Third World America - Arianna Huffington [57]
Talking about our financial crisis with them is like beaming back to the second century and discussing astronomy with Ptolemy. Just as Ptolemy was convinced we live in a geocentric universe—and made the math work to “prove” his flawed theories—Obama’s senior economic advisers are convinced we live in a Wall Street–centric universe and keep offering their versions of “epicycles” and “eccentric circles” to rationalize their approach to dealing with Wall Street.114 And because, like Ptolemy, they are really smart, they are really good at rationalizing.
If you believe the universe is revolving around the earth—when, in fact, it isn’t—all the good intentions in the world will be for naught. It’s no surprise that people such as Tim Geithner and Larry Summers believe in bank centrism—they’re both creatures of it. And in a bank-centric universe, funneling no-strings-attached money to too-big-to-fail banks is the logical thing to do.
The longer this remains the dominant cosmology in the Obama administration—and the longer it takes to switch to a plan that reflects a cosmology in which the American people are the center of the universe and are deemed “too big to fail”—the greater the risk that the economic crisis will be more prolonged than necessary. And the greater the suffering. There is an enormous human cost to this dogma.
Writing about the “grand book” that is the universe, Galileo declared that it “cannot be understood unless one first learns to comprehend the language and interpret the characters in which it is written … without these, one is wandering about in a dark labyrinth.”115
That’s where we find ourselves today, wandering about in a dark financial labyrinth—being led by good men blinded by an obsolete view of the world.
DO THE CRIME, DO THE TIME … UNLESS YOU’RE WORKING ON WALL STREET
“The struggle of man against power is the struggle of memory against forgetting.”116 So wrote Milan Kundera in The Book of Laughter and Forgetting. It is one of my favorite quotes and it popped into my head as I was thinking about how short our collective memory is when it comes to holding the powerful accountable.
Until the Securities and Exchange Commission sued Goldman Sachs for fraud in April of 2010, it was easy to forget that we have a regulatory agency designed to protect the public from the pillaging of corporate America.117 Six months earlier, the SEC had arranged a settlement with JPMorgan that showed how rigged the system is. The banking giant agreed to pay a $25 million penalty and cancel $647 million in fees owed by Alabama’s Jefferson County as the result of a complicated derivatives deal that blew up in the county’s face.118
As part of the settlement, JPMorgan neither admitted nor denied wrongdoing—despite overwhelming evidence that it had engaged in plenty of wrongdoing.119 This is what passes for justice these days. If you commit a petty crime and hammer out a plea bargain, you’ll have to admit wrongdoing as part of the agreement. But put on a suit and commit a billion-dollar crime and you won’t even have to admit you did anything wrong—which makes it much more likely that you’ll do it again.
We saw the same dynamic played out in the saga surrounding the $3.6 billion in bonuses that was awarded to Merrill Lynch executives just before the failing firm was acquired by Bank of America (with a lot of help from American taxpayers, who handed BofA $45 billion).120
Bank of America executives failed to inform their shareholders that, as part of the acquisition, they were going to give billions to the executives who had been at the helm while Merrill lost $27 billion in 2008.121 Had the shareholders