How Bankers Have Controlled US Politics

Print Friendly

Above: Left J.P. Morgan from unknown source; right Jamie Dimon from TOMOHIRO OHSUMI/BLOOMBERG

From J.P. Morgan to Jamie Dimon

The inside story of how banks and bankers control our politics

New York is a wonderful town — if you run a mega bank. Because for over a century, the Big Six banks and their leaders have dominated not just the U.S. banking industry, but American and global finance, traversing the power corridor between the White House and Wall Street to help themselves, their families and their friends in good times and bad, in partnership with the President.

But in the process of placing personal enrichment over the public interest and fair practices, particularly in recent years, they have created an atmosphere where the next big crisis is not a question of if, but of when. History has shown that absent true reform, those holding the power and the money can and will wreak havoc on the rest of the population.

For the first 80 years of the 20th century, four families largely controlled the nation’s top three banks: Morgan, Aldrich, Stillman and Rockefeller. National, financial and foreign policy was fashioned through personal connections to the Presidents — forged through blood, marriage, mentorships and connections made at Ivy League colleges, and through social activities like yachting, golfing, ranch barbeques and exclusive parties and clubs.

In October 1907, Manhattan was struck by a major bank panic. People from Fifth Ave. to Harlem rushed to extract their money from the Knickerbocker Trust Company because one of its leaders had made a horrendous bet on copper, which precipitated a wider panic. A fear of greater ramifications caused the “Trust-Buster,” President Teddy Roosevelt, to turn to the one man he believed could help — a banker, J.P. Morgan.

At midnight, Morgan and his entourage gathered at the Hotel Manhattan. With $25 million from the government to utilize as he saw fit, Morgan directed his financial friends to back the Trust Company of America, the “Too Big to Fail” firm of the time, embraced by the government and finance men who decided which banks lived and died — not the Knickerbocker Trust Company. President Roosevelt sat in Washington awaiting the results.

At 1 a.m., Frank Vanderlip, vice president of National City Bank (now Citigroup), informed reporters in the lobby that all would be well. And it was. New York papers sung Morgan’s praises. He had “saved” the city, the country. He was dubbed a “king.” The press omitted that he did it without dropping a dime of his own money.

Fast-forward through WWI and years of speculative buying and shady scams, and the stock market stood poised for collapse. In October 1929, it did.

Another meeting was called. The Big Six bankers gathered at the House of Morgan on 23 Wall Street before Thomas Lamont, acting Morgan Chairman. At his table were five other bankers: from National City Bank and First National Bank (both now part of Citigroup), from Morgan Guaranty and Chase (which, along with the Morgan Bank, became part of JPM Chase), and from Bankers Trust (which was controlled by the Morgan Bank). President Hoover sat in Washington awaiting the results.

The men hashed out a plan to boost the markets using their firms’ (or customers’) money. Each banker agreed to pony up $25 million. The stock-buying began. The mood and the markets were lifted. The media exalted. Nonetheless, over the next three years, the market lost most of its value, and a Great Depression ensued, crushing citizens.

Yet the Big Six survived, devouring thousands of smaller banks that failed.

Today’s Big Six banks are largely combinations (with additional members thrown in the mix) of the same Big Six banks that thrived through the Panic of 1907, Crash of 1929, WWII, the Bay of Pigs, the 1990s merger mania, and the recent financial crisis of 2008.

They now hold $9.4 trillion, or 84%, of U.S. FDIC-insured deposits, $12.5 trillion, or 85%, of all U.S. bank assets — and control 96% of all U.S., and 43% of the $693 trillion of global derivatives positions.

For the last 100 years, their leaders have collaborated with willing Presidents to run America. Given current global financial complexity, the Big Six chairmen have more economic control than Presidents, governments or central banks. We don’t elect them, but we do keep our money with them. We shoulder the cost of the risks they take.

With so much power in the hands of an elite few, America operates more as a plutocracy on behalf of the upper caste than a democracy or a republic. Voters are caught in the crossfire of two political parties vying to run Washington in a manner that benefits the banking caste, regardless of whether a Democrat or Republican is sitting in the Oval. Meanwhile, American inequality is reaching pre-1929 heights.

Mitigating the big banks’ power requires, at long last, breaking them up in such a manner as to split our deposits and taxpayers dollars from their speculative activities — by finally reinstituting the Glass-Steagall act of 1933.

In addition, we need to instill deposit and assets limits on these monstrosities to reduce the amount of control they have over America’s money. We need Congress to wake up to the looming mega-crisis around the corner that will happen without serious reform.

And, not least, we need a President who will get out of the bankers’ bed.

Prins, former managing director at Goldman Sachs, ran the international analytics group at Bear Stearns in London. She is author of the new book, “All the Presidents’ Bankers,” and a senior fellow at Demos, a think tank.

Read more: http://www.nydailynews.com/opinion/p-morgan-jamie-dimon-article-1.1752593#ixzz2ymwRFfT7

  • DHFabian

    I wonder how much of a role they (the richest few) have played in determining our public media — what is covered, and how it is covered. We do know it has played a powerful role in promoting an anti-New Deal/Great Society agenda, which has been tremendously important to the upward wealth redistribution agenda. This generation has been “re-taught” to view the hell of poverty as a mere “lifestyle choice,” or simply irrelevant. Even the media of the “left,” if addressing income inequality at all, consider ONLY the inequality in wages of workers. Not everyone can work, and we have a significant shortage of jobs. A huge chunk of our working class jobs were shipped out since the 1980s. We don’t know how many people have simply been left behind, with no means of providing for themselves. Low wage workers are a single job loss from losing everything, with no way back up. Middle classers can’t seem to grasp that once you no longer have a home address, phone, bus fare, you can’t get a job. Media won’t touch the issue of what we need to do about all those who have no way to provide for themselves.

    • http://batman-news.com MechyTechy

      I’ve been hoping that the general public will become a lot more involved in the next electorial cycle. It is depressing to me that everyone does not realize the hazards involved in allowing politicians to provide the answers to the many challenges we face, and, to define the issues as well as priorities.
      I would like to see the public define the issues, the preferred and uncompromised solutions to our problems, and set the priorities for the order in which to address them.
      It’s what the boss would do in a successful operation. I think the public should be the boss in a country founded on the principle that the government was to be by, for, and of, the people. It is (past) time to act to make good on that constitutional guarantee.
      Going into the next presidential election it appears that Mrs. Clinton is likely to be the democratic candidate. I can’t see any chance that the country would benefit from that. We have already experienced the Clinton team. NAFTA is one of the results. We need a leader who will not commit the country to more trade agreements. We need to get back the jobs lost to NAFTA.
      The public should insist that no candidate for public office be considered until they have willingly signed a contract to act only in the public interest in the event that they are elected. I don’t see Hilary as being the person to insure the immediate passage of an amendment to the constitution which specifies that only flesh and blood human beings are persons under the law. Which is of course the overriding issue which every single one of our legislators should be working on as hard and fast as possible right now.

    • http://www.JimLynchPhotography.com/ oldbimmercoupe

      6 corporations control all USA media.

  • http://batman-news.com MechyTechy

    The first thing that I would like to say: my hearfelt thanks to the author, Nomi Prins! Thank you, for creating and posting an article that makes sense and includes some specific information and suggestions which everyone should be able to grasp.
    It is my hope that this will open a reasonable and productive discussion within the comments.
    Earlier, I thought that I might have the opportunity to submit the first comment. At the time I was involved in helping a friend with a severe toothache locate a local dentist who would be willing to assist an employee of Walmart (who is a Department Manager and has been employeed there for a couple of years) with emergency treatment, despite the fact that he has no medical/dental benefits, no credit cards, little cash, and is almost out of time on his cellphone. A former member of the American Middle Class and a Vietnam Era Veteran . . . Now one of many victims of the mismanagement of the U.S. economy who can attest to the fact that “our” government helps and serves the wrong people. Not surprising, considering that we now have a government that has publicy proclaimed its confusion as what “people” are or might be.

  • Pingback: Fighting For A Legitimate Democracy, By And For The People | PopularResistance.Org