Investigative journalist Greg Palast has obtained a copy of a November 24, 1997 memo from then Assistant Secretary of the Treasury for International Affairs Timothy Geithner, to his then boss at Treasury, Deputy Secretary Larry Friggin' Summers:
"As we enter the end-game of the WTO financial services negotiations, I believe it would be a good idea for you to touch base with the [top 5 Wall Street] CEOs…."Palast is calling it "the end-game memo" and the implications he spells out are truly frightening. As Palast explains:
....US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks....Palast's discovery epitomizes the very essence of the disease that has misguided the U.S. and world economies for the past half century: the economic neo-liberal idea that private capital is more productive and more desirable, than democratic expressions of popular will as manifested in public government investment. The events of today must be properly understood within the historical context of the development of sovereign nation states arising as populations struggled to control their own destinies by exerting greater and greater influence on the political process. These struggles were against the will and machinations of essentially feudalistic-minded elites who often formed trans-national and trans-cultural alliances (such as the agreements that brought Hessian troops to North America to fight against the American Revolutionaries) to stymy and suppress the rise of common mass public influence -- not to mention the trans-national and trans-cultural business enterprises that were created to jointly rob the wealth of colonial prey. Michael Hudson has repeatedly warned that present-day global elites are putting the finishing touches on this new form of financial neo-feudalism. Properly understood, Palast's story can become a bombshell that prevents the appointment of Summers as next Federal Reserve chairman, and perhaps even hearings on the seditious nature of "free trade arrangements" such as WTO, NAFTA, and the Trans-Pacific Partnership that are being used to codify the new global neo-feudalism.
Second, the banks wanted the right to play a new high-risk game: "derivatives trading." JP Morgan alone would soon carry $88 trillion of these pseudo-securities on its books as "assets."
Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives.
But what was the use of turning US banks into derivatives casinos if money would flee to nations with safer banking laws?
The answer conceived by the Big Bank Five: eliminate controls on banks in every nation on the planet – in one single move.... The bankers' and Summers' game was to use the Financial Services Agreement, an abstruse and benign addendum to the international trade agreements policed by the World Trade Organization.
Until the bankers began their play, the WTO agreements dealt simply with trade in goods–that is, my cars for your bananas. The new rules ginned-up by Summers and the banks would force all nations to accept trade in "bads" – toxic assets like financial derivatives.
Until the bankers' re-draft of the FSA, each nation controlled and chartered the banks within their own borders. The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives "products."
And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.
A century and a half ago, any such attempt to avoid the lawful regulation of sovereign nation states would have been instantly recognized as a typical ploy of Perfidious Albion (think, the British East India Company) and the officials involved would have been faced with a huge public outcry charging them with sedition, if not treason. Alas, now we even have a President - Democratic, no less - who is trying to get the Trans-Pacific Partnership rammed through Congress, secret provisions and all.
Palast provides a list of the five top CEOs who were contacted by Summers:
Goldman Sachs: John Corzine
Merrill Lynch: David Kamanski
Bank of America, David Coulter
Citibank: John Reed
Chase Manhattan: Walter Shipley
The private cell phone numbers of these individuals is included in the article, but Palast reports the numbers were turned off soon after the article appeared.
And what this memo is--they call it the "end game memo". Geithner calls it the "end game". And what's the game being played? The memo asks Summers to get back to the five biggest, most powerful bankers in the United States to act on and determine what our policy should be for world governance of the banking system. Basically, there were secret calls going between Larry Summers and the head of Bank of America, the head of Goldman Sachs, the head of Citibank and Merrill, the five big boys, to find out what should happen to the world financial policing order. And the answer was: smash it. Summers was holding secret meetings with the big bankers to come up with a scheme to eliminate financial regulation across the planet.Pay close attention to what Palast says at the end of this excerpt:
It's quite an extraordinary process. This is one memo within the whole framework of this strange and what seems to be illegal gatherings. I can tell you that it's not against the law for the secretary of the Treasury to meet with big bankers. What you can't do is do it in secret and run secret negotiating positions past those bankers, who have a direct financial interest in the outcome. Their financial interest was to eliminate all policing of their activities, which they did.
Well, I actually spoke to--I traveled all over the world to confirm this. I went to Geneva, Switzerland, and I--you know, 'cause of my position as--I'm pretty well known internationally as a reporter, so I was able to speak with the director-general of the World Trade Organization himself, Pascal Lamy. He's French. He said, oh, the WTO--'cause all this was done through the auspices of trade--the WTO is not some cabal of evil bankers meeting in a room secretly filled with cigar smoke, etc. And then I showed him the memos. So that was--yes, there was no cigar smoke, but there were secret meetings of bankers.Are we being run by bankers? Near the end of his newest book, The Price of Inequality: How Today's Divided Society Endangers Our Future, Joseph Stilglitz relates his dismay and anger that the few economic meetings he was included in by the Obama administration, someone always posed the question, "How will this affect Goldman Sachs?" or "How will Goldman Sachs react to this?" Thus, Palast's discovery epitomizes the very essence of the disease that has misguided the U.S. and world economies for the past half century: the neo-liberal idea that private capital is more productive and more desirable, than democratic expressions of popular will as manifested in public government investment. As Chris Hedges has summarized the farce of American democracy today: there is no way for you to vote against the interests of Goldman Sachs.
And his reaction was, listen, if the United States--in his wonderful French accent--if the United States doesn't have a real democracy, then you're going to have to file a complaint with the human rights court down the street in Geneva. That's none of his business. It's not his job to make America a democracy if we're being run by bankers, which is pretty awful way of putting it.