What is Wall Street? What is the relationship between Wall Street and Washington? On one level there would seem to be a titanic struggle for power between these power centers, but since there are so many thousands of people whose careers are interwoven, it is far more complicated than that. How can we understand what is going on with our money and in our name and what we really might do to have any sort of influence over this mindboggling area of concern?
Below is a story that I am finding more and more illustrative as I try to read and make sense of what is going on now in our economy and our world.
Really, it looked just like a suit commercial. As I came into work one morning, there were a number of guys in expensively tailored suits leaning or sitting on the edges of various desks in the area, and they all looked up as I walked in. Clearly there was tension in the air.
I had gotten assigned as a temp to the International Division at Wells Fargo's World Headquarters building in downtown San Francisco, and I thought it was wonderfully poetic that my supervisor's name was Mr. Lord. This was in September and October of 1976. I could walk to work or ride a cable car. At night, I prowled the gay bars with a girl named Pat that I was in love with and was living with because she loved to dance and they had the best dance floors. It was the height of the disco era.
My job was tending one long low file cabinet drawer that was full of syndicated loans. The US government charters the largest multinational banks to do these loans. An individual bank can't lend out more than a small percentage of its entire capital, but many banks can be put together in one large mega-loan. At the time, about a year after the bank had turned their Latin American Division into a syndication operation, there were about a hundred file folders that stuffed this cabinet drawer. They ranged from a few hundred million to over half a billion. The loans were known by acronyms like CENTROMIN, which was the centralized, government owned iron mining operation. I seem to remember it was in Chile, a dictatorship under General Pinochet at the time.
They had one in the works, with Turkey, at 700 million at that time. I tended this drawer all day long. I typed memos and telexes and then filed them, and pulled
files for bank officers to review. I was at a desk immediately next to it.
The head of the division, whose desk was immediately behind mine, leaned close and in a confidential tone, filled me in one why everyone was so on edge. Overnight, a satchel of securities, drawn down for a 3 million dollar payroll at a mine in someplace like Chile had gone missing. The bank was being fined some $10,000 an hour and it had already been over 8 hours.
As the waiting continued, I found myself sitting near a gentleman who looked a lot like the actor Gig Young. He was wearing a yellow sweater and seemed like he had flown in from a ski vacation. Everyone deferred to him and someone told me that he was the Bank's CEO. I don't remember hearing a name. I was supposed to just know stuff like that and felt it would have been a faux pas to ask. Since we were just sitting there, I ventured to strike up a conversation. He was pleasant enough. He shared that he had graduated from the Sorbonne, in response to my recently graduated status.
I asked him what the payback period would be on a syndicated loan and he matter of factly said that it would be over 200 years.
I pointed out that I had noticed that the loans were with governments that were primarily dictatorships, such as Chile and wondered about that. He said that democratic governments were less stable for the long term and more likely to default.
I asked him why they were loaning so much money to these foreign entities. He said that there was a consensus that the US was over-invested and that the risk/reward potential was higher in developing countries.
Since the Presidential debate between Ford and Carter had been the previous night, in San Francisco, I asked him if he thought either one of them had a better handle on international finance. At that, his attitude changed a bit, looking at me more sharply, apparently antagonized by the question and said that they really didn't think the President of the US was competent to be a judge of such financial matters and that in general, the federal government lacked "perspicacity." I looked it up. Clueless, would be a more street level word.
Near the end of the day, the satchel turned up. The day before had been a national holiday and the border guards at the little airport had gotten drunk. One guard put the satchel full of securities in his locker and staggered home to sleep it off. The next day, when he came in, he went and got it.
No big deal.
Now, there is a reason that interesting anecdotes like this never turn into publicly available reading material. If you are a reporter coming to a large institution for stories, the PR department will direct your efforts to the happy face stuff. If you manage to figure out who to call among the junior execs, you won't get anyone to be forthcoming. They will have to file reports on what they said and what you asked. The chances of corroborating any element of what is going on up there are not good.
Lawsuits that are launched by large corporate institutions are not necessarily filed because they think they have the best chance of winning, but because they can throw millions at the effort, forcing the other side to spend lots of money. The side that has the most interest in pitting raw financial power against the opponent in the suit is probably going to win. That leaves media organizations really without the ability to play in the big time. This is a reason that the "mainstream media" is so lame. The alternative press has even less money and fewer lawyers on retainer, so they largely stick to entertainment coverage now.
Thus, We The People are not an "enlightened publick" at all when it comes to what is going on with our money at the level where billion and trillion dollar transactions are taking place, in the myriad workplaces of international finance. We don't know what happens when our local bank or credit union bundles our accounts together into investment packages that are further bundled together up the line and ultimately handled in mega transactions that produce the return on investment that pays the dividends we see in pennies.
These way up high offices are just wonderful and the people there are wonderful people. They all have the best educations, usually from the world's best graduate schools of business such as Harvard or the Sorbonne. The atmosphere is like Graduate School Heaven. There is a lot of really great art in amongst very tasteful interior decoration in the upper floor offices. Just to walk the beautiful carpets in those beautiful places makes you feel like you have arrived, even if you are just there as a temp. It is a very professional environment in the best sense.
You look out the window and the people on the streets below are like ants. The concerns you have as you think about the file drawer and what's in it are Big Thoughts about the shape of the world and maps on the scale of hemispheres and continents.
But there was an isolation in this atmosphere. All those really bright former graduate students talking to each other about the plays they had seen on Broadway and the vacations on yachts in the Pacific and the latest and greatest novels were in a bubble and no one outside it was allowed in. Security was tight. Entry was with the proper badge ID only. There was no interaction with anyone who did not share in this atmosphere.
It seemed to me that these secure places are the apotheosis of education in the humanities separated from humanity.
So in terms of the consciousness you would expect about the responsibility in an old fashioned community oriented sense to the human enterprise at large, I did not see that there was room for it. The Bottom Line was technical and about the terms of transactions. Externalities are irrelevant. I saw no files on those concerns.
People, the ants on the street, are externalities.
That might not be a problem if it weren't for the calamities that arise that affect literally millions and billions of people when mistakes are made. Only recently have such reasons for concern been increasingly getting highlighted.
The change that is needed will have to be a long evolution. It took a long time, actually centuries, for the situation as it is to arise. The protests on the street are no doubt read about as the New York Times or the Wall Street Journal is unfolded over coffee at break time in the upper floors. But they probably are not the subject of much comment beyond the seeming absurdity of people shaking fists at tall buildings.
Nevertheless, on a larger scale and in the longer run of history, the protestors will finally be heard. That is because continued estrangement between technical financing on a large scale and the interests of the human race worldwide is not ultimately sustainable. There will be more public education. There will be more evolution in terms of understanding how to achieve greater transparency and accountability where it is needed. There will be an evolution towards governance on an international level that currently does not exist. There will be more perspicacity on the part of the US federal government.
The tragedy is that the geniuses who brought about the financial crisis of the past several years have proven that bankers are no more responsible than anyone else and that the smartest people in the world can make some really dumb decisions.
Those loans in the hundreds of millions to the more "stable" governments like the Pinochet dictatorship? Most likely the FDIC paid depositors in the local banks back after those loans defaulted or were forgiven in the wake of overthrows that resulted in more democratic governments. And, I never saw any stories about that.
We The People have got to become more aware and conscious of our role as the Responsible party, individually, as nations, and as international humans. That is the real bottom line. Our survival and well being, and that of the human race may not be profit centers, but we are not externalities either.
An anniversary of the WTO protests in Seattle is coming up. We should all be aware that these things are not separate but interlinked. I hope that the Occupy observances around the country will recognize this by somehow incorporating the WTO anniversary into what they are doing. Most likely something will still be ongoing by then, as the general condition will be ongoing.
The largest impact from the Occupy actions would be to raise public consciousness about how to connect the dots and really understand what is going on. If it began to impell the policy making process forward towards real reform that would be great too.
