The Great American Swindle
Confidence Men: Wall Street, Washington, and the Education of a President
It’s rare to see an individual who dedicated his life to a celebrated calling come to the brink of rejecting everything he once accomplished. But that is what a titan of finance—in both a metaphorical and physical sense—almost did in the twilight of a vaunted career. Paul Volcker briefly asks himself what the hell he’d done for the last half century.
“It always used to bother me—not so much anymore, but for a long time—how I spent all my life in government, doing things that were so intangible. What’s there to show for it, what’s left behind? I always wanted to build something in my life. All I did was stop inflation,” the former Federal Reserve chairman laments to journalist Ron Suskind. Confidence Men: Wall Street, Washington, and the Education of a President is Suskind’s take on President Barack Obama’s first two years of trepidation and disappointment. If there’s one nugget of wisdom to pry away from a book that, beyond its journalistic meat, is a tale of where an advanced society went astray, it’s that the world of finance is a pernicious and somewhat incomprehensible illusion that should never have devoured our economy, if the right people were listened to. The brightest minds of our generation were not destroyed by Allen Ginsberg’s madness; greed simply soiled them.
What has the last 30 years done to our country? Confidence Men draws its power through that question, one that is finally being asked on a mass scale through the Occupy Wall Street demonstrations. It’s a shame Confidence Men missed out on the left’s second act. Or didn’t give the Tea Party near the time it deserved. One movement may be more astroturf than grassroots, but they both have arisen from a deep wellspring of popular rage aimed at the inequality that was promised to be erased in America long ago.
Suskind’s book is as much about Wall Street as Washington. Reviews have focused on how Obama is depicted as a bright man in over his head, vacillating and professorial when he should’ve been channeling his inner F.D.R., J.F.K., or even L.B.J. That’s true. And a good chunk of Confidence Men is dedicated to rightfully attacking Lawrence Summers, the cocksure former Treasury secretary and Harvard president who was right about far less than Paul Volcker, his nobler predecessor.
Summers, like current treasury secretary Timothy Geithner, worships at the altar of the unfettered market. As we already knew but learn in greater detail through Suskind, Summers had the president’s ear for a long time. Rather than follow Volcker, Joseph Stiglitz, Paul Krugman, or Austan Goolsbee, Obama went with a “B team” of Rahm Emanuel, Geithner, and Summers, thus allowing them to manipulate the fresh-faced president—at least, this is Suskind’s thesis, anyway. This may be an exaggeration. Just because you interview someone that says something happened at some point somewhere doesn’t make it true, though Suskind does seem to be doing his best to verify the spin of his sources.
The strength of any piece of writing lies in its ability to conjure a concrete image in the head of the reader. Limpid writing dulls the heart and allows the mind to wander. Suskind gives us the short story of Dennis Levine, a once dynamic Wall Streeter convicted of insider trading and various securities frauds. He was imprisoned by the late 1980s. Edward Markey, another voice Obama ignored, is a Massachusetts representative that chaired the House Subcommittee on Telecommunications and Finance from 1987 to 1995; Markey is one of the politicians who tried to regulate financial derivatives—agreements between two entities that depend on something that occurs in the future, like the performance of an underlying asset—before they had appeared on any regulator’s radar.
Markey, in an attempt to introduce the doomed Derivatives Market Reform Act of 1994, sought Levine so he could find out more about the culture of Wall Street and what could be done to rein in its sudden excesses. Levine, now in prison blues instead of opulent suits, told Markey (who tells Suskind), “You need to send out a slew of indictments, all at once, and at three p.m. on a sunny day, have Federal Marshals perp-walk 300 Wall Street executives out of their offices in handcuffs and out on the street, with lots of cameras rolling. Everyone else would say, ‘If that happened to me, my mother would be so ashamed.’ ”
Levine’s advice was never heeded in any meaningful way. The casino lives on. Barring Michigan Senator Carl Levin’s he-had-it-coming public excoriation of Lloyd Blankfein, chairman and C.E.O. of Goldman Sachs, the rich continue to grow richer, or stay rich, and the impoverished wage a losing war against governmental inaction and austerity. Henry David Thoreau pleaded in “Resistance to Civil Government,” “I ask for, not at once no government, but at once a better government.” What most pundits seem to miss about the Occupy protests is that the great majority of those taking to the streets in Thoreauian fashion are not asking for the abolishment of government or the ascent of Communism, but simply a better government, one that is inherently fair, strong-willed, and not willfully beholden to corporate power. Thankfully, Suskind does not only lay the blame for our economic implosion on Obama or that ghost the G.O.P. dare not speak of anymore, George W. Bush. Bill Clinton dismantled the Glass-Steagall Act, allowing savings banks to operate like commercial banks, thus paving the way for the bubble trouble of the 2000s. Ronald Reagan, aided by former Federal Reserve chairman Alan Greenspan, did nothing to regulate the destructive derivatives market or rein in a financial sector that treated billions of dollars like shiny poker chips. Greenspan himself, raised at Ayn Rand’s knee, was an architect of the subprime mortgage crisis.
As a reporter for the Queens Tribune, I’ve written about the opening of New York City’s first casino, Resorts World Casino New York City, at the Aqueduct Racetrack in Queens. Politicians have prepared endless encomiums for the casino’s arrival, parroting specious claims made by Resorts World’s public relations team that the casino will be a universal good for the community. It may do more good than harm—the truth is we just don’t know yet. But the mere fact that local councilmen and assemblymen seemed to be tripping over each other to praise Resorts World Casino New York City president Michael Speller was indicative to me of the same zeitgeist shift that Suskind recounted in Confidence Men. In this America, it’s more than okay to hunt for shortcuts and bank on a jackpot at the expense of everything else; that’s just sound business practice, according to the men (yes, they are almost exclusively men) of the Street. What else is Wall Street, as observers have noted repeatedly, but a monstrous casino, a matrix of absurd and byzantine bets in which massive losses don’t devastate individuals, but whole economies? Casinos were once a political non-starter in New York City. Now we have one, ready to prey on ignorance and desperation like an investment bank dangling another unaffordable home loan in front of an unwitting family. Come play, worry later could be a nice, neat maxim for the last three decades.
And when a man of finance begins to pull his head out from the shroud and look into the light, he understands that manipulating funds you never hold in your hands is not like laying the foundations for a suspension bridge, or penning a novel, or curing a dreaded disease.
It is manipulation, nothing more.