Writer Nomi Prins

The writer and Wall Street veteran examines the genealogy of American power, about which she writes in her latest text, All the Presidents’ Bankers.

Nomi Prins left a 10-year career on Wall Street—with posts at Goldman Sachs, Bear Stearns in London and Lehman Brothers—to write about politics, money and relationships. Her articles have appeared in The New York Times, Fortune, The Guardian, The Nation and other publications, and her books include nonfiction, including Other People’s Money, which predicted the financial crisis, and the historical novel, Black Tuesday. In her latest text, All the Presidents’ Bankers, she gives an account of the hundred-year interdependence between the White House and Wall Street. Prins is also a senior fellow at Demos, a nonpartisan public policy research and advocacy organization.

TRANSCRIPT

Tavis: The far-reaching influence of big money and how a handful of power players sway presidents regardless of their party affiliation is the subject of a new book by Nomi Prins who has written extensively for The New York Times, Fortune, Mother Jones and the nation. She’s also a former managing director at Goldman Sachs.

Her new text is titled “All the Presidents’ Bankers: The Hidden Alliances That Drive American Power.” Nomi Prins, good to have you back on the program, and thanks for the text.

Nomi Prins: Oh, thank you so much for having me back.

Tavis: When I picked this thing up – and it’s kind of dense – when I picked this up off my desk the day it arrived and saw this title, “All the Presidents’ Bankers: The Hidden Alliances That Drive American Power,” my first thought was I’m glad you’ve done this.

My second thought was ain’t nothing about this hidden. This alliance? I mean, there’s some of us who believe that America was really a corporation before it was a country. That requires a whole other conversation, but what’s new about this relationship between big money and the White House?

Prins: Well, what’s new is how this relationship actually works over history. Because what I did to create that really fat book was I traveled to all the presidential archives.

And I looked at specifically who were the individuals, which families, which bloodlines, which protégé mentorship associations really were involved with the individual presidents from Teddy Roosevelt back in the turn of the 20th century in the early 1900s through President Obama today.

But particularly, the lines of connections that extended for decades – it wasn’t like monies and politics today. It’s these people, it’s these lobbyists. It was these families for decades and decades and decades running banks, in and out of Washington, and presidents not being told what to do, but actively collaborating, and that’s the difference. It wasn’t a push. It was a collaboration from the beginning, and this is how it worked.

Tavis: How has that changed, worsened, deepened, you tell me, over the years?

Prins: Well, back in the beginning of the last century and towards the middle of the century, there was this alliance that stemmed also from trying to help America.

So, for example, in the 30s when we had something called the Glass-Steagall Act which passed to make banks less risky for the overall population, President FDR is credited with having been a very populace president, doing it for the people.

But really at the time, he had a friend who was a banker named Winthrop Aldrich who was running Chase, which is today part of JPMorgan Chase. And Winthrop Aldrich worked behind the scenes in Washington not to make this act weaker, but to actually restrain the banks more.

And this is like fascinating history when I was looking through the documents of the two of them. FDR would call on Aldrich to make sure that the senators in Congress made a stronger constraint on the banking system so that there would be more confidence in the system so that America could continue to be stabilized.

And that’s different today because today, for example, the head of that legacy bank, Jamie Dimon, who’s the head of JPMorgan Chase today, would not really be caught dead trying to constrain his own institution, whether or not he’s friends with Obama.

Tavis: Well, he doesn’t have to because, during the Clinton years, thanks to a bunch of other bankers or people who were friendly with bankers like Larry Summers and others, Glass-Steagall went by the side of the road.

Prins: Exactly, and now that started through the Reagan administration, the Bush administration. It was funny because, when I looked at, for example, Reagan’s Treasury Secretary, Donald Regan, he was the CEO of Merrill Lynch. Merrill Lynch is today part of Bank of America.

He said in order for America to be competitive, our banks need to be free. Robert Rubin, who was the former CEO of Goldman Sachs and the Treasury Secretary under Clinton, said exactly the same thing. They used the same words.

But under Clinton, the act was repealed and, as a result, where we are today is very much because of the lack of constraint on the banking system, but as well as the alliances that presidents and bankers together thought this would be okay.

And that culminated during Clinton’s administration, like it was okay to have less restraint and more risks coming from these very concentrated, powerful institutions.

Tavis: What do we make of the fact that these alliances have been and remain in place, as I said earlier and you detail in the text, never mind the party affiliation or the man in the Oval Office?

Prins: Well, money doesn’t care about party and that’s the whole thing, and relationships didn’t care either. Winthrop Aldrich, I mentioned before, he was a Republican. FDR was a Democrat.

If anything – and this is just sort of over these particular 100 or so years that I examined – the Democrats had closer associations with the bankers on a personal level than the Republicans, but it really was pretty much 50-50.

Because it’s all about this alignment of a philosophy and almost a club mentality that goes back over centuries that says this is what we need to do. We need for America to be a super power, we need to have unconstrained financial institutions and bankers feel that, for them to expand America’s interest abroad, they also need to have less constraint.

So presidents and bankers are on the same page and that’s really where we’re at today, except it’s just more dangerous today because there were periods in our history where there was accountability, where if bankers went off the rails or banks went off the rails, they were regulated. They were shut down.

Individuals left their positions of power at the helm of these institutions and new individuals came in who constrained them. We don’t have that today. We just have a very, very dangerous lopsided banking system and political financial system that subsidizes it.

Tavis: The other thing that makes it, to my mind, more dangerous – and you get into some of this in the text – but what makes it more dangerous to my mind, Nomi, in this present moment is that you referenced earlier in this conversation that these bankers back in the day would collaborate with the White House. They would collaborate with the president not writing legislation.

It ain’t like that no more. The lobbyists that these bankers pay actually write the legislation that these senators and others end up advancing as, you know, as a bill or as a law on the Hill.

So how much more dangerous has this relationship become when, again, they’re not just collaborating anymore, they’re writing this legislation?

Prins: And not only that, there’s no accountability. I mean, even back to LBJ’s times, he would say to bankers, you know what? You want to expand? You want my government to back you? You have to back my great society. You got to do what’s good for the country.

There is a give and take here. Today, of course, we don’t have that. And why that’s dangerous is because you got the lobbyists and lawyers in between who don’t care at all. They’re just taking a paycheck.

Tavis: They’re making money, yeah.

Prins: They’re making money. There’s a lot of them. There’ll continue to be a lot of them. So that personal relationship where a president can actually or chooses to actually call upon a banker and say, hey, look. This is what we need to do. This is what we need to do. You got to step on board here and I will do something for you. But you have to step on board too doesn’t exist.

Tavis: That doesn’t exist particularly when you look at the fact that they’re sitting on over a trillion dollars of money that they won’t reinvest back into the country. I mean, you know this stuff better than I do. But that’s not a quid pro quo relationship when they’re sitting on a trillion dollars.

Prins: Not at all, and the Federal Reserve is also part of that relationship. The Federal Reserve is sitting on $4.2 trillion dollars of bad assets and Treasury debts. We as a country went into debt to subsidize this banking system that’s giving nothing back and sitting on this money.

So it’s a crisis of leadership really all around on the political financial situation both in the White House and certainly in the banking system because they’re not being asked to do anything and they’re not offering. They’re certainly not offering.

And the result is just also it’s very dangerous for us because not only is this cash not going back into the economy, not only cannot smaller businesses or individuals get their refinancing done at appropriate levels, but these institutions are continuing to expand into the globe with the money that they could be using to help build America, to help with infrastructure here.

Tavis: So now these recent Supreme Court decisions, a couple of them, two or three of them, have now — all bets are off. You can pour as much money as you can into anybody’s campaign. You know, the rules have just been obliterated for these bankers and for others who have money.

So how do we slow down – as I was going to say, a runaway train. It’s not even a runaway train. Whatever’s worse than a runaway train, that’s what this is. Again, with the Supreme Court’s help now, they can do what they want to do.

Prins: Right. It’s kind of like a runaway train in the middle of a tsunami in the middle of a major earthquake and they all combine.

Tavis: There you go. That’s better. Exactly, all combined.

Prins: It’s kind of like a triplet.

Tavis: Exactly.

Prins: But, yes. I mean, there’s a couple of things. There’s legislation which is one aspect, that we could bring back the Glass-Steagall Act. We could at least separate our deposits, our taxpayer dollars, from this runaway train-earthquake-tsunami thing so that it doesn’t come down on us again, which we will have another crisis if this doesn’t happen.

And then also from the standpoint of individually, one of the things I talk about in this book a lot are these power alliances and how individuals work together, sometimes at arms but sometimes collaboratively to do something good.

And we as individuals on the ground need to be able to collaborate more and kind of establish our own alliances and not just say, okay, Washington’s not doing it, which I say a lot.

But also we need to do things from the ground up. We need to support, you know, community banks or local establishments or regional institutions or our friends and family.

And we need to do what these families, what these individuals from the Morgans to the Rockefellers to the Kennedys to the Bushes, did with each other which is they mutually enforced each other’s power. And we need to do that from individuals, from citizenship all the way from the ground up.

Tavis: I wonder what agency, though, fellow citizens think they have in doing that, in making that happen when there are now basically three or four banking institutions? There’s like three or four guys that own and control everything. You know, what difference does it really make if a handful of people support a community bank?

Prins: Well, it’s this. The Big Six banks today are derivations of the Big Six banks in the crash of 1929 and in the panic of 1907 where I start the book, the bank panic then under Teddy Roosevelt. They are the same institutions. They have consolidated power and they are at a very, very dangerous point of it right now. That’s all true.

The difference is that, if we do nothing, we’re just saying, you know what? This is okay and this can continue. And it’s not like any one of us individually has that power, but collectively – you know, if students stop paying their student loans the same way banks basically stopped reinforcing the loans at the beginning of these toxic assets that the Fed is basically paying for to take off the books of banks, if people did the same kinds of things, there would be a kind of financial revolution here which could push some change.

Tavis: But that’s the point, Nomi. Nobody went to jail. All of the wrongdoing on Wall Street in these banks, I mean, nobody paid a price for it.

Prins: And that is sad. I mean, there’s no doubt that the settlements that these people – the settlements that they paid are less than half of a percent of all their assets.

Tavis: Jamie Dimon got a raise…

Prins: Yes, for being a crook.

Tavis: After this was all said and done, he got a raise.

Prins: And he’s still there and he still talks against regulations. And it’s bad for the country and it’s bad for the world. So I agree they should be in jail. The Department of Justice should do its job and leadership in Washington should make an accountability like going back to an FDR, to an LBJ, to Eisenhower. It’s not even a party thing. There were men who made the idea of accountability stick with the financial institutions.

In 1956, Eisenhower, Republican president, wanted to make sure the banks couldn’t continue to concentrate because they were getting too much power even though he hung out and golfed with these people and was totally friends with them. It can be done.

Tavis: I have scratched the surface on what I teased Nomi about as a dense text, but it’s a good one. And if you ever want to know the history about these hidden alliances that drive American power, you’ll want to read the latest from Nomi Prins.

It’s called “All the Presidents’ Bankers: The Hidden Alliances That Drive American Power.” Nomi, thanks for the book, and good to have you back on this program.

Prins: Thank you so much.

Announcer: For more information on today’s show, visit Tavis Smiley at pbs.org.

[Walmart Sponsor Ad]

Announcer: And by contributions to your PBS station from viewers like you. Thank you.

  • Malak David

    If you can have on Nomi Prins, then you can have on Ellen Hodgson Brown, author of the Web of Debt. Thanks for having on Nomi Prins. Now get serious and have on Ellen Hodgson Brown.

  • Chris Kasie

    I agree that Ellen Brown would also be an interesting guest (as would Lynnette Khalfani-Cox).

Last modified: July 7, 2014 at 2:26 pm