Issues related to high finance and the banking industry were never something I had spent a lot of time focusing on, but last September's financial collapse was a moment not unlike 9/11 and national security: suddenly it became really obvious to all people who care about their country that it was essential to understand and start being involved in the issue.
I approached it from my perspective as a political strategist, and it was extremely clear that while some complicated economic issues were involved, the financial crisis was, at heart, a crisis of politics. Wall Street had gotten way too powerful and politicians were letting them have their way with us. Any private business that is "too big to fail" economically also holds an enormous amount of weight politically, and that political weight is at the heart of the problem.
What's important to remember is that the power of these huge financial institutions takes of many forms. Progressives are keenly aware of all the political contributions the financial industry makes and the well-connected lobbyists they employ. That kind of power is certainly important, especially on Capitol Hill where members have to spend practically every day dialing for dollars to pay for absurdly expensive campaigns. But we need to be careful not to focus on only that kind of power when trying to decide how to win back out democracy from the financial industry.
When you have the kind of size that the institutions behemoths do, your power stretches far beyond campaign contributions.
-- Bond traders have a huge amount to say about whether interest rates are lowered and raised.
-- Stock speculators and investment banks can literally destroy companies overnight by combining to drive their stocks downward.
-- Many in the media make snap judgments over how successful a presidential initiative on the economy is based on whether the stock rises or falls immediately following a new policy announcement.
-- Perhaps most importantly, there's this free market, what's good for Wall Street is good for America mentality that has been bought into by many Democrats and pretty much all Republicans.
And then, of course, there's the whole "too big to fail" dynamic in and of itself. As we have just seen in the last eight months, if one of these giant companies is struggling -- even when it is due to their own bad decisions -- they can run to the government and say "give us all kinds of bailouts and tax breaks and special privileges, or else we will fail and destroy the entire economy"
There is nothing more important to the long term political and economic health of our country than lessening the power and the size of the massive financial conglomerates on Wall Street. They have already destroyed our economy, and will again if we don't solve this problem. They are also the biggest single danger to our democracy.