Wall Street's Dangerous Power

A core group of bankers have become so powerful they can do enormous damage to society—and they really don’t care.
  • Transcript


Question: What was really behind the crisis? 

Simon Johnson: I think at the heart of this problem is a set of people, not a huge set of people-- and this is not anti-finance, this is not anti-Wall Street. I’m a professor of entrepreneurship. I like people who take risk and who put their own money and persuade other people to invest money in genuine risk-taking productivity-enhancing technology-transforming projects. But, there's this core of people who have become very, very powerful who can do enormous damage to the rest of society and honestly, they really don’t care. They’ve made a lot of money in the 2000’s, for example. Some of them have written their memoirs. Many of them just disappear with their hundreds of millions of dollars and they leave it to the rest of us to clean it up. That’s not acceptable. That’s not fair. That’s not reasonable. That’s not how we should organize our society going forward. 

Question: Are other countries experiencing similar problems? 

Simon Johnson: Other countries have many of the same problems. I think we should look to American history for the solutions. I think we should look at what Teddy Roosevelt did. He took on JP Morgan and he won. We should look at what FDR did. He turned the economy around without kowtowing to the bankers. We should look at what Andrew Jackson did. Andrew Jackson, very controversial figure of course. He said the second bank of the United States in the 1830’s was too powerful and it should be reined in. At lot of people thought that Jackson was out of control and exaggerating until the second bank of the United States started to fight back and it showed its power and it bribed a lot of people and it restricted credit in an attempt to stop Jackson. And that, of course, is what turned public opinion against them. People said, “Oh, my goodness. Andrew Jackson is right.” That’s why his picture’s on the $20 bill. 

Recorded on March 31, 2010