BILL MOYERS: Government will be lazy, and everybody else will...
WILLIAM GREIDER: Will fair badly.
BILL MOYERS: Right. Right.
WILLIAM GREIDER: Well, yeah, and Democrats, not all of them, but in many ways-
BILL MOYERS: Not all Republicans, either.
WILLIAM GREIDER: Nor all Republicans, but both parties, on the whole, bought into this. And we- no need to question their sincerity. They bought into it. You might observe, in passing, that it also matched the desires of their patrons.
BILL MOYERS: Well-
WILLIAM GREIDER: Who were the big financial contributors to their campaigns. But even leaving that aside, this logic was, you know, compelling to lots of people. Some of us are, were sort of bag ladies on the street corner, waving our placards, "No, no, no, don't do this."
BILL MOYERS: As I listen to Secretary Geithner, I heard him say, well, Treasury's going be a tough cop on the beat. We're not just turning to the Fed. We're going to make this Treasury Department a champion of the people's interest, of the public interest. And we're going be a really tough cop on the beat. Do you believe him?
WILLIAM GREIDER: Unfortunately, Secretary Geithner, has a record- which we know about. When he was President of the New York Federal Reserve Bank. And he was at the table, in many of the bailout transactions. First Bear Stearns then A.I.G. and others. And this is, again, not my opinion, but people on Wall Street talk about it all the time. He got spun around again and again by the big Wall Street players. The bailout of Bear Stearns was really about protecting J.P. Morgan Chase.
The story was told backwards in the press, basically, because it's a story the government told that J.P. Morgan came in to buy Bear Stearns at the behest of the government. But in fact, if Bear Stearns had gone down, J.P. Morgan Chase was vulnerable itself to a wave of derivative crashing crisis. When they bailed out A.I.G., the chief executive of Goldman Sachs was in the room. Why was he in the room? Well, because he had big exposure to- through derivatives, to A.I.G. So, when they pump money into A.I.G., it sends the same dollars out and buys back these derivative contracts at par value, not even discounted, to the banks and others who hold them. Goldman Sachs gets $12 billion out of that transaction. This is another scandal waiting to surface. And I trust good, smart reporters are already on the case. And following the dollars that moved around among the leading financial institutions in ways that politicians could not have not known about it. It defies reason to think that Washington didn't know this was happening.
* * *
BILL MOYERS: What do ordinary citizens do about this? How do they break this grip that money has- the patrons have on the politicians?
WILLIAM GREIDER: They trust themselves. I read a wonderful book about the Civil Rights Movement and SNCC and others in the South, in Mississippi, the most treacherous, backward place you could go, bring the issue of racial equality.* And they said the organizers first goal was to learn to listen to these people, that they were poor blacks in Mississippi. The second goal was to convince themselves and these poor people to act like citizens even if- even though they knew they weren't citizens. And you think about that. That's kind of the mystery of democracy. People get power if they believe they're entitled to power.
* * *
BILL MOYERS: I hear that. But I also read your piece on "The Washington Post" last Sunday, in which you wrote, "Obama told us to speak out. But is he listening?" You ask. Well, is he?
WILLIAM GREIDER: I think he's... And I've been very enthusiastic about his opening as President. He did the stimulus package and a number of other things that's fulfilling his promise. On this, he does seem absolutely committed to restoration of the old order. There's no other way to say it. And this- these things Secretary Geithner is saying this week and others have been putting out, all confirm that.
I think that's A) a huge mistake, financially. I don't- because I think these things are not going to work. And will, in fact, blow up in his face. Maybe a month from now. Or maybe six months, I don't know. But the handing out of government guarantees and capital to hedge funds and private equity funds. Financial institutions founded on secrecy, by the way. They're don't even pretend to be transparent. They're closed shops. Hands out that money, and then somewhere down the road people are going to learn that the investors, so called, are reaping 20 double digit returns on this money with almost no risk at all to themselves. And whether that works or not, people will be outraged. Again, as the returns come in. And I think should be. And outrage right now might just get the Congress to slow down a bit, calm down, we want reform, but we want it done right. And we want it done for the public interest, not for the old order.
BILL MOYERS: So, Obama, this week, has opened the hotline, one might say, the online hotline, to the White House. And said, give me your questions and we'll answer them. As of now over 100 thousand people have responded. Do you take that as an indication of what?
WILLIAM GREIDER: Popular anger.
BILL MOYERS: Popular anger?
WILLIAM GREIDER: Yeah. People get confused about this. Americans overwhelmingly want our President to succeed. And so do I. But that's not- the nature, is not, of democracy, authentically, is not simply supporting from the bleachers, and saying, gee, we hope you win the game. It's being on the field, engaged in whatever small or large way is possible. And expecting those elected representatives, including the President, to at least hear what you're saying, and if, and rightly, responding to it in some ways. That's the dynamic of a democratic society. And we know everybody knows in this country that this has now been, for some years not exclusively, but mainly a top down society. And you go into workplaces and hear the same things said as you hear about politics. Well, I know what's wrong here, but they won't listen to me. I don't have any voice in the matter. Or investors, small investors, putting their money in mutual funds. Well, they're not listening to me. Look who they're giving this money to. You know, you can go on and on. And that's what democracy is- would break.
BILL MOYERS: And I know that one of your deep concerns about the Fed, turning so much power over to the Fed, is that it is cozy with the big institutions. And that the smaller, entrepreneurial organizations and businesses that do not have access to the inner circle are excluded.
WILLIAM GREIDER: President Obama and if the Democratic leaders in Congress follow along, he'll put the Democratic Party on the wrong side of history. At this critical moment. What we ought to be seeking, the goal of reform, and government aid, is creating a new financial and banking system, of many more, thousands more, smaller, more diverse, regionally dispersed banks and investment firms. That's first obligation is to serve the economy and serve society. Not the other way around. What the administration's approach may be doing is consecrating too big to fail, for starters. Which, of course, everybody in government denied was the policy until the moment arrived. And secondly, and this will sound extreme to some people, but I came to it reluctantly. I fear what they're doing, not intentionally, but in their design is setting the crown for a corporate state.
BILL MOYERS: A corporate state?
WILLIAM GREIDER: A corporate state. And by that I mean a rather small but very powerful circle of financial institutions the old Wall Street banks, famous names. But also some industrial corporations that bought banks. Or General Electric, which is already half of big financial capital, GE Capital. And that circle will be our new Wall Street club. Too big to fail. Yes, watched closely by the Federal Reserve and others in government, but also protected by them. And that's a really insidious departure. To admit that and put it into law. And then think of all those thousands of smaller banks. How are they going to perform against these behemoths that have an inside track to the government spigot? And for just ordinary enterprise in general? Before you even get to the citizens. How are citizens supposed to feel about that? And I-- my point is, in this situation, with if the leading banks and corporations are sort of at the trough, ahead of everybody else in Washington, they will have the means to monopolize democracy. And I mean that literally. Some of my friends would say, hey, that already happened.
BILL MOYERS: Yeah, the corporate state is here.
WILLIAM GREIDER: The corporate state is here. And I'd say, let's not argue over that. The fact is, if the Congress goes down the road I see them going down, they will institutionalize the corporate state in a way that will be severely damaging to any possibility of restoring democracy. And I want people to grab their pitch forks, yes, and be unruly. Get in the streets. Be as noisy and as nonviolently provocative as you can be. And stop the politicians from going down that road. And let me add a lot of politicians need that to be able to stand up. Our President needs that to be able to stand up.
As I suggested at the top, I'm not really sure that Greider gets it at a fundamental level. He really sees the Fed as a potential regulatory body, able to step in to form balance between banking and the rest of us. That's not true, unfortunately. The Fed is a private organization with quasi-governmental privileges. Whether regulation is a good idea or not, the Fed will "regulate" the only way it ever has -- by inflating and shifting the benefits of that largesse only to those first in line. And by that I mean the 20-or-so-odd banks that have access to the discount window and other Fed perks.
But I come to praise, not to criticize, so I'll end by saying that Greider really nails the whole concept of the corporate state, of the Oligarchy forming. Of the role and power of the Insiders. Every voice in the mainstream or semi-mainstream that talks about this stuff is a good thing.