generations in debt and be repeatedly denied credit by Goldman Sachs, the economy wouldn't completely collapse for a little while. Now we have a horrific blend of rampant free market capitalism in the form of privatized gains for banks in good times and socialism in the form of socialized losses for banks in bad times. With such a grossly inequitable system in place, the surviving mega banks have every incentives to pursue even riskier financial policies and extend the recession on into the future.
Obama's administration is not shaping up to be like that of Jefferson, Jackson, Teddy Roosevelt, or FDR, all of whom were suspicious of giving banks the unfettered power they lobbied for and consequently kept them in check. So long as his cabinet is filled with Wall Street career men, I wonder how aware Obama is himself of the exact influence these bank holding companies have. Is he, like Clinton, truly convinced that we can justify not reinstating the Glass-Steagall Act to break up banks that are "too big to fail" on the premise that we NEED a huge powerful banking sector for our economy to thrive? Does he want to curtail the power of big banks, but knows he doesn't have the political capital to do so because of the opposition he'll face by Republicans in Congress (ardent champions of the supremely hypocritical mantra "Companies get big bailouts with no strings attached but if anyone suggests maybe taking over the banks and distributing their profits to the taxpayers, we'll get our teabagger sheep to scream 'SOCIALISM!' at town hall meetings")? Or does he cynically make a few weak financial reforms because he knows he needs the political support of bank holding companies to win re-election in two years? What do you all think?