A pair of new government reports released this week paint a startling picture more than a year after the economic meltdown. On Tuesday, the New York Comptroller Office said Wall Street profits are set to exceed the record set three years ago. The four largest firms took in $22.5 billion in profits through September. Meanwhile, far more people are going hungry in the United States than previously thought. The Department of Agriculture estimates 50 million Americans, including a quarter of all children, struggled to get enough to eat last year. We speak to veteran journalist Robert Scheer. [includes rush transcript]
This is a rush transcript. Copy may not be in its final form.
AMY GOODMAN: We turn now to the latest on the economy. A pair of new government reports released this week paint a startling picture of where the country is, more than a year after the economic meltdown. On Tuesday, the New York Comptroller’s Office said Wall Street profits are set to exceed the record set three years ago. The four largest firms — Goldman Sachs, Merrill Lynch, Morgan Stanley, JPMorgan Chase — took in $22.5 billion in profits through September. The top six banks set aside $112 billion for salaries and bonuses over the same period. In a recent interview, the CEO of Goldman Sachs, Lloyd Blankfein, defended the bank’s massive profits, saying Goldman is, quote, “doing God’s work."
Meanwhile, the Department of Agriculture has revealed that far more people are going hungry in the United States than previously thought. The Department estimates 50 million Americans, including a quarter of all children, struggled to get enough to eat last year. The number of children who live in households in which food at times was scarce last year stands at 17 million, an increase of four million children in just a year.
Our next guest has been closely following the impact and causes of the economic meltdown. Robert Scheer, editor at Truthdig.com, author of many books, including The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America. His latest column is called "Where Is the Community Organizer We Elected?" He joins me here in Burbank, California.
Welcome to Democracy Now!, Robert Scheer. OK, just talk about these figures, from hunger to Goldman Sachs.
ROBERT SCHEER: Well, first of all, I mean, the whole thing about the profit of Wall Street that makes it particularly obscene is that we gave them that money. Your previous guest talked about how China is carrying $800 billion of our debt. We’re running up a $1.4 trillion deficit. And what happened was, we threw a lot of money at Wall Street. In particular, in relation to Goldman, we had this buyout of AIG, $180 billion. We’ve guaranteed the toxic assets of these enterprises. And that money, in a really truly shameful way, was passed on directly to the very companies that you mentioned that are giving themselves profits. So there’s something — yes, I’ll use the word “obscene.”
It’s also interesting that he should say he’s “doing God’s work,” Blankfein, the head of Goldman Sachs. And my goodness, if Scripture is clear on anything, it’s condemnation of those who take advantage of the poor. You know, after all, Jesus threw the money changers out of the temple. Scripture is devastating in its condemnation of usury, the immorality of usury. And yet, in your promo, you mentioned Chris Dodd is trying to get a bill passed that would cap interest rates. You know, where is the Christian right? Where are the Christians? Where are the Jews, for that matter? Or the Muslims? At least the Muslims, in their religious practice, don’t believe in interest as a principle, but the idea that we’re jacking up credit cards to 30, 35 — this is loan sharking. And we can’t even get a bill passed through Congress that would cap interest payments.
The other thing is, their rationalization is they’re somehow saving the economy. It’s the old blackmail thing. They ruined the economy; they got the legislation, the radical deregulation they wanted, that permitted them to become too big to fail — Citigroup and these companies; and then they turn around and say, “If you don’t throw all this money at us, the economy is going to go into the Great Depression.” But they haven’t solved the main problems. Mortgage foreclosures this month are higher than they’ve been in ten months. We have the commercial housing market exploding, you know, apartment building rentals exploding, going into mortgages. And so, you know, they are not dealing with the fundamentals. What has happened is an incredibly expensive band-aid was put on this. And these people don’t even have — they’re not even embarrassed.
And the reason I wrote that column is they’ve also captured the President. And, you know, I voted for this president. I even contributed money that I didn’t have to his campaign. You know, I still feel great that he’s the President. You know, I’m biased. I like the guy, you know. I like everything about him.
AMY GOODMAN: Yet you ask, where’s the community-organizer-in-chief?
ROBERT SCHEER: I am appalled. This is not a minor criticism. I think the guy is betraying — betraying — his own presidency, the promise of his presidency, because he has taken these thieves — and I use the word advisedly. You know, I think people like Lawrence Summers, who pay themselves — you know, maybe he’s not legally a thief, but, you know, a guy who pays himself, or gets paid from hedge funds and other people, $15 million in ’08, while he’s advising Obama about the economy. And he’s the guy who, more than anyone else, when he was Secretary of the Treasury in the Clinton administration, pushed through the radical deregulation that allowed these businesses to get in all this trouble and refused to regulate derivatives and all that sort of thing. And then these guys are made the head of the — what? They’re going to save us now?
And so, you have the one I attack, particularly, Neal Wolin, who was the general counsel of Hartford, but before that he’d been the general counsel to the Treasury Department, he’s now Deputy Secretary of the Treasury, and he’s the guy that pushed through the reversal of Glass-Steagall. He wrote the actual words in, you know, the Gramm-Leach-Bliley Act. And now he’s our deputy. And he condemns —- the point of the column was that there’s actually a chance to do something now. Chris Dodd has finally seen the light. He is the most important -—
AMY GOODMAN: While he is running for reelection.
ROBERT SCHEER: Yeah, running for election.
AMY GOODMAN: Ralph Nader could run against him possibly.
ROBERT SCHEER: Right, and he’s also under pressure, because he did get insurance money and all that sort of thing. But the fact is, he’s got a bill that makes sense, which is, you know, the Fed has been at the center of the problem. Ron Paul is right. The Libertarians are right. You know, the Fed is out of control. It has a higher degree of secrecy than the CIA. We don’t know what they’re doing with our money. There is no accountability there. Basically it’s run by the banks themselves on the regional level. They’re the ones that are listened to. And what’s happened is that Chris Dodd said, no, you’ve got to take power away from the Fed, and you have to put a new agency that will control these “too big to fail” agencies. And the administration is opposed to it. I can’t — I mean, I know why they’re opposed to it.
AMY GOODMAN: The administration is opposed to it, and the Republican senators are opposed to it.
ROBERT SCHEER: Yeah, exactly.
AMY GOODMAN: Why are they opposed to it?
ROBERT SCHEER: Because they think — they like business as usual. I mean, they are for Wall Street going its own way. They haven’t learned the lesson that capitalism uncontrolled is capitalism destroyed.
You know, I really found your previous interview on the China thing fascinating. And why is China doing well? You know, this is a startling lesson here, because we were always told unbridled capitalism is the best capitalism. Well, the Chinese have a marriage, like western Europe, but even more so, of government and the free market. It’s not unbridled capitalism. And they’ve been able to come out of this recession that we created. It’s an incredible object lesson here. These commies over there were able to take the capitalist energy and free market model and control it to a considerable degree, and they have an eight, ten percent growth rate now at a time when we’re floundering.
AMY GOODMAN: OK, so you have Lloyd Blankfein, head of Goldman Sachs, saying they’re “doing God’s work.”
ROBERT SCHEER: Yeah.
AMY GOODMAN: And then a week later, they issue this apology, apologizing for past mistakes that led to the financial crisis and announcing a plan to work with Warren Buffett to help 10,000 small businesses recover from this recession and spend $100 million a year for five years. Now, the Financial Times did point out the $100 million annual cost is the equivalent of one good trading day, but explain what’s going on here.
ROBERT SCHEER: Well, first of all, Buffett is the biggest holder in Goldman Sachs, and Buffett is a man of social conscience. I think he’s a very decent, enlightened capitalist of the kind you would hope exists, a long-term view, doesn’t want to destroy the system. And Buffett has said a number of sensible things over the years. And I think he put pressure on them. He said, “Look, you guys are out to lunch here. You don’t understand how much the people hate you at this point.” You know, and Buffett is out there in real America, you know, and he called them on it. But it’s chump change, what they’re talking about. It’s a program to help small businesses.
I just want to say something emotionally, since you brought up the poverty. I happened to be in Riverside, California last week, and this is a place where the American Dream died at this point. These are people who work hard. You know, they clean our buildings. They work in factories. They got conned into buying homes they couldn’t afford by people who were then going to package them and sell them somewhere. And you go out there now — I talked to a young man, he bought a house for $350,000, scraped up everything. He works like a dog. His parents have been cleaning buildings for forty years. That house is now worth $120,000. He lost not only — he lost everything his family had ever saved. OK? So we’re talking about human tragedy. These people — he went to college, he went to Riverside, UC Riverside, did everything he was supposed to do, works, you know, twelve-hour days. As I say, his family has always worked hard, paid their taxes, scraped up this money. They buy this house and to have the American Dream. And every fourth house — they’re making their payments, but, you know, house next door, house over there goes back.
Why didn’t we have a freeze on foreclosures? The smartest thing to do. Jon Stewart recommended it on The Daily Show. He’s the only person. I mean, where are these pundits, you know? And they would laugh. His guests on The Daily Show would laugh at him when he brought it up. But, you know, a freeze on foreclosures, we still need it. A moratorium on foreclosures for two years. They’re not doing it. What they’re doing is throwing more and more money at Wall Street.
And I go back to Obama and the point of my column: he has betrayed his own — what is it? It wasn’t a revolution, but his own promise. You know, he gave a speech at Cooper Union in ‘08, in March at Cooper Union. This was two months after Robert Rubin, the mentor of all of these people, said there’s no problem, we don’t have any flap in the economy, it’s just a little mild blip. And Obama gave a speech that was right on. You could give that speech now, and it would be on target. He blamed Wall Street. He blamed radical deregulation. And then, inexplicably, when he got the nomination, he turned to these very same people that had created the problem and said, “OK, now you get us out of it.”
And they’re not doing it. You know, maybe if they’d gotten religion, maybe if they’d learned their lessons, you know, maybe if they were a different breed — but they’re not. You know, and this Neal Wolin, he attacked Chris Dodd. You know, and they say, “Oh, you’re going to create nervousness for Wall Street.” That was the word they used: you’re going to make Wall Street nervous. I want to make Wall Street nervous. You know, the next time these guys figure out another way to fleece us, they should worry they’re going to get caught. Maybe they won’t do it.
AMY GOODMAN: What about this new government report that’s found Goldman Sachs could have suffered dramatic losses if the federal government hadn’t intervened to bail out AIG, American International Group, the report by the special inspector general for the government bailout program raising doubts about Goldman’s previous claims that it was hedged against potential AIG losses?
ROBERT SCHEER: Yes, well, first of all, this has been —-
AMY GOODMAN: What does all that mean?
ROBERT SCHEER: This is the big lie from Goldman, is that, you know, we didn’t -— look, look what happened. Lehman was Goldman’s competitor, was allowed to go belly up, OK? The Secretary of the Treasury was a former head of Goldman Sachs. I don’t want to get into conspiracy theories here, but Robert Rubin was a head of Goldman Sachs, OK? And Paulson was a head of Goldman Sachs. They decide not to — you know, and Rubin was involved in these discussions, Lawrence Summers, Paulson and so forth. Timothy Geithner, who is our Secretary of Treasury, was head of the New York Fed for five years while all this was going on. So they say, “Let Lehman go, you know, down the tubes,” which is great for Goldman Sachs, because now you have basically two investment houses that are getting all the business. “But on the other hand, we’ll put all this money into AIG,” which was backing these junkie derivatives, these mysterious packages, “and it will be a pass through. People won’t notice, because we’re giving it to AIG.” $180 billion of our taxpayer money, we taxpayers get nothing in return, AIG is still in the toilet, but Goldman got its money. You know, it got upwards of $20 billion, that they don’t have to pay back. They make a big thing about “We’re going to pay back some of the TARP funds” and everything. And by the way, they were allowed to become a bank. No hearings, no judicial proceedings and so forth. You know, the very thing Lehman was asking for — “Let us become a bank so we can get some of this TARP funds and everything” — that was granted to Goldman Sachs.
You know, Ron Paul, by the way, who has been trying to go after the Fed, and he has an accountability piece of legislation that the Democrats have gutted, and said, “Let’s have an audit of the Fed. Let’s find out what does the Federal Reserve do. What are the deals they made? Where did the money go?” We don’t have that. And the inspector general of the Treasury Department, the inspector general, you know, Elizabeth Warren, all of these people have pointed — from the Congressional Oversight Panel — all of these people point out, “We don’t have the facts. We don’t know where the trillions are going.” We know trillions have been committed. We know all of these huge pools — Bank of America’s $300 billion of toxic assets have been backed up. But there’s no accountability.
I have covered the CIA, I’ve covered national security, and I’ve covered banking. I did it for the LA Times in one way or another for thirty years, OK? It is more difficult to cover Wall Street, in terms of secrecy and classification and their protection, than it is to cover the CIA and the Pentagon. That much I’ll tell you. You know, you get greater claim on the truth covering the Pentagon, as I did in my last book, than I’m having in my current book called The Great American Stick-Up that Nation Books is publishing. And, you know, these people go, “No, it’s proprietary. It’s our business. It has nothing to do with you.” And that goes for the Fed, which is supposed to be a government agency.
And so, for Chris Dodd to say, “No, we have to take power away from the Fed. We have to create a new independent agency to supervise these too big to fail institutions to make sure that they don’t go belly up and we taxpayers pay for them again,” he’s absolutely right. And people watching this, if there’s one thing they should demand from the Obama administration, is get behind the Dodd bill on taking power from the Fed and creating a new publicly accountable agency. That’s absolutely critical. Without that, we’re not going to get out of this mess, and we’re not going to prevent a future one.
AMY GOODMAN: Very quickly, you profile — you profile Brooksley Born in an article, “They Shot the Messenger.”
ROBERT SCHEER: Yeah.
AMY GOODMAN: What was his message?
ROBERT SCHEER: That was in Ms. Magazine, that my wife wrote, Narda Zacchino, and I worked with her. Brooksley Born is the great hero of the whole drama. Brooksley Born was the head of the Commodity Futures Board. And Brooksley Born, seventeen times, testified before Congress that this was a disaster in the making. And the old boys’ club that is now in power — Lawrence Summers, Timothy Geithner, and it was Robert Rubin and Neal Wolin, who condemned Dodd the other day — they smashed Brooksley Born. They took away her power. They pushed through the Commodity Futures Modernization Act that said there can be no regulation of these over-the-counter derivatives. That’s why we’re in this big mess today. So Brooksley Born should have statues to her, you know? She is on the committee — Nancy Pelosi appointed her to the committee that’s supposed to be, you know, overseeing the rewrite of legislation. I’m hoping, you know, that she’ll be listened to. But basically it’s the old boy club that got us into this mess that is scamming us once again.
AMY GOODMAN: Robert Scheer, I want to thank you for being with us, of Truthdig.com, author of many books, including, appropriately, The Pornography of Power.