(Here's the promised diary from Demos in tandem with my previous diary - promoted by Paul Rosenberg)
By Caleb Gibson
In remarks made at a summit in Trinidad and Tobago this past weekend, National Economic Council director Larry Summers teed up what has turned out to be a very active week in the credit card reform arena. Summers told NBC’s David Gregory that President Obama would be "very focused in the very near term on a whole set of issues having to do with credit card abuses."
He wasn't kidding.
Thursday, Obama, Summers, Treasury Secretary Timothy Geithner and White House senior advisor Valerie Jarrett held a "pow-wow" with over a dozen executives from the major credit card issuers and networks to discuss lending practices that have roiled consumers and lawmakers.
(Some have compared this meeting to being called to the principal's office or taken out to the woodshed. One Republican credit card lobbyist told POLITICO, "the companies will get the s*** beat out of them by the President and Summers." We consumer advocates would love to get that much attention from the White House.)
But before the White House got their chance to let the credit card companies have it, the industry came under fire from at least three other federal entities.
In a New York magazine article, "My Manhattan Project: How I helped build the bomb that blew up Wall Street", former programmer Michael Osinski tells of his part in the making of the financial meltdown. But along the way he also tells us something of the trader culture he helped to enable, where the really big bucks were. For example:
Now that I was spending more time on the floor, I wondered why the men's room always stank. Then one afternoon at three, when I was in there taking a leak, I discovered the hideous truth. Traders had a contest. Coming in at eight, they never left their desks all day, eating and drinking while working. Then, at three o'clock, they marched into the men's room and stood at the wall opposite the urinals. Dropping their pants, they bet $100 on who could train his stream the longest on the urinals across the lavatory. As their hydraulic pressure waned, the three traders waddled, pants at their ankles, across the floor, desperately trying to keep their pee on target. This is what $2 million of bonus can do to grown men.
These are the guys we have to keep happy?
I'm not just after a cheap shot here. Last month, the Compulsive Theorist posted a couple of posts on "business and cultural norms in the financial sector". The little vignette above is simply a vivid reminder of just how warped those norms have become. And you know what? The conservatives are right: the issue of moral values goes right to the core of our politics, and the fate of our nation. Only it's their values that are the problem.
Yesterday, I published a couple of diaries dealing with William Black, his criticism of the role of criminality in the financial meltdown and his prescriptions-along with James Galbraith-for a minimal program of what ought to be done to clean up the mess. Quite a bit of energy went into responding to a DKos-sourced attempt to discredit him, and while it's certainly important not to ignore the substance of the narrow charge against him (a charge of misrepresentation that increasingly seems anything but clear-cut), it's even more important to maintain our focus on the bigger picture-that being the role of the financial industry in wrecking our economy, and how to save ourselves from it.
It's important to note three things right off the bat: (1) There is a long-standing history of demonizing finance, which in the Western World has repeatedly been intertwined with anti-Semitism. (2) There is a similarly long-standing history of finance being involved in recurrent economic catastrophes. (3) There is no good reason in the world why responsible figures in the world of finance should want to bring about financial ruin. Above all, the anti-Semetic narratives implicated in (1) are utterly nonsensical, based on a demonic narrative about the nature of the Jews. Yet, the unreal, even hateful nature of the narratives referred to in (1) in no way serves to invalidate the historical reality of (2). We need to be able to walk and chew gum here, people. PArticularly given the enormous growth in the size of the financial sector over the past few decades:
Naturally, this has enormous implications in terms of political money and power as well--as we'll examine more closely on the flip.
(3) Former chief economist of the International Monetary Fund, Simon Johnson, has an article at The Atlantic, "The Quiet Coup", about which the editors say, "If the IMF's staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we're running out of time." The following chart from Johnson's article shows the growing dominance of the financial industry. Josh at TPM notes, "As you can see, the pivot in each case is around 1980." Gee, I wonder what happened then?
