In the strange politics of 2012, the strangest wrinkle may be the growing convergence between high-powered establishment financiers and Occupy Wall Street. Earlier this week there was a convocation of bankers, lawyers, academics and financial leaders in the august halls of a major Manhattan law firm. Its central purpose was to examine federal regulatory responses to the Great Financial Meltdown.
What emerged was a cri de coeur about the future of the American economy. Its central thesis was that the concentration of wealth and power in the hands of the top 1% (of banks) was a danger to the other 99% (of banks), to our economy, our liberty and our democratic values. I expected to hear this at Zuccotti Park. It was a genuine surprise to hear it on 5th Avenue.
The group that met was made up of very smart people, with a variety of social and political views. Among of string of piercing presentations, two stood out. First, Henry Kaufman, the storied "Dr. Doom" of years past, who made an international reputation predicting interest rate shifts and the economic realities behind them. He laid out how mega-banks:
- Restrict capital from getting to small business
- Encourage market manipulation and rapid shifts on interest rates by decreasing the number of market participants
- Concentrate political power as well as wealth, and provoke government into massive and unworkable regulatory schemes
Next, Ira Millstein, the diffident gray-eminence of anti-trust law and corporate governance who has engineered reforms at places like General Motors and New York's MTA, subtly skewered Dodd-Frank and increasing federal regulation of banks. His skepticism comes not from the scripted anti-government perspective of the Tea Party and Mitt Romney, but because such regulation is doomed to fail. The answer: An anti-tust analysis of the mega-financial conglomerates.
Without ever saying so, both Kaufman and Millstein were calling for a reinstatement of Glass-Steagall, the New Deal restriction against financial conglomerates repealed by Bill Clinton. Repealing Glass-Steagall created mega conglomerates which include insurance, investment banking and related functions, and which decreased competition in the banking sector. Breaking up these mega conglomerates allows a market-based solution that restricts the power of the huge players who currently control our financial lives. Both were skeptical that it would ever happen.
Having spent considerable time around and about Occupy Wall Street, the ironies of the Kaufman's and Millstein's concerns struck me as considerable. While the social perspectives and life experiences could not be more divergent, their conclusions were precisely the same as OWS. The great danger to American prosperity, to American values, to average people is the result of the huge concentration of money and power that have been the "hallmark of the American economy" for over thirty years.
The convergence of these ideas is an enormously important phenomenon. Even as concentrated power increases, and as almost all Republicans and most Democrats enable it, the populace is becoming increasingly restless and counter-forces are bestirring themselves. It may be incongruous to think of Kaufman and Millstein drumming on the steps of Zuccotti Park, but drumming they are. The folks who are starting to hear the drumming are now the financial academic and legal elite of the business community.