Bill Moyers: Was the Financial Bailout Just a Slick, Friendly Takeover of the Federal Government?

The following is excerpted from the transcript of Bill Moyers' interview with Ohio Democratic Rep. Marcy Kaptur and Simon Johnson, former head of the International Monetary Fund, from PBS's Bill Moyers Journal.

Bill Moyers: I sat in a theater packed with passionate moviegoers, every one of them seemingly aghast at the Wall Street skullduggery exposed by Michael Moore in his latest film. It's called Capitalism: A Love Story. Here's an excerpt:

 

Michael Moore: We're here to get the money back for the American people. Do you think it's too harsh to call what has happened here a coup d'etat? A financial coup d'etat?

Marcy Kaptur: That's, no. Because I think that's what's happened. Um, a financial coup d'etat?

MM: Yeah.

MK: I could agree with that. I could agree with that. Because the people here really aren't in charge. Wall Street is in charge.

Bill Moyers: That's the progressive representative from Ohio, Marcy Kaptur, she's with me now. She has a master’s from the University of Michigan, did graduate study at M.I.T. and still lives in the same house in the Toledo working-class neighborhood where she grew up.

She's in her 14th term in Congress, the longest-serving Democratic woman in the history of the House, and she's an outspoken financial watchdog on three important committees: appropriations, budget and oversight and government reform.

Also with me is a familiar face to viewers of this broadcast. Simon Johnson is the former chief economist at the International Monetary Fund. He now teaches global economics and management at M.I.T.'s Sloan School of Management. He's one of the founders of the Web site Baselinescenario.com. I check it out daily for Simon's take on the economic and financial crisis.

It's been a year since the great collapse, and both my guests are well equipped to assess what's happened since then. Welcome to you both.

MK: Thank you.

BM: Let's look at this story that I just read from the Associated Press this week about how Treasury Secretary [Timothy] Geithner is on the phone several times a day with a select group of very powerful Wall Street bankers, especially Citigroup, J.P. Morgan, Goldman Sachs.

He will talk to them when members of Congress have to leave a message on the answering machine. And these are the bankers who helped bring on this calamity and who are now benefiting from it. What does that say to you?

MK: That says to me that Wall Street and Washington is a circuit. And because Mr. Geithner headed the New York Fed that that historic relationship, unfortunately, continues. And it gives them special access and special power to influence policy.

Simon Johnson: Well, I think it really tells you how the system works. The system is based on access and is based on what on Wall Street shaping Washington's view of what's important.

It's the people who are very close to Mr. Geithner before when he was the head of the New York Fed. Before he became treasury secretary. These people have unparalleled access.

And in a crisis, when everything is up for grabs, you don't know what's going on, the people who will take your phone calls, right, in government and people who are going to be standing in the oval office, making the key decisions. That's the heart of the system. That's the heart of how you get your agenda through, by changing their worldview.

MK: And they also move people. In other words, Mr. Geithner came from the New York Fed, he came from Wall Street, and he becomes Secretary of the Treasury. His predecessor, Mr. [Henry] Paulson, came from Goldman Sachs, and he becomes Secretary of Treasury.

You can go back decades, and you will see that there's this revolving door between Wall Street and Washington. And I recently asked Chairman [Ben] Bernanke of the Federal Reserve, "Let me ask you a question. Would you be willing to consider a reform where the Cleveland Fed would have equal power to the New York Fed, in terms of how the Fed is run?" And his answer was, "No."