BILL MOYERS: This is no time to mince words and thank goodness, Thomas Frank never does so. In a recent essay in Harper’s Magazine -- “It’s a rich man’s world” -- he wrote: “Over the course of the past few decades, the power of concentrated money has subverted the professions, destroyed small investors, wrecked the regulatory state, corrupted legislators en masse, and repeatedly put the economy through the wringer. Now it has come for our democracy itself.”

Strong stuff, and typical of Thomas Frank, the historian and journalist. His book, What’s the Matter with Kansas? was a best seller about how we so willingly allow money and ideology to subvert government, against our own self-interest. Now, we have his latest -- Pity the Billionaire, in which the worst economy since the l930s has led to a revival of power for the very people who brought it about. Thomas Frank, welcome.

THOMAS FRANK: It's my pleasure to be here.

BILL MOYERS: This week Jamie Dimon, CEO of JPMorgan Chase testified before the Senate Banking Committee on how his bank got it wrong on risk management. What would you think if I told you that seven members of the Senate Banking Committee have been big recipients of money from JPMorgan Chase?

THOMAS FRANK: I would not be surprised, not in the least. That's obviously where JPMorgan would be spending its lobbying dollar would be on the, you know, giving to the campaigns of the people on that committee. That's the wisest strategic choice for them.

BILL MOYERS: And get this. The bank has been the second largest contributor to Senator Tim Johnson, Democrat, the chairman of the committee.

THOMAS FRANK: And I got news for you. They also, I mean, you know this already, they also were one of the biggest donors, or their, I should say their employees, to President Obama's campaign in 2008 and also to, I believe, to John McCain's campaign in 2008. This is the nature of what they do. They spread their spread the wealth around, you know.

BILL MOYERS: And there's more. One of Senator Johnson's former staffers is now one of JPMorgan's chief lobbyists. And the chairman's present top assistant used to be a lobbyist for a law firm that worked for JPMorgan. I mean, this wasn't a hearing. This was a reunion of the Gambino family.

THOMAS FRANK: Well, look, this is what we call in Washington the revolving door, okay. And this, if your viewers haven't heard of this they need to learn about it right away because this is how Washington D.C. works is that people go back and forth from, typically from Capitol Hill staffs to working for lobby firms or directly for these, you know, the clients of the lobby firms that have to do with the interests that they used to work on when they were on Capitol Hill.

And then they go back and lobby to their former boss, right, and convince him or her to vote one way or the other. And that's how you get ahead in lobbying is you start out working for someone on Capitol Hill, a powerful senator on a given committee. And then you go and essentially sell that expertise, sell that, you know, the fact that your friends with that guy to, you know, to a lobbying firm or to a bank or to whoever. That's totally how it works.

BILL MOYERS: It's an interlocking cartel and it's serious business. How can we claim to have a representative government when they really are representing the people who bought the campaigns and not the voters who voted for them? It's a serious question.

THOMAS FRANK: Well, there are people who, I'm going to get cynical on you here, Bill. There are people who believe that the more money we have in politics the closer we become to a democracy. They think it's better for there to be more money in politics.

Why do they think that? Because they think that the market is a democracy, that markets are democracy and that government is, when government interferes in the economy it's illegitimate by definition. And so the more money we get in there the more it allows entities like JPMorgan to defend themselves against the sort of, you know, the heavy-handed meddling of some, you know, Washington bureaucrat.

BILL MOYERS: But what does it say when members of the Senate Banking Committee have received $13 million over the last few years from the financial services industry? And these are the guys who are supposed to protect the common folks out there from the predatory lenders. I mean, what happened?

THOMAS FRANK: They haven't done a very good job, have they?

BILL MOYERS: That’s the answer.

THOMAS FRANK: They've done exactly the opposite. I mean, you can look over their record over the last 20 years, all the amazing ways in which they deregulated the financial industry, I mean, this is the story of our time.

And they deregulated this aspect, the other aspect, everything, you know, overturned the Glass-Steagall rules, you know, that's the biggest example. But my favorite one, actually this wasn't the Senate that did this, this was the Bush administration. A lot of states have laws against predatory lending and were enforcing those laws.

And this would have stopped the housing bubble in its tracks, you know, the no-doc loans and this kind of nonsense that was going on. The Bush administration preempted those laws, the state level laws and said, "No, no, predatory lending is now only going to be enforced at the federal level and here's how we're going to enforce it: By doing nothing."

BILL MOYERS: There’s also a report out this week from Senator Bernie Sanders, the independent Senator from Vermont. Would you believe according to his figures that 18 former and current directors from Federal Reserve Banks, including Jamie Dimon, directly benefited from the financial bailouts after the 2008 crisis?

THOMAS FRANK: That's not a surprise. It's cronyism in this kind of extreme otherworldly dimension. When the bailouts happened and when all of this stuff was on the front pages, it was the kind of moment that really shakes the faith of an entire nation.

It was so disturbing. Well, first the financial crisis was disturbing, the failure of Lehman Brothers, Merrill Lynch going down, Chrysler and GM declaring bankruptcy. One after another on the headline of the newspaper, it was the pillars of middle class life crumbling around us.

And it was astonishing, okay. And then the second chapter, the bailouts, with this enormous price tag where these guys on Wall Street, the bankers just whistled up the resources of the public Treasury for their own benefit, you know. And the country could have gone in any of several different directions. Now, I was looking at this from the perspective of the 1930s.

BILL MOYERS: When the collapse of the economy brought out a large social protest and--

THOMAS FRANK: Exactly, there were even--

BILL MOYERS: -- and a demand--

THOMAS FRANK: There were bailouts then in the '30s. The Hoover administration did massive bailouts of the banks. And it was exactly the same thing. It was rampant cronyism. I'll tell you a story. So the head of Hoover's bailout agency, it was called the Reconstruction Finance Corporation. The guy that Hoover put in charge of it had been Calvin Coolidge's vice president, you know, this is cronyism already, right?

At one point the guy quits his job as head of the bailout agency and goes back to his bank in Chicago. Couple months later he comes to the Reconstruction Finance Corporation which he had just, a few weeks before, been the head of and says, "Oh, I need a bailout," and they give him one. And the country is, like, outraged, right? Because ordinary people have lost their jobs, unemployment is at 30 percent, whatever it is.

It's catastrophe and this guy who, you know, politically connected is getting a bailout. And the country reacted though not with Tea Party movement, not with, you know, people demanding more deregulation. It reacted by electing Franklin Roosevelt and it reacted with an enormous labor movement and all the things that we remember from the 1930s.

And when I watched this stuff happen, you know, the banks getting their bailouts I thought we're going to see that happen again, we're going down the tracks of, you know, very well-worn tracks. We can all see what's coming.

BILL MOYERS: And everybody was saying, "Come on Barack, give us an FDR, right?

THOMAS FRANK: That's right. I thought it was a Roosevelt moment. And he certainly had the public, the kind of public adulation that Franklin Roosevelt had in 2008. Remember those crowds when he was inaugurated, all those people out on the National Mall. He was something like a national savior. People really thought it's Franklin Roosevelt all over again. Didn't work out that way.

BILL MOYERS: But recently Barack Obama sent his campaign manager, Jim Messina, to New York to assure the financial services industry, Wall Street, that when they heard Barack Obama talk populist rhetoric on the campaign trail he wasn't going to demonize them.

THOMAS FRANK: He wasn't going to demonize Wall Street? Oh no. This is the amazing thing to me, that we have just come through this sort of extraordinary real world demonstration of the folly of our financial system, of all the stuff that we've been doing, the deregulation of the last 30 years, the setup of the Federal Reserve system, however you want to put it, it has all failed us.

And we haven't been able to rise to the challenge and do anything, you know, to fix it in a really structural way like they did in the 1930s. We haven't done that. And Barack Obama who had that opportunity and had both houses of Congress and had, I mean, the world at his feet in 2008 could have gone in any direction he chose, instead chose to basically follow in the footsteps of the sort of tepid centrist Democrats before him, you know, to do little regulatory things here and there, to use some sort of mean-sounding rhetoric at times, but to not really change anything.

And the failure is the Democrats. Democratic Party has by and large not risen to the challenge. I mean, this is not the party of Franklin Roosevelt, it's not the party of Lyndon Johnson. This is a part that can't, you know--

BILL MOYERS: And Barack Obama for all of his virtues and intelligence is not a man of the people.

THOMAS FRANK: No, he's not. And he also, he's a man of academia. He's a man who believes in experts and expertise as we've seen in many, many, many, all the different sort of arenas of his presidency whether you're talking about the war in Afghanistan or whether you're talking about the financial crisis.

This is a man who defers to experts, believes in expertise. He does not have much sympathy for, say the labor movement. He can't go out there and tell you why, say the regulatory agencies failed. He can't, it doesn't make sense to him. He can't talk about these things that everybody wants to know about.

Now, on the other side you've got a movement, the conservative movement, a right wing populist movement that talks a very good game, that speaks to people's anger and that offers them a kind of idealism, a kind of hope that perversely draws on a lot of the rhetoric of the 1930s and models itself after a lot of the movements of the 1930s.

And what they offer, this is interesting. What they offer, the dream, the sort of utopia, the vision that they have for the future of our country is pure free markets. And they say this all the time. It's not me making this up. You go to any Tea Party rally--

BILL MOYERS: That's right. We've covered them. You're exactly right.

THOMAS FRANK: --and they talk about this. If we can just get government out of the way and we can reach out, you know, and--

BILL MOYERS: But getting government out of the way is what helped bring down the economy--

THOMAS FRANK: Of course, but they say the only problem is that government, you know, yes, we deregulated all that stuff, we deregulated all through those years, but we didn't go far enough. And so you can say to them, "Well, look at the record of George W. Bush, the champion deregulator. Look at all the amazing things that he did to set Wall Street loose to deregulate."

And they're like, "Well, George W. Bush was not a real conservative." They say this all the time. It's very easy for them to, you know, because they're such purists and such ideologues to excommunicate someone like George W. Bush from their movement and say, "Well, he wasn't pure enough." Ten years ago they had little statues of him on their desks, you know. But how he's thrown out of the movement, "Not pure enough" --

BILL MOYERS: That's their idealism?

THOMAS FRANK: -- because of the bailouts.

BILL MOYERS: Their idealism is their unblinking faith in the free market?

THOMAS FRANK: Yes, and this is an idea that when I first started writing about it was something that you only saw from the Jamie Dimons of the world.

I called it market populism. It was something that you saw on CNBC in the early days, in the stock market boom of the '90s. You would see it in, like, personal investment books and I made fun of it. Today it is everywhere. It is epidemic, and it's not just the high and the mighty that believe this stuff now, that believe that markets are both a natural phenomenon and a democratic phenomenon. This is average people all across America that believe this.

BILL MOYERS: But you're a historian. Why has this happened?

THOMAS FRANK: Our anger turned from Wall Street to Washington, and it happened in a very short period of time. If you remember back to 2009 when the bailouts were going on the sort of high point of public anger came when AIG, remember these guys? This is a company that should not exist any longer.

These are the people that invented, they didn't invent the credit default swap, but they sort of took it to its logical extreme. And these guys were not only bailed out, they were handing out bonuses to the executives in the division that had invented the credit default swap and had done all these crazy things. And the public was so angry. This is in March of '09. I remember the feeling.

BILL MOYERS: Yeah, I do to. I was reporting on it.

THOMAS FRANK: People were furious. And then all of a sudden the direction changed and it went away from AIG and over to Washington. And we decided that the real villains in all of this was Washington. And--

BILL MOYERS: But Tom, why wouldn't you feel that way if you saw how the banking committee is dominated by money from Wall Street, if you see the revolving door you talked about, if you know that 18 members of the Federal Reserve Board of Directors benefiting from the bailout, if you see the deregulators helping Wall Street despite all this? Why wouldn't your anger be directed toward Washington?

THOMAS FRANK: They certainly deserve a really, really big helping of public anger. And there's a lot of terms, look, I imagine I'm going to make fun of the Tea Party movement, and that’s certainly what Pity the Billionaire is about, but let's give them some concessions right off the bat.

When they talk about crony capitalism they're right. When they talk about what you just said, all these interconnections between the banks and the legislators, they're right. When they talk about, they use this term, “the ruling class,” that term is totally right on the money. That's a term that we should be throwing around these days. These--

BILL MOYERS: But the ruling class is--

THOMAS FRANK: --people are, they are in bed with each other, you know.

BILL MOYERS: But the ruling class is funding their movement, the Koch brothers, the--

THOMAS FRANK: Exactly, this is the--

BILL MOYERS: --big corporations, Wisconsin.

THOMAS FRANK: -- this is the funny thing that instead of saying, instead of looking at the present situation and saying the regulatory system broke down, we need stricter oversight on these people, we need a political, you know, we need Washington to at least be strong enough and smart enough to supervise these guys and make sure this never happens again which was the response that we had in the 1930s.

Their response is, "It's impossible to regulate these guys." What we have to strive for instead is some kind of pure free market system, so get government out of the way all together. Stop trying to regulate them. And you see the kind of people who've been elected, as a result of this populist anger out there in the country, get in office and immediately go to war against the Securities and Exchange Commission that's supposed to regulate Wall Street.

They want to hammer those guys into the ground. They go after the, what is the new, the only sort of substantial new regulatory agency, the Consumer Financial Protection Bureau, they go after those guys. They've tried to de-fund them. You know, they wanted to make sure Elizabeth Warren would not be chairman of it.

They've gone to war against regulation, against the very idea of government oversight of the financial markets. This is fascinating. How can you react to, you know, three decades of financial deregulation leads to this collapse, this tremendous disaster and our response as a nation has been to say, "Well, we need more of that. We need to deregulate more."

BILL MOYERS: Is one of the reasons money in politics, both of us know there's nothing new about money in politics in American history. What's the difference now?

THOMAS FRANK: Well, there's two things. One is the sheer size of it. We've really turned it loose. The Citizens United decision, we're going to see a wave of money like we've never seen before. The 2010 midterm elections dwarfed what they call independent expenditures which is expenditures by PACs and super PACs were two times what they were in 2008. So there's that.

The other thing is that we are so blasé about the money. It doesn't shock us anymore. You know, and there was a time when, you know, John McCain is a Republican, was offended by money in politics. Today, you know, we've all sort of made our peace with it.

BILL MOYERS: You raised Citizens United. When Justice Anthony Kennedy wrote the majority opinion for the other conservative judges he said flatly quote, "This court now concludes that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption." Can anyone, seriously now, can anyone in touch with reality believe that?

THOMAS FRANK: I don't see how you can. To say that that doesn't give rise to the appearance of corruption when the billionaires are more or less directly, you know, staking these men to run for the presidency and--

BILL MOYERS: And when you've got the banking committee taking money from JPMorgan whose CEO is testifying?

THOMAS FRANK: But even worse when he wrote those words the country was in the throes of this populist outrage at Wall Street because, you know, Wall Street had been able as I said before to get itself a bailout. The connection between private wealth and the, you know, and public power and the force of government had never been more clear.

And that's the moment when he wrote that decision saying, "Well, that is by definition, we hereby decree that that is not corrupt and that it's not even, it doesn't even appear to be corrupt." And yet the country's politics are being moved by that very perception at that same moment.

BILL MOYERS: Someone you know, the writer E.J. Dionne says that the Citizens United decision is part of quote, I'm quoting, "A larger initiative by moneyed conservatives to rig the electoral system against their opponents."

THOMAS FRANK: That’s right.

BILL MOYERS: You agree with that?

THOMAS FRANK: No doubt about it. For a long time the people have been talking about the conservative movement and their effort to develop some kind of permanent lock on power. And I think that Citizens United might be the thing that actually delivers that not because it's going to give Republicans per se a lock on power or give them a permanent majority or anything like that. You're still going to have a two party system no matter what happens, but it will tilt our politics in a certain direction. It will draw both parties by a sort of force of gravity in a certain direction. Before you can even, when you put such a price tag on elected office, and this has been going on for years, but today it's way up there in the hundreds and hundreds and hundreds of millions of dollars to run for the presidency.

And who knows how many millions to run for the United States Senate and a couple million to run for the House of Representatives. When you put a price tag like that on political office you automatically rule out lots of people and lots of ideas from the competition.

If you have to be able to reach out to the billionaire community and make your case to the billionaire community even before you begin, even before you start running for office, you know, automatically a lot of ideas and a lot of ideas that are very traditional, very American, you know, red, white and blue ideas are automatically off the table. You have to be able to please that class of donors before you even start.

BILL MOYERS: So our choices are narrowed to candidates favored by the rich?

THOMAS FRANK: The choices have already been made for us instead of, you know, 20 candidates out there, they've chosen two candidates who've made it through the money primary and that's who we get to take our pick from.

BILL MOYERS: Tom, here's the dilemma. I know a lot of good citizens who are simply giving up. Two nights ago I was with some old friends out in the Midwest, your part of the country, and one of them looked at me and said, "I don't know what to do, so I'm just bailing out." And she was serious.

THOMAS FRANK: Look, I have the same problem myself. I also have an answer. I have a solution for it. You want to hear what it is?


THOMAS FRANK: We need third parties in this country. And by that I don't mean another third party supported by billionaires, that centrist, you know, in the sort of Ross Perot manner. I mean parties that represent different opinions on the spectrum in the manner of the populist party in the 1890s which was really the last time we saw a third party movement, you know, that contested the ballot from the bottom all the way to the top, you know, and they were a real political party. Unfortunately the techniques that the populists used are against the law in most states. If we were to repeal those laws you might have a vibrant third party scene again.

BILL MOYERS: But the two parties, the Republicans and the Democrats make sure that those--

THOMAS FRANK: That those laws stay in place, exactly--

BILL MOYERS: Yeah, that the barriers are not taken down.

THOMAS FRANK: Well, I'll tell you the other thing we need, and this is even, I mean, everything is going against me here, a labor movement. I mean, it just seems as I look back over all the books that I've written and we look back over our lives what's missing from when we were young and what and where we are now, what made that world, you know, in the 1960s, different from this world that we're in today, and the answer just leaps out at you: it was a strong labor movement.

BILL MOYERS: But do you think the returns in Wisconsin suggest that is--

THOMAS FRANK: No, I don't think that's in the cards. And the Democratic Party could have made it a possibility with something like the Employee Free Choice act in the Obama years and they declined, they decided not to do it. They didn't really lift a finger for their friends in the labor movement and are watching them just get wiped out.

BILL MOYERS: If we become as you suggest we are already becoming, a country of rich people, what's the odds then of reversing that--

THOMAS FRANK: Well, we're not going to be a country of rich people, Bill. Some people are going to be rich. We're going to be a country ruled by rich people. We already are to a certain degree, and there's a word for it, plutocracy: Rule by wealth. And there's no doubt in my mind, I mean, this is the direction we've been heading for a long time.

We came to a turning point and we didn't turn. We came to a point where the plutocracy had utterly discredited itself, had ruined all of our savings, you know, smashed our 401ks, defrauded us in countless ways, corrupted our government as we saw in the Bush years and the Jack Abramoff, Tom DeLay years and we came to a turning point and we didn't turn. We decided no, we got to double down on this. We need, you know, a stronger dose of that bad medicine. That's where we are today.

BILL MOYERS: So why pity the billionaire?

THOMAS FRANK: That's sarcasm, Bill.

BILL MOYERS: No, no, Tom Frank sarcastic? Tom Frank, the book is Pity the Billionaire. Very good reading. Thank you very much for being with me.

THOMAS FRANK: Oh, it's my pleasure.

Thomas Frank on Money in Politics

When it comes to the vast, corrupting influence of money in politics, historian Thomas Frank has sounded the alarm loudly and often. In “It’s a Rich Man’s World,” one of his recent essays for Harper’s Magazine, Frank writes, “Over the course of the past few decades, the power of concentrated money has subverted professions, destroyed small investors, wrecked the regulatory state, corrupted legislators en masse, and repeatedly put the economy through the wringer. Now it has come for our democracy itself.”

Bill talks with Frank about the power of concentrated money to subvert democracy.

Frank’s book, What’s the Matter with Kansas? was a best seller and his latest, Pity the Billionaire, asks how Tea Partiers and their allies can make heroes of the rich and mighty who ran us into a ditch.

Editor’s Note:

On June 20, we received a response to this interview from the Senate Banking Committee:

Statement of Senate Banking Committee Spokesman Sean Oblack

“The facts speak for themselves. Under Chairman Johnson’s leadership, the Senate Banking Committee has conducted extensive oversight of the financial services industry and implementation of the Wall Street Reform Act. With respect to JPMorgan Chase specifically, Chairman Johnson was the first to announce hearings on the matter and the first committee chairman to call JPMorgan’s CEO Jamie Dimon to testify. While Senate and House Republicans, along with Mr. Dimon, have fought to weaken or repeal the Wall Street Reform Act, no one has been a stronger defender of the law than Chairman Johnson.”

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