Posted by: Dan Beucke on November 16, 2011 at 3:30 PM
At the tail end of a long interview with Betty Liu on Bloomberg TV today, AIG Chairman Steve Miller was asked what he thought of Occupy Wall Street’s criticism of bailouts given to AIG and other financial firms. (Fast forward to the 10:35 mark on the video above.) “The understanding of the Occupy Wall Street crowd of what makes our country work is probably fairly limited,” Miller says. “It’s a very simplistic view of things. No one will ever know what would have happened to our country and our whole global financial system if AIG had been allowed just to go down.”
To give Miller his due, he does narrow his critique at one point to the “long weekend” in which Henry Paulson and his Treasury team scrambled to save the U.S. financial system:
“It’s lost on them,” he said. “They think, ‘Why are you bailing out Wall Street and not Main Street?’ You have to have a view as to what would have happened if Wall Street had been allowed to just implode. I think it would have been devastating for our whole economy and that would have been far worse for Main Street than what did happen.”
Let’s grant Miller that the subsequent disaster would have been far worse for “Main Street” if there was no bailout of the banks. But in making a more general criticism of the protesters’ “understanding” of how the economic system works, Miller seems to reveal a shallow — shall we say, simplistic? — understanding of the movement’s take on Wall Street and Washington. Let’s examine two common themes in OWS signage:
“Banks Got Bailed Out, We Got Sold Out”
This is one of the most frequently seen messages in the U.S. protests, showing up in the march on Park Avenue bank headquarters, in Zuccotti Park, and elsewhere. A popular variation makes the point that banks got bailed out and then foreclosed on homeowners; another links bailouts to the massive buildup in student debt.
The point may be simple, but it’s not unsophisticated. Washington has avoided a direct bailout of homeowners for three years; now a growing number of economists, financial experts, and politicians believe that only a permanent reduction in mortgage principal will revive the housing market. Among them: Martin Feldstein, economist and chairman of Reagan’s Council of Economic Advisers; Bill Clinton; and hedge fund luminary Greg Lippmann. My colleague Mark Gimein argues that a student loan bailout isn’t far away, either.
“The Money Given Wall Street Flows to K Street”
If we expand Miller’s time horizon — say, to the 10 years leading up to Hank Paulson’s lost weekend — it’s easy to see how the Wall Street/Washington lobbyist connection led to the relaxation of financial regulations. That in turn allowed for the rise of “black box” financial products that were so “unsimplistic” that even bank executives later admitted they didn’t understand the risks they were taking on — for the banks and for taxpayers. If protesters want Washington freed from Wall Street influence, they have another great fan of simplicity on their side: Paul Volcker.
On a lighter note, no one ever argued that a protest movement needs to spout complex arguments to be taken seriously. Effective messaging, in fact, would argue for the opposite. But if Miller or anyone else is looking for more sophisticated OWS signage, the example to the right shows there has been some of that, too.
Update: I have tweaked the language above; no, B, Bill Clinton is not a financial expert.
(Photographer: Ben Furnas)