What the Mainstream Media Still Doesn't Get About Big Banks
Reading over the coverage of JPMorgan Chase’s $2 billion fiasco, it’s impossible not to be reminded of the heady early days of the Lesser Depression. Not because the scale or risk is equivalent, but because the naked hubris, incompetence and greed on display have once again stirred up a regulatory fervor among large swaths of the media. All of a sudden pundits and editorial boards are sounding less like Paul Ryan and more like Paul Krugman. There are also the predictable right-wing hacks who claim this episode somehow makes the case against the Volcker Rule, the part of Dodd-Frank that bans commercial banks from engaging in speculative bets to increase their own profits, known as “proprietary trading.”
But unfortunately that’s usually where it ends. The issue remains framed through a partisan lens: you can either be in favor of implementing existing regulation or against it, but few voices move beyond those narrow confines. As a result, regulation gets discussed as an important but isolated issue, largely removed from more fundamental problems like income inequality and the power corporations exert over both parties.
A central theme among those in favor of less regulation is the fear that JPMorgan’s loss will strengthen the argument for a robust Volcker Rule. Editors at The Corner posted a piece with the headline: JPMorgan’s Loss: New Ammo for Regulators? Investor’s Business Daily echoed, arguing, “[i]t's a one-off financial loss that will very quickly be forgotten — except by Washington, which is eager to put all of Wall Street under its thumb.” The Wall Street Journal surprised your media critic by issuing the following conclusion:
“One tragedy of J.P. Morgan's trading loss is that it will become an excuse to give regulators even more power, when what taxpayers really want is a system that ends too-big-to-fail banks, not a plan to revive them.”
Turns out WSJ is totally into the Break Up BofA campaign! It isn't, of course, but this rhetorical tool is common among those desperate to continue with the status quo. The WSJ is absolutely in favor of reform, it tells its readers, just not this kind of reform. As evidence against the Volcker Rule, they argue it's, “becoming murkier by the day as regulators take years to define it.” What they don't say is that banking lobbyists are the ones muddying the waters, attempting to find ways around any restrictions whatsoever. So while it's popular this week to pretend to want reform, the WSJ's deregulatory bent is well documented.
Similarly, the editorial board at the Chicago Tribune recognizes that “[t]he Volcker Rule tries to solve [a] genuine problem,” but concludes,
“We hope that cool heads prevail so that industry and regulators can work together to provide a level of oversight that ensures America's financial future — and no more.”
Beyond the obvious conclusion -- that these pro-corporate outlets are perfectly happy to let Wall Street greed run rampant -- there’s another point to be made. Other than the typical “taxpayers shouldn’t be on the hook” cliches, there is no recognition of the human suffering created by the financial-political corporatocracy of which JPMC is a huge part. In the eyes of the anti-regulation crowd, this is a partisan game they don’t want to lose and a get-rich-quick scheme they don’t want to see vanish.
On the other hand, there was no shortage of voices calling for increased regulation, which is as unsurprising as neighbors watching a house burn and wishing they had invested in a fire department, or residents of River City calling for a moratorium on band instrument sales. Much of the analysis was quite good, from Paul Krugman’s op-ed on the historical context of regulation, to the Financial Times’ editorial board, which argued, “[u]ntil banks become more like utilities – predictable businesses with low, stable returns – regular wipeouts of profits will be the rule.” Particularly good were the few pieces which acknowledged the existence of Occupy Wall Street. Felix Salmon gave props to Occupy the SEC, which has been demanding a stronger (much stronger) Volcker rule for months. Eliot Spitzer suggested persuasively that Occupy should hold protests calling for Jamie Dimon’s removal from the board of the New York Federal Reserve Bank, which is tasked with overseeing banks like JPMC. Spitzer writes,
“The Fed conflict is so obvious that it defies any possible rationalization or explanation. For a decade, the New York Fed has failed to pick up on any of the significant Wall Street threats: excess leverage, subprime fraud, dangerous concentration in “too big to fail” entities. Maybe the reason is that the board is controlled by the very voices that have been at the root of the failure.”
Elizabeth Warren joined Spitzer in calling for Dimon's ouster, saying, "[w]e have to say as a country, no, the banks cannot regulate themselves." These posts are worth singling out not simply because they mention Occupy, but because of the capability that Occupy has to draw connections between seemingly disparate issues. Both the New York Times and Washington Post wrote fine editorials -- although, again, this is a pretty easy time to Get Tough on banks -- but a passionate call for increased regulation doesn’t tell the whole story unless you talk about the ever-increasing wealth gap, and decreasing taxes for the rich, and super PACs, and corporate control of the media.
JPMorgan Chase has only become as wealthy and powerful as it is because of 30 years of deregulation, for which both parties are responsible. Dismantling any semblance of oversight resulted in a massive feedback loop, wherein financial elites became more powerful, political elites became more indebted to them, and the revolving door between the public and private sectors has virtually eliminated any distinction between the two worlds at all. Prior to the $2bn loss, lobbyists (with the help of Congress and the White House) were effectively killing Dodd-Frank, while the corporate media stayed largely silent. The New York Times, for instance, only mentioned the Volcker Rule 22 times from December 2011 to early May.
None of the reports I read talked about Attorney General Eric Schneiderman's economic task force either. That's not to say the JPMC bet was illegal, but one of the reasons no bankers have gone to jail after blowing up the economy is because of the massive amount of money Candidate Obama received from the financial sector during his first run, and continued to raise well into his first term. If we're to fully understand the importance of regulating Wall Street, we must also understand who is standing in the way of a full criminal investigation into the housing crash.
The point is not that any one editorial can touch on everything. The point is that there is a structural failing in our media landscape where environmental issues, and stop and frisk, and regulation and housing insecurity, are all treated as separate items. That’s what was so thrilling about the beginning of Occupy -- all these calls for social justice could be connected through the prism of 30 years of wealth centralization among the now-entrenched American plutocracy.
Corporate media is simply not capable of connecting these dots on their own, no matter how fantastic any individual story or editorial is. The fracturing of like-minded causes renders each weaker than the collective could be. As a result, the primary cause of injustice – the increasing centralization of wealth – remains mystified.
It’s good that in the wake of the largest loss since the beginning of the Lesser Depression not everyone is rushing to defend bankers. But simply calling for a stronger Volcker rule is not enough. We need to highlight the connections and common threads between the numerous threats to human survival or human dignity. To do that, media outlets must move beyond a partisan mindset, wherein all that is possible (or even discussed) are the topics the parties put forward, each subject removed from the other, like a carved up elephant only those in the streets can identify.