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13 Bankers

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13 Bankers

The Wall Street Takeover and the Next Financial Meltdown

Pantheon Books,

15 min read
10 take-aways
Text available

What's inside?

Wall Street’s belief in lax bank rules and quick fiscal innovation pervades U.S. economic thinking – just ask the bankers.

Editorial Rating

9

Qualities

  • Innovative

Recommendation

This intriguing study concludes that for all the talk of a new world order after the devastating 2007-2009 financial collapse, Wall Street looks remarkably the same. Money and power are concentrated in fewer hands, but the Street’s fundamental philosophy, favoring light regulation and markets dominated by a few huge banks, survives. In this eye-opening account, former chief economist of the International Monetary Fund (IMF) Simon Johnson and former McKinsey & Co. consultant James Kwak argue that Wall Street has gotten what it wants for too long, and that the time has come to break up big banks. While the authors cover oft-trod turf, their novel premise that the government must break up the big banks counters conventional wisdom. getAbstract recommends this book to taxpayers and policy makers seeking insight into how Wall Street works.

Summary

Protecting Bankers from the Pitchforks

Blame for the Great Recession of 2007 to 2009 belongs squarely to Wall Street and the large, powerful banks that took foolish risks and brought down the world economy. Yet, when 13 heads of the U.S.’s dominant banks visited newly elected President Barack Obama in March 2009, they heard little tough talk. Obama did not suggest that their banks should be allowed to fail or that – since they led the economy into collapse – they should lose their jobs. Instead, Obama portrayed himself as a protector of the major banks. “My administration is the only thing between you and the pitchforks,” he told them, referring to public and media anger about Wall Street profiteering.

During his campaign, Obama had called for modest investment bank reform, but Wall Street had lobbied vigorously against it. Now, the banks needed federal help. His audience included the heads of Bank of America (BOA), Citigroup, Freddie Mac, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo and six other banks. The time seemed perfect for breaking up the big banks or imposing meaningful reform. Obama had as much leverage over them as he ever could hope for, ...

About the Authors

Simon Johnson, who teaches at MIT’s Sloan School of Management, writes the “The Baseline Scenario” blog with former McKinsey & Co. consultant James Kwak, a software entrepreneur.

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