Bill Moyers: Thomas Frank and Mother Jones on the Vast, Corrupting Power of Money in Politics
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And they deregulated this aspect, the other aspect, everything, you know, overturned the Glass-Steagall rules, you know, that's the biggest example. But my favorite one, actually this wasn't the Senate that did this, this was the Bush administration. A lot of states have laws against predatory lending and were enforcing those laws.
And this would have stopped the housing bubble in its tracks, you know, the no-doc loans and this kind of nonsense that was going on. The Bush administration preempted those laws, the state level laws and said, "No, no, predatory lending is now only going to be enforced at the federal level and here's how we're going to enforce it: By doing nothing."
Bill Moyers: There's also a report out this week from Senator Bernie Sanders, the independent Senator from Vermont. Would you believe according to his figures that 18 former and current directors from Federal Reserve Banks, including Jamie Dimon, directly benefited from the financial bailouts after the 2008 crisis?
Thomas Frank: That's not a surprise. It's cronyism in this kind of extreme otherworldly dimension. When the bailouts happened and when all of this stuff was on the front pages, it was the kind of moment that really shakes the faith of an entire nation.
It was so disturbing. Well, first the financial crisis was disturbing, the failure of Lehman Brothers, Merrill Lynch going down, Chrysler and GM declaring bankruptcy. One after another on the headline of the newspaper, it was the pillars of middle class life crumbling around us.
And it was astonishing, okay. And then the second chapter, the bailouts, with this enormous price tag where these guys on Wall Street, the bankers just whistled up the resources of the public Treasury for their own benefit, you know. And the country could have gone in any of several different directions. Now, I was looking at this from the perspective of the 1930s.
Bill Moyers: When the collapse of the economy brought out a large social protest and--
Thomas Frank: Exactly, there were even--
Bill Moyers: -- and a demand--
Thomas Frank: There were bailouts then in the '30s. The Hoover administration did massive bailouts of the banks. And it was exactly the same thing. It was rampant cronyism. I'll tell you a story. So the head of Hoover's bailout agency, it was called the Reconstruction Finance Corporation. The guy that Hoover put in charge of it had been Calvin Coolidge's vice president, you know, this is cronyism already, right?
At one point the guy quits his job as head of the bailout agency and goes back to his bank in Chicago. Couple months later he comes to the Reconstruction Finance Corporation which he had just, a few weeks before, been the head of and says, "Oh, I need a bailout," and they give him one. And the country is, like, outraged, right? Because ordinary people have lost their jobs, unemployment is at 30 percent, whatever it is.
It's catastrophe and this guy who, you know, politically connected is getting a bailout. And the country reacted though not with Tea Party movement, not with, you know, people demanding more deregulation. It reacted by electing Franklin Roosevelt and it reacted with an enormous labor movement and all the things that we remember from the 1930s.
And when I watched this stuff happen, you know, the banks getting their bailouts I thought we're going to see that happen again, we're going down the tracks of, you know, very well-worn tracks. We can all see what's coming.