THE WALL STREET BANKSTERS
“It is well enough that the people of the nation do not understand our banking and monetary system for, if they did, I believe there would be a revolution before tomorrow morning.” —Henry Ford
Report by Tyler Downey
Financial catastrophe. Double-digit unemployment. Home foreclosures. An everwidening gulf between the extremely rich and the rest of us. Control of government and media in the hands of a select group of elites. Wall Street destroying the middle class. Are these the harsh realities that face Americans today? Absolutely. But they’ve always been offshoots of crony capitalism, which has a long history of wreaking havoc on this country. Whether it was the railroad bubble of 1893, the rampant financial malfeasance of the Roaring Twenties that led to the Great Depression, the dot-com crash of the late 1990s or the current real estate-driven mess we find ourselves in now, Wall Street speculation and corruption have been at the heart of America’s economic crises.
It takes an extremely courageous and patriotic leader to stand up to the Wall Street banking cartels. Franklin Delano Roosevelt was such a man. When he was elected President in 1932, America was beset by the worst financial crisis it had ever known. Despite assurances from the bankers that the Federal Reserve System (formed in 1913) would forever prevent the panics and economic upheaval that had previously struck the country, the Great Depression of the 1930s nearly wiped out the American middle class.
Seeing the damage inflicted by an outof- control Wall Street, FDR took drastic steps to curb the bankers’ influence. “We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering,” he declared during a campaign speech at New York City’s Madison Square Garden in 1936. “They had begun to consider the Government of the United States as a mere against one candidate as they stand today. They are unanimous in their hate for me— and I welcome their hatred.”
The robber barons certainly didn’t want Roosevelt, a Democrat, reelected. Once FDR took office in 1933, chief counsel Ferdinand Pecora—a former New York City prosecutor—was given the green light to rev up the Senate Banking Committee’s investigation into the practices that had triggered the Stock Market Crash of 1929. Pecora ultimately concluded: “Had there been full disclosure of what was being done in furtherance of these schemes, they could not long have survived the fierce light of publicity and criticism. Legal chicanery and pitch darkness were the banker’s stoutest allies.”
Pecora uncovered stock offerings at discounted prices to politicians, the selling of bad loans to unsuspecting investors and the fact that J.P. Morgan Jr. and his partners had paid no income taxes in 1931 and 1932. The president of Citigroup was forced to resign. As Ron Chernow explained in a 2009 New York Times article, it was Pecora’s inquiry that paved the way for the legislation that followed.
Franklin D. Roosevelt first ordered the Treasury Department to close all banks that had been reckless with people’s money. There would be no bailout for them. He then signed into law the Banking Act of 1933, better known as the Glass-Steagall Act, which separated investment and commercial banking. No longer could banks speculate with money that customers had deposited into their private accounts.
FDR also pushed legislation making it much harder for banks to repossess family homes and farms. He instituted the Federal Deposit Insurance Corporation, which safeguarded depositors’ accounts and thus restored public confidence in the nation’s banks. FDR introduced regulation into nearly every sector of the economy— energy, labor, trade—to ensure that the middle class was protected from the predations of crony capitalism.
In his 1944 State of the Union address, Roosevelt even proposed an Economic Bill of Rights. “To assure us equality in the pursuit of happiness,” it basically stipulated that no citizen should be denied employment (with a living wage), “a decent home,” “adequate medical care,” “a good education” and social security. It also called for an end to monopolies and cartels. Unfortunately, FDR died before this great goal could be realized, but his bold actions led to an unprecedented 50 years of prosperity for the American middle class.
Of course, Wall Street would fight back. appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob. Never before in all our history have these forces been so united Abetted by massive campaign donations, media consolidation and good old-fashioned corruption, the robber barons have waged a 75-year war on the policies of FDR.
The tide turned in Wall Street’s favor with the election of Ronald Reagan in 1980. It was his administration that first allowed financiers to write laws that their servants on Capitol Hill enacted. How did the politicians become captives of the ruling class? Since 1990 the financial sector has spent over $2.5 billion on campaign donations alone, not including the astronomical amount spent on lobbying.
This is far and away the most money donated by a single industry—and it’s going to Republicans and Democrats! That’s why it’s impossible to differentiate between Ronald Reagan’s “deregulation” policies and those of Democrat Bill Clinton. Both Presidents were bought and paid for by Wall Street bankers. According to bestselling author Charles Geisst, the culmination of this silent war against the legacy of FDR was the repeal of the Glass-Steagall Act in 1999. Thanks to Clinton, the robber barons came back in full force, and it took less than ten years to see the result of those efforts.
The Federal Reserve’s record-low interest rates had spawned a colossal real estate bubble. Freed from the regulations of FDR, Wall Street investment firms issued riskier and riskier loans. By 2008 the corrupt system became untenable. Ordinary Americans lost $17 trillion in retirement savings, announced Treasury Department chief economist Alan Krueger. When it all came crashing down, the bankers threatened to destroy the entire financial system if they didn’t get paid off.
Democrat Barack Obama was elected with a mandate to again make government work for the people, not Wall Street. However, his campaign received nearly $40 million in contributions from Wall Street entities. It appears that despite his promises and speeches, Obama is just another politician bought and paid for by the financial industry.
Even after securing his party’s Presidential candidacy in 2008, Obama supported President George W. Bush’s decision to hand over $700 billion of American taxpayer money—with no claw-backs, no oversight and no controls—to bail out Goldman Sachs, Citigroup, Bank of America, AIG and other firms. The recipients then spent about $114 million of our tax money in campaign donations in 2008 alone. They also planned to dole out roughly $14 billion in bonuses to executives.