Nationalize, Reorganize, Decentralize

Two days ago I wrote about introducing a new kind of scale-based antitrust. Before exploring some other structural reforms, I want to encourage people to join a nationwide demonstration of support for some basic principles of structural change in the banking sector.

On Saturday, 60+ demonstrations will be held around the country, demanding structural change in the banking sector. The group organizing the demonstrations, a New Way Forward, started less than a month ago, but is already approaching 10,000 members. A New Way Forward embodies the logic of the most thoughtful economic thinkers in the country, translated into clear, direct language and action.

We/they support a Nationalize, Reorganize, Decentralize platform, pointing to Krugman on the need for temporary nationalization, Simon Johnson on the need for removing current leadership in the banking sector, and Mike Lux on the importance of creating a new, decentralized private market, with new banks run by new people. Any bank that's "too big to fail" means that it's too big to exist in a free market.

I got involved in A New Way Forward a week or so after it started, and its an amazing grassroots organization in a few ways.

The first is that it is completely unfunded. Tiffiniy Cheng, Donny Shaw, Morgan Knutson, Andrew Packer, and the 60+ local organizers who have sprung up are all working (a lot) for free: not a one is making a dime. There are no paid advertisers, media campaigns, or strategists. Every piece of this effort is unpaid.

The second is that it is intellectually serious and engaged, without being condescending. On the organizers listserv, the 60+ organizers share tips on how to get megaphones, how to make effective signs, how to get permits, who to ask for legal advice...and thoughtful opinion pieces by economists about the pros and cons of different regulations. The wisdom of particular regulations is debated.

The third is that the process is deeply democratic. Debate on the organizers listserv--and it is a listserv about highly contentious issues, so there is debate--is respectful and thoughtful. Suggestions are made, but not commands. In the "top down" vs. "bottom up" range of organizations, this one is deeply bottom up, with a fundamental attitude of respect and care--necessary features in a sustainable democratic community.

All of these things to me give me great hope that it will have an impact, and become a sustainable force demanding a complete change in the way we organize our banking structure, in both the short and long term.

The summary of demands: "Nationalize, Reorganize, Decentralize" applies to banks, but also applies to the politics of the group--everyone comes together to organize locally, in a decentralized fashion.

As Bill Greider said describing it on Bill Moyers, it is an expression of true citizenship--active, thoughtful, public expression and engagement in the most important political debates of our times.

Comments (20)

1. Thanks for the post, Zephyr --and great name by the way.

   This is a hugely important movement and moment. I hope readers here who have the time and the proximity will seriously think about attending these rallys.

   By all means, please click on the link Ms. Teachout has provided.

   We may all have to thank you for your efforts if this thing can snowball enough on time to cause an urgently needed Obama redirect.

   Posted by b_kool_66 at 04/09/2009 @ 4:49pm

2. posted by ZEPHYR TEACHOUT on 04/09/2009 @ 3:42pm

   Did any of the regulatory apparatus that you and N.W.F. want to see implemented at the Federal level exist before "securitized risk" and the general repackaging of debt as an asset broadly within the financial system existed?

   Why does N.W.F. not push for a simple return to the regulatory apparatus that had to be dismantled before debt securitization could exist, and large entities like CitiGroup could come to exist?

   In other words, why do new forms of regulation have to be invented, before the old and OK forms of regulation are simply reinstrumented?

   Posted by syfriendly at 04/09/2009 @ 5:47pm

3. syfriendly--great question.

   it does not apply, of course, to the first two prongs of the platform, which propose a method of responding to the current crisis, not a long-term solution (nationalize now, as we are losing money while not doing so, when its inevitable; reorganize now, but not perpetually).

   however, it does apply to the last prong. for myself, i support reinstalling those regulations, but also installing a system in which political power of banking industry will be less likely to become so powerful again to dismantle the regulations. i will write more about this later in the week, because its an important question. in other words, i think the model of big banks with political power is inherently unstable and will repeatedly lead to deregulation that leads to systemic risk. relatedly, concentrated power is much riskier than decentralized power.

   zt

   Posted by zephyrteachout at 04/09/2009 @ 5:57pm

4. Trillions, trillions ... of dollars, of worthless, toxic, banker version(s) of gambling dept(s), paper made most malignant, should never be nationalized.

   The people should not, and if these times have not found a "small people," will not ... be forced to go anywhere near that shit.

   Bankruptcy reorganization.

   You're not going to get my money, so that maybe, if you feel like it (lol ...) you'll lend my money back to me, fuck you, or be wee folk, lmao.

   And we would love for someone to tell us how functionally, as in where it counts ... nationalization would differ in deeper, further, versions of this our favorite collapse.

   And so prove, that when the it hits the more than likely proverbial fan, that the ones left standing because they had no chair when the music ended. And are thus holding the seemingly treasured, "nationalized" paper, wont in the end be just as fucked.

   Or ... different hand same results.

   Posted by V at 04/09/2009 @ 6:12pm

5. Posted by zephyrteachout at 04/09/2009 @ 5:57pm | ignore this person | warn this person

   To make it clear I support "nationalize now" or what that really means "manage bankruptcies for the apparent zombies now, so that Tim Geithner and his cronies can't rob us anymore, with the intent of rapidly reprivatizing the institutions thus 'nationalized' once they are rehabilitated and a basically renewed regulatory structure is in place".

   Likewise, the managed bankruptcies should involve summary termination of all upper management figures with no chance for compensation, and furthermore no guarantees to share and bondholders that the USG will meet the companies' obligations to share/bond- holders. The USG has no moral obligation to do so and "bankruptcy" means just that.

   I'm looking forward to seeing your detailed suggestions as to how reduction of the banks' political power is to be achieved. I have a feeling that Henry Paulson and Timothy Geithner, both of G-S ("government-sachs"), along with their cronies at the top of the banking world, are the only figures with any say in the matter. I have little hope that the political corruption will ever change.

   Posted by syfriendly at 04/09/2009 @ 6:16pm

6. Posted by zephyrteachout at 04/09/2009 @ 5:57pm | ignore this person | warn this person

   I also really wonder what Joe Trippi is doing high up in N.W.F.

   Trippi was part of the Dean Machine, which, frankly, was very good at moving Dean upwards by harnessing public anger (rightful public anger) without any serious commitment to really doing what needed to be done about the causes of the anger (corrupt parties, tax policy favoring gazillionaires, evil and needless warfare, etc.).

   Frankly, Trippi's presence frightens me.

   But here is a real question for you: given that a major source of the corruption that gives bankers such political power is their deep ties (social, class, contribution, revolving door) to both national political parties, and given that the national political parties - all two of them - absolutely control the regulatory changes that get made, what is your suggestion about how to sever the ties between banks and political parties?

   The 2004 Democratic presidential candidate, John Kerry, is a wholly-owned subsidiary of the former "shadow" banking system, and was such when he ran. There would have been no chance for regulatory reform there. Likewise, according to public disclosure documents required by law, the Obama campaign's single biggest corporate contributors were the organizations that comprise the SAME "shadow" banking system that Kerry danced with.

   What do you think the Obama administration - which is loyally standing with "shadow" banking operative T. Geithner - is going to do to help reduce banks' power?

   Posted by syfriendly at 04/09/2009 @ 6:32pm

7. I still don't like the idea of the government taking over any bank other then the FDIC.

   Of course if they do nationalize, I most certainly will not take a chance and invest in them. Come to think of it, I'll put the rest of my money out in our "unNationalized" Credit Unions.

   Posted by ACook at 04/09/2009 @ 6:43pm

8. "What do you think the Obama administration - which is loyally standing with "shadow" banking operative T. Geithner - is going to do to help reduce banks' power?"

   Posted by syfriendly at 04/09/2009 @ 6:32pm

   I would be willing to bet good money for doughnuts, that in the end it will have been Summers proved to be much closer to shadows than Geithner.

   I said it somewhere else, Summers is now the closest thing we have to Cheney. Is in his way just as dysfunctionally pathological-fanatical.

   Posted by V at 04/09/2009 @ 6:54pm

9. Posted by V at 04/09/2009@6:54pm

   I am also a big non-fan of Larry Summers and that entire cadre of Harvard economists who encouraged the Russians to privatize their economy into oblivion. Lithuania also suffered from his advice.

   I think from the Larry Summers learned alot about how to institute a kleptocracy from his experiences in Russia and Eastern Europe, and we have gotten the benefits of it.

   As for the Nationalize, Reorganize, Decentralize project - I have two words for you & they are "Credit Unions".

   Posted by cdlepthien at 04/09/2009 @ 8:37pm

10. "I mentioned in my article Bankrupting the world that Tim Geithner was just the face, the voice, behind the PPPIP giveaway to America's top commercial banks to restore what amounts to $200 trillion in their cumulative derivative debt. I can say today that it's even more apparent that Larry Summers is the corrupt brain behind the give-away and should go."

    "Second (of the eight reasons to dump summers ... ed), consider Summers infamous comments at the World Bank. In December of 1999, Summers as Chief Economist for the World Bank wrote in a memo that bore his signature and was leaked to the press that though free-trade wouldn't much benefit the environment in developing countries, there was a clear economic logic in dumping toxic waste in them. This gives you a sense of the man's character, or lack of it.

    Summers actually wrote, "I think the economic logic behind dumping a load of toxic waste in the lowest wage countries is impeccable and we should face up to that . . . I've always thought that under-populated countries in Africa are also vastly under-polluted." I wonder how that would have sat with President Obama's late father who was Kenyan. It's patronizing beyond insult. And if that's how Summers calculates human value, we are in big trouble."

    "Third, back in 1998, Summers testified in Congress against regulating the derivatives market. He actually said we could trust Wall Street."

    "Fourth, Summers backed the awful Commodity Futures Modernization Act of 2000, the flip-side of Glass-Steagall."

    "Sixth, Summers proclaimed in a New York Times Op-Ed "we're all Friedmanites.""

    From "Eight reasons to dump Larry Summers"

    Democratic Underground.

    http://tinyurl.com/d6jzzf

    Posted by V at 04/09/2009 @ 10:26pm

11. We don' need no steenkin' reg-u-lAYtiONS!

    Posted by snowball666 at 04/10/2009 @ 10:45am | ignore this person | warn this person

    Great imagery - smarmy gringo banditos this time around.

    "We are your friens"

    This is what I think should be done.

    http://www.metacafe.com/watch/191248/the_wild_bunch_finale/

    Posted by OneVote at 04/10/2009 @ 12:06pm

12. Posted by snowball666 at 04/10/2009 @ 12:22pm

    You're too kind with the pie and punch. I'd rather give 'em kool-aid and be done with it. :-)

    Posted by ACook at 04/10/2009 @ 12:41pm

13. Posted by snowball666 at 04/10/2009 @ 12:22pm | ignore this person | warn this person

    Don't forget that it was mostly The Federales ammo!!

    I'll settle for Jim Jones style - much more "dignified."

    Posted by OneVote at 04/10/2009 @ 1:27pm

14. I always knew the democrats at <i>La Nation</i> were simpleminded cheerleaders, but then did they become the premier DP astroturf advertiser on the web?

    Posted by AlanSmithee at 04/10/2009 @ 2:47pm

15. Sadly, we may be in more of a 'Butch and Sundance' type situation vis a vis the economy.

    Posted by snowball666 at 04/10/2009 @ 2:51pm | ignore this person | warn this person

    It was interesting that The Wild Bunch was set in 1913, the infamous year that the federal income tax was resurrected from repeal post civil war, and that many tariffs were lifted on international trade - the start of the free trade onslaught on our economy. Funny that an additional gift of the free traders including loss of jobs is the income tax!

    Interesting time period with Huerta in Mexico and Pres. Wilson's distaste for him (something about free elections?), WWI coming with Archduke Ferdinand's assassiantion, and the Bolshevik Rev. in 1917. Wilson enacted the first effective national draft circa 1917.

    In many respects the closing of an era - (the Wild West and expansion westward) and the opening of a new one - creeping federalism.

    Posted by OneVote at 04/10/2009 @ 3:38pm

16. Sadly, we may be in more of a 'Butch and Sundance' type situation vis a vis the economy.

    Posted by snowball666 at 04/10/2009 @ 2:51pm | ignore this person | warn this person

    Harken back to the S & L crisis - and they say it wouldn't happen again.

    Posted by OneVote at 04/10/2009 @ 4:02pm

17. Dubya's tax cut threw more gas on the fire and blew the bubble up while his war spending was dragging the deficits into the trillions.

    Kaboom.

    Posted by snowball666 at 04/10/2009 @ 4:59pm | ignore this person | warn this person

    His parting gift. Strange how the "moonbats" predicted Sept. 2008.

    The pendulum swings back and forth.

    Posted by OneVote at 04/10/2009 @ 10:25pm

18. I did my level best to council my friends that were signing up for loans at the peak...some listened and are waiting for the real-estate bottom with me...some are treading the waters of negative equity...

    Posted by snowball666 at 04/11/2009 @ 07:13am | ignore this person | warn this person

    You know the game.

    Roubini, Krugman,Schiff,Paul,Baker,

    'Yesterday in an interview with the Associated Press's Deb Reichmann, Vice President Cheney repeatedly insisted that no one anticipated the looming U.S. financial crisis. "I don't think anybody saw it coming," he said. He then compared the financial crisis to 9/11, another crisis that supposedly no one predicted'.......

    versus

    'Oddly enough, in today's White House press briefing, Deputy Press Secretary Scott Stanzel insisted that the Bush administration "saw those [financial] problems on the horizon," but it was Congress's fault for taking "a long time…to act." In reality, many economic experts -- such as Nouriel Roubini, Dean Baker, and Paul Krugman -- did predict the economic crisis; the Bush administration just wasn't listening to them. In reality, administration officials often turned a "blind eye to the impending crisis."'

    "Cheney: No One Could Have Predicted the Financial Crisis, Just as No One Foresaw 911"

    ThinkProgress.org

    Posted by OneVote at 04/11/2009 @ 09:29am

19. The Obamanation of desolation administration and Demoncrat congress is making it perfectly clear to the business world and ALL corporations that;

    1. the future of business growth and profit will NOT be in the U.S.A.!

    2. the future of the nation is as an importer not an exporter of manufactored goods and commodities as long as the consumer wealth lasts!

    3. why waste a productive growing future by living here as there is no such thing as patriotism and nothing to be gained by it! Get educated here, then leave and enjoy an abundant life elsewhere!

    Posted by comancheamerican at 04/11/2009 @ 10:08am

20. Posted by comancheamerican at 04/11/2009 @ 10:08am | ignore this person | warn this person

    hey - Bush says making hamburgers at fast food restaurants are manufacturing jobs - who says we are losing our industrial base! Fear not.

    Posted by OneVote at 04/11/2009 @ 10:14am