Every week, New York Magazine writer-at-large Frank Rich talks with assistant editor Eric Benson about the biggest stories in politics and culture. This week: the Koch brothers enact revenge in Michigan, HSBC gets away with high crimes, and the Supreme Court takes on gay marriage.
The Republican-led Michigan legislature just passed a “right-to-work” law, severely diminishing union power in a stronghold of American labor. Is this an overreach by a party fearing for its survival or the latest wave in a powerful anti-union surge?
For all the Beltway hysteria about the fiscal cliff, the forgotten Americans in the debate are American workers: both those who are employed and have seen their wages stagnate and those who are unemployed and can’t find work. The fixed ideas in Washington right now — reducing the deficit, cutting entitlements, increasing tax rates for the upper 2 percent — do not begin to address this crisis. What the stunning victory of the Michigan GOP (the governor as well as the legislature) demonstrates is that while Romney may have lost, the Koch brothers and other right-wing industrialists determined to erode workers’ pay, benefits, and standing have only just begun to fight. If they can’t win a national election, they will pour money in at the local level in state after state, even seemingly blue states like Michigan and Wisconsin, to further their own financial interests. It’s going to be trench warfare in the coming years.
Also this week, the Justice Department and the Manhattan DA’s office imposed a $1.92 billion fine on HSBC for, among other infractions, allowing Mexican and Colombian drug cartels to launder money in the U.S. and working with Saudi banks that have close ties to terrorist organizations. The real news, of course, was that neither the bank nor its executives were indicted for any crimes. What should we take from this?
If big banks can enable drug traffickers, terrorists, and the Ahmadinejad regime and still escape serious criminal punishment, what can they do that would break the law? Apparently nothing. By this legal standard, HSBC’s top officers could rape and pillage anyone they want, perhaps literally as well as metaphorically, and get to settle with a fine — a fine that no matter how ostensibly large can be written off as the cost of doing business. The government’s rationale for this “settlement” — that criminal indictments of HSBC would bring the bank to ruin and take the economy along with it — put big banks even more above the law than they were before the crash. As Neil Barofsky, the outspoken former TARP inspector general wrote in The New Republic, “The largest banks are in many ways even more systematically dangerous today than when we bailed them out.” Does anyone in his right mind not think that this state of affairs, where too-big-to-fail banks are bigger and more ungovernable than ever, will not lead one day to exactly the financial catastrophe this resolution of the HSBC case is supposed to head off?
The Times reported that officials within the Justice Department had urged a criminal indictment but that Treasury and the Federal Reserve won out with the lesser penalty. What does it say about the Obama administration that Treasury and the Fed are dictating judicial policy?
Once again that the administration’s original economic team, protective of the financial sector and less focused on jobs, may have been its biggest mistake. At least for another few weeks, Timothy Geithner, Obama’s original choice for Treasury secretary, is still there. He brought along the values of his mentor, Robert Rubin, who was practically one-stop shopping for the Obama economic team during the transition four years ago. Rubin was the Clinton Treasury secretary who championed the deregulation of Wall Street (in the form of the repeal of the Depression-era Glass-Steagall Act), then exited through the government’s revolving door to cash in on that deregulation by joining the newly created Citigroup (a behemoth that came into being thanks to the repeal of Glass-Steagall). And then stuck everyone else with the bill when he walked away scot-free with a fortune after Citi nearly collapsed because of the reckless gambling that occurred during his tenure. This is exactly the kind of moral calculus you see in the administration’s — that would be Treasury’s — decision to coddle HSBC rather than enforce the law.
In your piece in July 2011, you wrote that “what haunts the Obama administration is what still haunts the country: the stunning lack of accountability for the greed and misdeeds that brought America to its gravest financial crisis since the Great Depression.” Is the administration haunted still?
Yes. See above. For all that is admirable about this president, this is the failure that could overshadow his legacy. It is astonishing that under this Democratic administration Wall Street has flourished more or less unscathed and still underregulated while middle-class Americans, and not just in Michigan, remain in a fight for their economic lives.
The Supreme Court announced last week that it would hear two cases challenging same-sex marriage bans. Advocates are concerned about the case involving California’s Proposition 8 because an adverse court decision could set back the cause for decades. Was it wise to push that case toward the Court?
Too late to turn back the clock on that now. My own guess is that this very political court — reflecting the personality of the chief justice, John Roberts — will not want to risk being on the wrong side of history, as reflected in all polls as well as the actuarial tables showing, as George Will put it, that “quite literally, the opposition to same-sex marriage is dying.” So if the court stops short of unequivocally clearing the path for same-sex marriage, it will find a way to punt, fudge, or kick the can down the road a little bit. Roberts doesn’t want to be remembered in history as presiding over the court that produced the Dred Scott decision of the gay civil rights movement.
James Harding, the editor of Rupert Murdoch’s Times of London, was forced to resign yesterday. Some speculated that he was axed because his paper offered serious coverage of the phone-hacking arrests at News Corp. newspapers. Murdoch is fresh off closing down his iPad experiment, the Daily. Does any of this really affect his empire and its boffo entertainment-industry profits?
No. But the always less profitable print bits of News Corp., including the British and American papers, have now been quarantined into a separate company (still called News Corp.) for Rupert to play with as his own toy while the fabulously lucrative television and film divisions, united under the Fox brand, are free to pile up their profits unencumbered by old media. Whatever Murdoch does with the Times or any of his other journalistic (I used the word advisedly) outfits at this point has no effect on the bottom line, however malign his effect on civilization as we know it. Best to look at Murdoch as a far less sympathetic King Lear on the heath, railing at the heavens.