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David Corn and Kevin Drum
MOTHER JONES magazine
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January 8, 2010

America's big banks are back on top. Just a year after their financial gambles brought the American economy to the brink of collapse, requiring a massive federal bailout, they're back in the black and paying themselves healthy bonuses. With so many Americans facing economic hardship, the banks' good fortunes have led to resentment and even some rage among those outside the financial industry. Yet, according to Washington watchers — and sheer dollars spent — the banking industry lobby remains among the most powerful in the nation's capital.

The latest issue of MOTHER JONES magazine looks into this discrepancy, calling it the "accountability deficit." The magazine commissioned a series of articles investigating why no one has been brought to account for crashing the economy.

Two contributors to the issue, David Corn and Kevin Drum, join Bill Moyers on the JOURNAL to explain how the banking lobby continues to hold so much power in the nation's capital.

While the great wealth of Wall Street allows it to lavish campaign contributions on Congress, it is not money alone that gives the financial industry so much power. The influence of Wall Street has managed to change the national conversation. MOTHER JONES political blogger Kevin Drum explained the phenomenon using a term used by economist Simon Johnson:
It goes beyond regulatory capture, where, say the banks control the S.E.C. That's one thing. "Intellectual capture" means that essentially the financial industry has convinced us — you know, in the '50s what was good for General Motors was good for America — now it's what's good for Wall Street is good for America. And they've somehow convinced us that we shouldn't ask about what's right or what works or what's good for America. We should ask what's productive, what's efficient, what helps grow the economy.
It is this "intellectual capture" that prevents a reform movement from taking hold. David Corn, Washington bureau chief for MOTHER JONES, explains:
While [people are] angry at Wall Street, particularly on the corporate compensation front — which is very easy to get angry about — they also are fearful of taking Wall Street on, because they've been taught that if the Dow falls, if you take on the big banks, it's going to be bad for all of us. So, it really is this "Stockholm Syndrome," where we're forced to identify with people who are holding us hostage without our interest in mind.
The money, though, plays an important role. Corn notes that the fundraising system itself is a barrier to reform, "I mean, our whole system where the guys in charge of regulating or writing the laws would take cash from the people who want favors, you know, it's kind of, you know, bizarre to begin with."

And though members of Congress deny their donors don't influence their decisions, Drum is doubtful. Citing Senator Chuck Schumer's fundraising, Drum argues, "[Senator Schumer] raised a couple hundred million dollars, a lot of it from the financial industry. And that went to all Democrats. Not just Schumer. It went to all Democrats who were running for the Senate. Well, there's no way you can take that money and not at least be leaning in their direction, one way or another."

>>Read more about the "Accountability Deficit" at the MOTHER JONES Web site.

Kevin Drum
Kevin Drum is a political blogger for MOTHER JONES magazine. Prior to that he was a contributing writer for the WASHINGTON MONTHLY and authored their blog, "Political Animal." During the 1990s he was vice president of marketing for a software company in Irvine, California

David Corn
David Corn is the Washington bureau chief for MOTHER JONES magazine. Prior to that he was the Washington editor of THE NATION magazine for 20 years. He writes on a host of subjects, including politics, the White House, Congress, and the national security establishment. He has broken stories on George W. Bush, John McCain, Sarah Palin, George H.W. Bush, Newt Gingrich, Colin Powell, Rush Limbaugh, Enron, the Central Intelligence Agency, the CIA leak case, corruption in Iraq, the National Rifle Association, Senator David Vitter, the Pentagon, and assorted Washington players and institutions. He also has blogged for HUFFINGTONPOST.COM, CQPOLITICS.COM, and the "Comment Is Free" site of THE GUARDIAN. For years he wrote the on-line column, "Capital Games" for THENATION.COM.

Corn has written for THE WASHINGTON POST, THE NEW YORK TIMES, THE LOS ANGELES TIMES, THE WASHINGTON TIMES, THE PHILADELPHIA INQUIRER, THE BOSTON GLOBE, NEWSDAY, HARPER'S, THE NEW REPUBLIC, MOTHER JONES, THE WASHINGTON MONTHLY, THE LA WEEKLY, THE VILLAGE VOICE, THE INDEPENDENT, ELLE, SLATE, SALON, TOMPAINE.COM, ALTERNET.ORG, and other publications and websites.

He is the co-author (with Michael Isikoff) of HUBRIS: THE INSIDE STORY OF SPIN, SCANDAL, AND THE SELLING OF THE IRAQ WAR (Crown, 2006), a NEW YORK TIMES bestseller. His book THE LIES OF GEORGE W. BUSH: MASTERING THE POLITICS OF DECEPTION (Crown, 2003) was also a NEW YORK TIMES bestseller. His first novel DEEP BACKGROUND, a political thriller, was published by St. Martin's Press in 1999. He is the author of the biography BLOND GHOST: TED SHACKLEY AND THE CIA'S CRUSADES (Simon & Schuster, 1994).

Related Media:
Moyers on Banks and Bailouts
View our complete coverage of the banking and bailout crisis from early warning from THE NEW YORK TIMES' Gretchen Morgenson in 2007 to date.

William K. Black
The financial industry brought the economy to its knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout. (April 3, 2009)

James Galbraith, photo by Robin HollandJames Galbraith
Bill Moyers sits down to talk about the economic future with James K. Galbraith, Lloyd M. Bentsen, Jr. Chair in Government/Business Relations at the LBJ School of Public Affairs at the University of Texas at Austin. Galbraith is the author of six books, the most recent, THE PREDATOR STATE: HOW CONSERVATIVES ABANDONED THE FREE MARKET AND WHY LIBERALS SHOULD TOO. (October 24, 2008)

Simon Johnson, photo by Robin HollandSimon Johnson
Former chief economist of the International Monetary Fund (IMF), MIT Sloan School of Management professor and senior fellow at the Peterson Institute for International Economics, Simon Johnson examines President Obama's plan for economic recovery. (February 13, 2009)

Kevin PhillipsKevin Phillips on BAD MONEY
Bill Moyers sits down with former Nixon White House strategist and political and economic critic Kevin Phillips, whose latest book BAD MONEY: RECKLESS FINANCE, FAILED POLITICS, AND THE GLOBAL CRISIS OF AMERICAN CAPITALISM explores the role that the crumbling financial sector played in the now-fragile American economy. (September 19, 2008)

Community Organizers

Anger and the Economy
Organizers George Goehl and Heather Booth on turning anger into action.



James Thindwa
James Thindwa, whose campaign for economic fairness for working people in Chicago has brought him up against the city's powerful political establishment and corporate giant Wal-Mart.

Steve Meacham: Fighting Foreclosure
The JOURNAL profiles Steve Meacham, a Massachusetts community organizer fighting to keep working people in their homes.

Leo Gerard, photo by Robin HollandLeo Gerard
Bill Moyers sits down with United Steelworkers' International President Leo Gerard to discuss seeking economic justice for workers in the middle of an economic crisis and how he sees the future of American manufacturing. Gerard shares his thoughts on how unions will fare under the Obama administration, what kind of stimulus might be needed and what the future of American industry might look like. (January 9, 2009)

Holly Sklar, photo by Robin HollandHolly Sklar
Holly Sklar, co-author of RAISE THE FLOOR: WAGES AND POLICIES THAT WORK FOR ALL OF US, discusses what current economic conditions say about the state of the American dream. (June 13, 2008)

References and Reading:
"Cramdown" Legislation

BILL MOYERS JOURNAL: Senator Dick Durbin
Bill Moyers interviews Senator Durbin about the defeat of his amendment to allow bankruptcy judges to modify some mortgages, popularly known as "cramdown" legislation.

Banks and the Bailout

"The Accountability Deficit"
Read articles by Kevin Drum, David Corn and others in MOTHER JONES magazine's special series.

Kevin Drum's articles at MOTHER JONES.

David Corn's articles at MOTHER JONES.

THE BASELINE SCENARIO
The influential finance Web log maintained by Simon Johnson and James Kwak.

"Why Treasury Needs a Plan B for Mortgages"
By Gretchen Morgenson, THE NEW YORK TIMES, December 5, 2009.

"What Is Living and What Is Dead in Social Democracy?"
By Tony Judt, THE NEW YORK REVIEW OF BOOKS, December 17, 2009.

"Change Wall Street Can Believe In"
by Holly Sklar, COMMON DREAMS, November 9, 2009.

"Debt Raters Avoid Overhaul After Crisis"
By David Segal, THE NEW YORK TIMES, December 7, 2009.

Grassroots Groups and Banking Reform

City Life/Vida Urbana
Boston-based group that aids troubled homeowners.

Americans for Financial Reform.
"Americans for Financial Reform is a coalition of nearly 200 national, state and local consumer, labor, retiree, investor, community, and civil rights organizations who have come together to spearhead a campaign for real reform in our banking and financial system."

National People's Action.
Organizing network whose mission is "to create a society in which racial and economic justice are realized in all aspects of society, resulting in more equity in work, housing, health, education, finance, and other systems central to our well-being."

"Protesters in Chicago March on Offices of Goldman, Wells Fargo"
By Lauren Etter, THE WALL STREET JOURNAL, October 27, 2009.

PR Watch
A project of the Center for Media and Democracy.

Crossing Wall Street
The Center for Responsive Politics project on Wall Street lobbying. The site offers a tool that lets you check and see who is funding members of key financial reform committees.

"Move Your Money"
A viral video and Web site persuading people to take their money out of the big financial institutions and put them in a local bank.

>Check out our other resources for tracking lobbying dollars.
Also This Week:
BIG MONEY AND BIG POLITICS
MOTHER JONES journalists David Corn and Kevin Drum offer a hard look at the obstacles to real reform of the financial industry.

>THE JOURNAL ON BANKS AND THE BAILOUT
View our complete coverage of the banking and bailout crisis from early warning from THE NEW YORK TIMES' Gretchen Morgenson in 2007 to date.

>MAKING A DIFFERENCE IN THE COMMUNITY
View profiles from BILL MOYERS JOURNAL of people who are making a difference in their communities.

CAMPAIGN FINANCE AND LOBBYING RESOURCES
Follow the money and the influence with online campaign finance and lobbying tools.

PREVIEW: GREG MORTENSON
author and humanitarian Greg Mortenson, whose best-selling books THREE CUPS OF TEA and STONES INTO SCHOOLS argue that education is the best way to peace in Afghanistan and across the Islamic world.

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