Nightmare on Wall Street: Washington Can't Bail out the Sea of Red Ink

The following is a transcript of an interview with author Bill Greider from the July 18 broadcast of Bill Moyers Journal(watch the video).

Bill Moyers:With me now is one of America's leading chroniclers of money, power, and politics, who says what's happening is the disgrace of Wall Street, its excesses paid for by people like those in Cleveland and millions like them around the country.

William Greider has spent forty years examining how powerful institutions affect ordinary people. Once a top editor of The Washington Post, a columnist for Rolling Stone, and now National Affairs Correspondent for The Nation, he has produced a series of best-selling books: Secrets of the Temple: How the Federal Reserve Runs the Country, One World, Ready or Not: The Manic Logic of Global Capitalism, Who Will Tell the People: The Betrayal of American Democracy, and The Soul of Capitalism. He's working on a new book with the title: Come Home, America.

Moyers:

What were you thinking as you saw that report from Cleveland? [The segment preceding this interview with Greider covered exorbitant lending practices in Cleveland].

Bill Greider:

Made me angry all over again, even though I know the story. And then I thought, "This is usury." This is a living example of what the Bible prohibited, which is the sin of usury. Most Americans have never heard of it probably.

Moyers:

Usury?

Greider:

Usury, to be clear about it, is rich people taking advantage of poor people by lending them money on terms that are sure to make them fail. All three of the great religions, Judaism, Christianity, Islam, had a moral prohibition against usury because they recognized that society can't function like that. People of great wealth and their institutions like banks naturally have the power to overwhelm people of lesser means. And you can't allow that in a decent society. It won't survive.

Moyers:

Where were the gatekeepers? Where were the watchdogs? Why did it take the Fed so long to put an end to predatory practices?

Greider:

To make the story overly crude, Congress repealed the law against usury. It was done in 1980 by a Democratic Congress, Democratic President. And, of course, the Republicans all piled on and voted for it. And that was the first stroke, only the first of many, in which they stripped away the regulatory laws from the financial system and from banking.

And that allowed the free market modernized gimmicks of one kind or another, all these things we're now reading about, to flourish. And that's where we are. I mean, the gatekeepers said to the banking industry and to the financial industry, "We don't think federal control or regulation is good for you, so we're, therefore, liberating you to do your own thing."

Moyers:

So why did they do that in 1980? I mean, there was, of course, the rise of the backlash to regulation from 40 years of Democratic rule there was the rise, the arrival of the conservatives with their free market ideology.

Greider:

Right, right.

Moyers:

What was the issue?

Greider:

Well, the driver then, and it was a powerful driver, was inflation. And through the '70s, for lots of reasons inflation, which tends to undermine the value of financial wealth and money, was out of control. The Federal Reserve had lost control of it, not entirely its fault. But that set up a political climate that said the government is not working and that wasn't wrong at the moment. Let's get the government out of the way.

And that was very appealing as framed by Ronald Reagan and other conservatives. But I think it's fair to say most Democrats yielded to it against whatever their original instincts were because of political necessity. And then the third dimension, maybe the most important, was that you had this very powerful industrial sector, that is banking and finance, that wanted and had pushed for years to get out from under the regulatory controls, limits on interest rates, the law against usury, the merger of commercial banks with investment banks, which had been prohibited in the New Deal because it caused the disaster of 1929.