Moyers talks with former Citigroup Chairman John Reed to explore a momentous
instance: how the mid-90's merger of Citicorp and Travelers Group, and a
friendly Presidential pen, brought down the Glass-Steagall
Act, a crucial firewall between banks and investment firms which had
protected consumers from financial calamity since the aftermath of the Great
Depression. In effect, says Moyers, they put the watchdog to sleep.
carefully to the rationales provided for taking down Glass-Steagall, which helped to set up the current financial
crisis and collapse. This interview with John Reed by Bill Moyers is one of
the most powerful and yet simple summaries of the cause of the financial
crisis that I have heard.
The arguments for 'free financial markets' are being repeated again every
time there is a discussion of financial re-regulation, providing reform to
curb reckless speculation, and shrinking the TBTF banks and the systemic
risks which they provide.
All of them are fallacious, but they are backed by amoral self-interest and
more importantly, big money.
Although the great landscape of moral decay covers the widespread fraud in
the mortgage markets and the foreclosures, there is fine microcosm of this
outcome to be seen in the blatant theft of customer money at MF Global by the
broker and his banks, as the courts and the regulators turn a blind eye to
John Swinton is anecdotally, and quite possibly
apocryphally, reported to have said this about journalists in The Gilded Age
of robber barons, but it aptly describes the economists, politicians,
lawyers, accountants, regulators, and the rest of the Wall Street demimonde
of our day. Once one sells the integrity of their knowledge, they become
tolerant of and even open to soft participation in a much broader set of
injustice and crimes.
business of the journalist is to destroy the truth; to lie outright; to
pervert; to vilify; to fawn at the feet of mammon, and to sell his country
and his race for his daily bread.
You know it and I know it and what folly is this toasting an independent
press? We are the tools and vassals of rich men behind the scenes. We are
jumping jacks, they pull the strings and we dance. Our talents, our
possibilities and our lives are all the property of other men. We are
the Crash of 1929, in the Congressional hearings a Wall Street 'publicist,'
A. Newton Plummer, revealed that the majority of financial journalists had
been 'on the take' from the great stock pools and manipulators of the day. He
could not be discredited by the deniers because he had kept a great cache of
cancelled checks to prove his allegations. So he was largely ignored, his
story buried for the sake of confidence and recovery, and the freedom and
ease of the complicit.
And in our day, now that the music is stopped, the participants and enablers
are standing with dirty hands, ashamed but too frightened to acknowledge
their part in it, and more cynically, concerned about losing the benefits and
the easy money they have obtained from it.
And so the nation is caught in a credibility trap that stifles recovery and
reform, and there does not seem to be the ability or the will to return to
healthy markets and a balanced economy, what is derided as the 'old normal.'
Descensus Averno facilis est...
is the descent to hell; all night long, all day, the doors of dark Hades
stand open; but to retrace the path; to come out again to the sweet air of
Heaven - there is the task, there is the burden."
John Reed on Big Banks' Power and Influence