Greg Palast is an investigative journalist. In an article in Vice, he says that a source has given him a secret memo whose “content was so explosive, so sick and plain evil, I just couldn’t believe it.” The document that he calls the ‘End Game Memo’ reveals how top US treasury officials secretly colluded with the heads of major banks to implement the deregulations that led to the financial collapse. Once again, this was something that was suspected but it makes a difference to have it actually spelled out.
The Memo confirmed every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet.
The Treasury official playing the bankers’ secret End Game was Larry Summers. Today, Summers is Barack Obama’s leading choice for Chairman of the US Federal Reserve, the world’s central bank. If the confidential memo is authentic, then Summers shouldn’t be serving on the Fed, he should be serving hard time in some dungeon reserved for the criminally insane of the finance world.
He describes what happened and it features the usual players: Summers, Robert Rubin, Timothy Geithner and the heads of the five biggest US banks, aided by the Wall Street friendly and ambitious Barack Obama
The year was 1997. US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks. It was like replacing bank vaults with roulette wheels.
Second, the banks wanted the right to play a new high-risk game: “derivatives trading”. JP Morgan alone would soon carry $88 trillion of these pseudo-securities on its books as “assets”.
Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives.
But what was the use of turning US banks into derivatives casinos if money would flee to nations with safer banking laws?
The answer conceived by the Big Bank Five: eliminate controls on banks in every nation on the planet — in one single move. It was as brilliant as it was insanely dangerous.
They then used the World Trade Organization to strong-arm as many nations as they could across the globe to accept the plan. Brazil was the only major nation to resist and they were threatened with all manner of retaliation if they did not play along. And the result, as they say is history, with the financial crisis hitting one nation after another like dominos, while the banks escaped and ended up doing even better. And the architects of that disaster, like Summers, Geithner, and Rubin, are still around and prospering.
And of course, it should be no surprise that it is being strongly hinted that Obama will appoint Summers as the next head of the Federal Reserve and that he is telling his own supporters to knock off the criticisms of him and stop campaigning for Janet Yellen. It is not that Yellen, currently vice-chair of the Fed, is some flaming radical. One poll of Wall Street bankers and traders found that Yellen was overwhelmingly favored by them, and by many others in the financial world and has been endorsed by the New York Times.
But what really counts are the opinions of the members of a closely knit insiders club and it is clear that Summers is their choice and that he has the ear of Obama. Summers has always been a big fan of deregulation and was part of the insider group, along with Rubin and Alan Greenspan that back in the 1990s sabotaged the efforts by Brooksley Born, then head of the Commodity Futures Trading Commission, to regulate the derivative markets. She was proven right and these other people wrong when these unregulated instruments precipitated the financial crisis a decade later. But who cares if you are right or wrong? What matters is whether you increase the profits of the major banks and for that Summers is your man.
Palast can be erratic in some of his scoops but seems convinced that the memo he received is genuine but, despite being so explosive, this story has not yet been picked up by the major media. On his own website, Palast posts the story and links to some of the sources.
It will be interesting to see if this memo is picked up by Yellen supporters to attack the candidacy of Summers. The catch is that the people involved in this particular game are all establishment types who, while they may favor one individual over another, do not want to expose the corruption of the entire system. This may make them reluctant to use the Palast End Game Memo even if they are convinced it is genuine and could be used against the Summers candidacy.