The Grapes of Wrath, John Steinbeck’s brilliant novel about the Great Depression, should be required reading for anyone hoping to understand our current economic crisis. Although it lacks the complexity of the novel, the movie adaptation by John Ford is a classic in its own right. Ford was able to distill Steinbeck’s message in any number of finely honed scenes. One of my favorites is the scene where Muley and his son try to understand how their family can be evicted from the land they have farmed for three generations.
MULEY: You mean get off my own land?
THE MAN: Now don’t go blaming me. It ain’t my fault.
MULEY’S SON: Whose fault is it?
THE MAN: You know who owns the land — the Shawnee Land and Cattle Company.
MULEY: Who’s the Shawnee Land and Cattle Comp’ny?
THE MAN: It ain’t nobody. It’s a company.
SON: They got a pres’dent, ain’t they? They got somebody that knows what a shotgun’s for, ain’t they?
THE MAN: But it ain’t his fault, because the bank tells him what to do.
SON: All right. Where’s the bank?
THE MAN: Tulsa. But what’s the use of picking on him? He ain’t anything but the manager, and half crazy hisself, trying to keep up with his orders from the east!
MULEY: (bewildered) Then who do we shoot?
As the CEO’s of corporations, banks, and insurance companies march, one by one, before Congressional committees, average Americans are asking the same question- Who is to blame? Politicians, seeing an opportunity to score political points, are falling all over each other to demonstrate their outrage. Republican Senator Charles Grassley has gone so far as to suggest the executives at AIG “either resign or commit suicide.” Today he backtracked to say that he only meant it “rhetorically.” But that is the problem. Politicians are all about rhetoric rather than action.
So, what about Muley’s question? Whose fault is it? Who is to blame? I suppose we can say Wall Street and the financiers are to blame. But honestly, what did we expect? By their very nature they are all about maximizing profit. They were just doing what they received those outrageous salaries and bonuses to do.
To me the answer is obvious. The fault lies with those who worship at the alter of the free market. The Libertarians and “take a bite out of government” ideologues who view government as the enemy are to blame for our current crisis. And, of course, those very politicians who are crying the loudest now are responsible for the orgy of deregulation that has been their guiding idea since the days of Reaganomics.
A perfect example is Idaho’s senior senator, Mike Crapo. Senator Crapo has been positioning himself as “shocked” by the excesses while, at the same time, co-sponsoring with Senator Christopher Dodd the “Depositor Protection Act of 2009” that will provide FDIC insurance to those companies “too big to fail.” What Crapo never mentions is that, as a member of the Senate Committee on Banking, Housing, and Urban Affairs he has led the fight to deregulate the financial industry.
According to the nonpartisan Center for Responsive Politics
The last time Congress seriously debated how to regulate the financial industry, the result was legislation that allowed the nation’s largest banks to get even larger and take risks that had been prohibited since the Great Depression. A look back at that debate, which was over the 1999 Financial Services Modernization Act, reveals that campaign contributions may have influenced the votes of politicians who, a decade later, are now grappling with the implosion of the giant banks they helped to foster. Those members of Congress who supported lifting Depression-era restrictions on commercial banks, investment banks and insurance companies received more than twice as much money from those interests than did those lawmakers who opposed the measure.
Until the U.S. government threw a taxpayer-funded lifeline to Wall Street banks drowning in a sea of bad debt, the potential for these financial giants to go under had been dismissed. The banks were “too big too fail.” It was the 1999 legislation, commonly referred to as Gramm-Leach-Bliley (for its sponsors’ names), that cleared the way for these companies to grow so large.
Not only did Crapo vote for Gramm-Latch-Bliley, he joined Phil Gramm in fighting for it in committee and on the Senate floor. His efforts to deregulate the financial industry didn’t end there. As recently as 2006 Crapo was leading efforts to provide even more “regulatory relief” through the “Financial Services Regulatory Relief Act of 2006.” Crapo said on the floor of the Senate in support of the bill,
After many months of negotiations and discussion with regulators, industry, consumer groups and other interested parties, we now have a bill before us that will provide important regulatory relief for financial institutions.
So, more than most politicians, Crapo is responsible for the current crisis. More than most, Crapo is to blame. Not only does he refuse to accept blame, he now would have us believe it is finally time to consider the question of whether there are some corporations “too big to fail” and to trust him to lead the discussion.
I can think of five good reasons not to trust him. Here are Crapo’s top five contributors during his last decade in the Senate.
- Citigroup Inc
- JPMorgan Chase & Co
- Goldman Sachs
- Credit Suisse Group
- Securities Industry & Financial Mkt Assn
I am guessing Crapo believes all five are/were too big to fail.