The 2008 financial crisis cost the US $12.8 trillion of GDP, at least $2 trillion in tax revenues, and destroyed the financial lives of hundreds of thousands of families. Literally hundreds of thousands of people have lost their homes as a result of credit default swaps. Every single item on the social justice agenda lost years of progress in an instant in a crisis that was not only foreseeable, but preventable. The economy is still in a crisis-generated tailspin.
The Too Big To Fail institutions that caused the crisis are even bigger now than they were before, and zero prosecutions show they are not only TBTF they are also Too Big To Prosecute.
To add insult to injury the damn bankers insist they paid the money back!
Regulation designed to mitigate the risk of TBTF institutions is inadequate as written and it is weakened as it is implemented. The agencies responsible for overseeing financial institutions are grossly under-funded and will remain so. A future bailout is less an ‘if’ than a ‘when’.
After the financial crisis, the founder of the Agenda Project worked with Dr. Rob Johnson and the Roosevelt Institute to create “Make Markets Be Markets”: a volume, conference and influencer marketing project designed to highlight the most critical areas of financial reform.
MMBM included a written volume with chapters on derivatives, resolution authority, the Consumer Financial Protection Agency, Glass Steagall, securitization, off-balance sheet accounting, eliminating Fannie and Freddie, and the credit rating agencies among others. Writers for the volume included: now Senator Elizabeth Warren, former Chief Accountant of the SEC Lynn Turner, former deputy director of the CFTC Michael Greenberger, former Chief Economist of the IMF Simon Johnson, and other distinguished thinkers. In addition to the printed volume, we produced a conference at which each writer presented their chapter. The conference included an in-depth discussion with panelists George Soros, Joseph Stiglitz, and Jim Chanos. Each presentation was filmed and posted on the website http://makemarketsbemarkets.org. The conference was streamed live by CNN.com.
Once the intellectual work of the volume and the conference were complete, the Agenda Project took over the public advocacy effort. We recruited a few dozens of the country’s leading financial sector and economic experts to sign a letter which said:
Nineteen months after the most devastating financial crisis since the Great Depression, our financial system remains at risks. Neither the bill passed earlier this year by the House, nor the one currently under consideration in the Senate would have prevented the crisis. Without serious restructuring they will not prevent a future crisis.
The letter went on to detail 8 critical failures of the proposed financial regulation. We put the letter on a website www.agendaproject.org/financialmarkets and sent a press release to our media contacts. The letter became the basis of a 7-minute Today Show story. The segment featured three thinkers, all of them had spoken at the conference and two of them were chapter writers.
BEATING THE DRUM (and JAMIE DIMON)
In the summer of 2012, JP Morgan suffered a $6 billion loss on a single trade by the so-called London Whale. Morgan CEO Jamie Dimon was personally responsible for the firm’s risk management systems during the time of this trade. Dimon also sits on the Board of Directors of the Federal Reserve Bank of New York, the entity responsible for overseeing the financial sector including of course JP Morgan.
What’s bad for Jamie Dimon can be very good for financial reform. We recruited Dr. Simon Johnson, former Chief Economic of the International Monetary Fund, to author a petition on Change.org calling for Dimon’s resignation from the Federal Reserve Bank. We coordinated all of Simon’s messaging, outreach, and PR. The petition received more than 41,000 signatures and was picked up in Forbes, New York Magazine, CBSNews, The New York Times, Bloomberg, and U.S. News and World Report. The petition caused such uproar that the Federal Reserve Bank of New York took a meeting with Simon Johnson to quell the outcry.
Lee Bollinger, President of Columbia, decided to publicly defend Dimon’s position on the New York Fed. So we reached out to Columbia University students, alumni, and faculty, to let them know that Bollinger had taken a $500,000 contribution to Columbia University from JPMorgan Chase. Several prominent faculty issued a public letter demanding Bollinger withdraw his support of Dimon. Columbia University signers included: Marcellus Andrews, Professor of Economics;John Atlas, President of the National Institute; William Hartung, Director at Center for International Policy; Carolyn Douglas,Associate Professor of Psychiatry; Frederick Neuhouser, Professor of Philosophy; and Eric Schoenberg, Professor of Economics (and Patriotic Millionaire).
The letter was picked up in a lengthy article in Bloomberg, which reported on both the impact to Bollinger and the swelling support for Simon Johnson’s petition. It was also reported in Business Week and the Guardian. We were now fighting the battle on multiple fronts. So we took it a step further.
We called in the Top Wonks. We recruited about 25 economic experts to sign a letter to Federal Reserve Chairman Ben Bernanke and members of the Federal Reserve warning that Dimon’s position on the board was a conflict of interest.
And when Jamie Dimon, after a mountain of bad press, was forced to appear before the House and Senate to testify about his role in his bank’s huge losses as well as his status on the board of the New York Federal Reserve, the Agenda Project deployed a reporter of our own to head to D.C. and cover the hearings. Our reporting of the too close financial ties between Dimon and the members of the Senate Banking Committee were widely picked up by other news outlets.
When it came time for Jamie Dimon to renew his term on the New York Federal Reserve, he quietly declined, going out not with a bang but a whimper. The coverage of Dimon and the inherent conflict of interest in his serving both his bank and the NY Federal Reserve Board was a result of careful coordination and precise timing: finding the top economic minds and amplifying their voices and ideas.
Derivatives are like tiny nuclear reactors – a lot of complicated math can create a really big bang and all that’s left is wasteland.
If you care about social justice, if you care about climate, if you care about Medicare and Social Security . . . if you care about Progress, you have to care about derivatives.