The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street [Paperback]

Robert Scheer (Author)

Book Description

Publication Date: September 7, 2010

In The Great American Stickup, celebrated journalist Robert Scheer uncovers the hidden story behind one of the greatest financial crimes of our time: the Wall Street financial crash of 2008 and the consequent global recession. Instead of going where other journalists have gone in search of this story—the board rooms and trading floors of the big Wall Street firms—Scheer goes back to Washington, D.C., a veritable crime scene, beginning in the 1980s, where the captains of the finance industry, their lobbyists and allies among leading politicians destroyed an American regulatory system that had been functioning effectively since the era of the New Deal.

This is a story largely forgotten or overlooked by the mainstream media, who wasted more than two decades with their boosterish coverage of Wall Street. Scheer argues that the roots of the disaster go back to the free-market propaganda of the Reagan years and, most damagingly, to the bipartisan deregulation of the banking industry undertaken with the full support of “progressive” Bill Clinton.

In fact, if this debacle has a name, Scheer suggests, it is the “Clinton Bubble,” that era when the administration let its friends on Wall Street write legislation that razed decades of robust financial regulation. It was Wall Street and Democratic Party darling Robert Rubin along with his clique of economist super-friends—Alan Greenspan, Lawrence Summers, and a few others—who inflated a giant real estate bubble by purposely not regulating the derivatives market, resulting in the pain and hardship millions are experiencing now.

The Great American Stickup is both a brilliant telling of the story of the Clinton financial clique and the havoc it wrought—informed by whistleblowers such as Brooksley Born, who goes on the record for Scheer—and an unsparing anatomy of the American business and political class. It is also a cautionary tale: those who form the nucleus of the Clinton clique are now advising the Obama administration.

 

Editorial Reviews

From Publishers Weekly

Following Ronald Reagan' s obsession with the radical deregulation of financial markets through its apotheosis under the Clinton administration to Obama' s reform efforts--which rely, oddly enough, on Clinton cronies to clean up (and profit from) the mess they made--Scheer (The Pornography of Power) proves that, when it comes to the ruling sway of money power, Democrats and Republicans, Wall Street and Washington make very agreeable bedfellows. Scheer names names (Robert Rubin, Lawrence Summers, Alan Greenspan), while praising those who sounded the alarm and underscoring the foreseeable results of putting Wall Street in the driver' s seat. What grew in this regulatory vacuum, Scheer shows, was a global casino, a mind-bendingly enormous and arcane system of gambling on new financial products worth hundreds of trillions of dollars. By 2007, when the house of cards collapsed, Wall Street alone understood what it had wrought while its government partners remained clueless.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From Booklist

*Starred Review* Coziness between Wall Street and Washington, D.C., from as far back as the Reagan administration, set up the nation for a deliberate swindle that nearly brought down the U.S. economy, argues Scheer, a veteran journalist and editor of TruthDig.com. Drawing from investigative reporting, memoirs, and news accounts, Scheer traces the building crisis through the Reagan, Clinton, Bush, and even Obama administrations, taking aim at three myths: that the financial markets are logical and self-correcting, that excesses only hurt speculators and not the general public, and that government regulation stands in the way of effective free enterprise. Instead, he presents a portrait of financial and political skulduggery by several influential players, notably Alan Greenspan, Robert Rubin, and Phil Gramm, and heroic efforts by a few regulators to stop it. Scheer explains in accessible detail the expanding derivatives markets, loosening of regulations on financial activities, and the subprime mortgage market, with much of the abuse aided and abetted by a handful of influential men. He highlights Rubin’s machinations within government to grant expanded powers to Enron and Citigroup, then later joining Citigroup to benefit from the changes that he helped to engineer. Scheer is also critical of the business press that championed deregulation and asked few questions as iconic figures sat atop failure after failure, many of them now engaged in “reforming” the system. A scathing, penetrating look at the unsavory links between American finance and politics. --Vanessa Bush

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Product Details

• Reading level: Ages 16 and up
  
• Paperback: 304 pages
• Publisher: Nation Books (September 7, 2010)
• Language: English
• ISBN-10: 1568584342
• ISBN-13: 978-1568584348
• Product Dimensions: 8.2 x 6.5 x 0.9 inches
• Shipping Weight: 7.2 ounces (View shipping rates and policies)
• Average Customer Review: 4.8 out of 5 stars  See all reviews (40 customer reviews)
• Amazon Best Sellers Rank: #49,429 in Books (See Top 100 in Books)
  • #68 in Books > Business & Investing > Industries & Professions > Banks & Banking

More About the Author

Robert Scheer has built a reputation for strong social and political writing over his 30 years as a journalist. His columns appear in newspapers across the country, and his in-depth interviews have made headlines. He conducted the famous Playboy magazine interview in which Jimmy Carter confessed to the lust in his heart and he went on to do many interviews for the Los Angeles Times with Richard Nixon, Ronald Reagan, Bill Clinton and many other prominent political and cultural figures.

Between 1964 and 1969 he was Vietnam correspondent, managing editor and editor in chief of Ramparts magazine. From 1976 to 1993 he served as a national correspondent for the Los Angeles Times, writing on diverse topics such as the Soviet Union, arms control, national politics and the military. In 1993 he launched a nationally syndicated column based at the Los Angeles Times, where he was named a contributing editor. That column ran weekly for the next 12 years and is now based at Truthdig.

Scheer can be heard on the political radio program "Left, Right and Center" on KCRW, the National Public Radio affiliate in Santa Monica, Calif. He is currently a clinical professor of communications at the University of Southern California's Annenberg School for Communication and Journalism. Scheer has written nine books, including "Thinking Tuna Fish, Talking Death: Essays on the Pornography of Power"; "With Enough Shovels: Reagan, Bush and Nuclear War"; "America After Nixon: The Age of Multinationals"; with his son Christopher and Lakshmi Chaudhry, "The Five Biggest Lies Bush Told Us about Iraq"; "Playing President: "My Close Encounters with Nixon, Carter, Bush I and Clinton--and How They Did Not Prepare Me for George W. Bush"; and "The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America." Scheer's latest book, "The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street" (Nation Books), will be released on September 7, 2010.

Scheer was raised in the Bronx, where he attended public schools and graduated from City College of New York. He studied as a Maxwell Fellow at Syracuse University and was a fellow at the Center for Chinese Studies at the University of California at Berkeley, where he did graduate work in economics. Scheer is a contributing editor for The Nation as well as a Nation Fellow. He has also been a Poynter Fellow at Yale, and was a fellow in arms control at Stanford.

Customer Reviews

Most Helpful Customer Reviews

146 of 151 people found the following review helpful:

5.0 out of 5 stars The great American Stickup, September 8, 2010

By 

Herbert L Calhoun "paulocal" (Falls Church, VA USA) - See all my reviews
(REAL NAME)   

This review is from: The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Paperback)

In this book, "deregulation" is a four-letter word: a synonym for leaving the U.S. taxpayer, U.S. markets and the U.S. reputation wide open to greedy mindless homegrown plutocrats. In short, it is a synonym for leaving the nation vulnerable to conscienceless unpatriotic Wall Street thieves.

Here in easy to understand language, Robert Scheer has pealed back the layers that cover up the whole stinking mess that has become "stripped-down vulnerable deregulated America." The method of robbery is basically a five-step political process: (1) "demagog" FDR and all existing regulations relentlessly as the enemy of free enterprise; (2) use paid lobbyist to help justify, tear-down and then rewrite new regulations; (3) use lobbyists' contributions to buy off the votes of key politicians in both parties to open up the laws for the impending thievery; (4) once legislation is passed, oversee the Wall Street financial casino with watchdogs that do not watch; and then (5) appoint members of the plutocracy who stand to gain the most, as facilitators and the palace guards of policy.

The present system of "high-level state sanctioned grand larceny" was designed and implemented, not by Ronald Reagan, or GW Bush, but by William Jefferson Clinton with the help of none other than the gang of four -- Timothy Geitner, Robert Rubin, Alan Greenspan, and Lawrence Summers. However, the unsung hero of the grand heist, was Windy Lee Gramm, senator Phil Gramm's paramour and then wife, (who as a grad student was first his lover and then very quickly his wife). It was this "devious duo" that engineered the plans for the ultimate robbery of the American economic system.

It was Windy's computer models, of exotic financial instruments that unleashed the derivatives market (of "securitized (packaged subprime bundles) loans, "credit default swaps," etc.) on an unsuspecting American public. She of course then was immediately promoted to an oversight position to oversee the very OTC commodities markets she had help prepare for raiding. Then before the flax hit the fan, she was out of "Dodge" and off to Enron, where there she helped with, among other things, some now infamous creative accounting.

However, the skids for raiding the U.S. financial markets had been well-greased before Mrs. Gramm rode into town on her husband's white horse. Roosevelt's New Deal Reforms, which had put a check on the Robber Baron's of the 1920s had been under attack since Ronald Reagan's administration. But Reagan got no further than "attack rhetoric." It took the "faux liberal," Bill Clinton, and his gang of four (Rubin, Geithner, Greenspan, and Summers) to put Reagan's ideas into practice and to then pull off the ultimate economic heist. Once their buddies had their billions, and all the illicit bonuses were paid, only then did we realized that the U.S. treasury had been sacked in broad daylight.

But now Obama appears to be even "slicker" than "slick" Willie himself. While campaigning against the Clinton's during the democratic primary, Obama had used the "no financial tricks" economic guru, Warren Buffet as his chief economic advisor. Buffet had described the financial "dirty tricks" designed by Wendy Gramm and later fully implemented by "the gang of four as "Rubinomics," as "weapons of financial mass destruction."

During the run up to the election, Obama had essentially agreed with Buffet, that the Clinton/Bush/Gramm approach was headed straight to disaster. Yet, once in office, he not only changed his tune, but it seems he also had no place on his financial team for the renown Buffet. Instead, he retained as his chief advisors (and to preside over recovery from the "Gramm/Cheney/Bush/Clinton mess), the same "economic hit team" that underwrote the mess in the first place. So under Obama, the "the gang of four" got in on the ground floor to set up a new "kinder and gentler" version of America's casino capitalism, although one more carefully covered over with a thinly veiled limp-wristed set of regulations that are being sold to us by Barack Obama, Nancy Pelosi, Chris Dodd and Barney Frank as "real" financial regulations.

With Scheer's book, I guarantee that the next heist, which is already well into the making, will not be as quite as easy to pull over on the American people as the last one. Five Stars

56 of 56 people found the following review helpful:

5.0 out of 5 stars Crime: Public, Private and Bipartisan, September 22, 2010

By 

James Mamer (Modjeska Canyon, CA USA) - See all my reviews
(REAL NAME)   

Amazon Verified Purchase

This review is from: The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Paperback)

"Steal a little and they throw you in jail - Steal a lot and they make you king" - Bob Dylan

Imagine, for a moment, that a burly stranger takes your wallet, removes $20, and walks away. It stands to reason that, at the very least, you would want the culprit caught. You might even take the time to file a police report and describe the thief to a sketch artist. Now imagine instead, a very well dressed thief, with a dozen or so well dressed associates, who manage to take your house, your job, and even to diminish the value of your 401K, would you want this group caught just as badly? And if it turns out that this second heist was the work of identifiable thieves, would you spend the time necessary to learn who they were and how the deed was done? Or would you rather squeal and scream at whoever and whatever is directly in front of you?

That is the choice you face when deciding whether or not to read "The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street". In it, veteran journalist and Truthdig editor, Robert Scheer does exactly what the subtitle implies. He describes in detail how we got into the economic mess we are in.

Of course, everyone knows some of what happened. Most, probably suspect that both bankers and brokers had a hand in creating the real estate mess. Most have heard something about derivatives, CDOs, Alt-A loans, and subprime loans. And those government sponsored bank bailouts are, by now, infamous - even if there seems to be widespread confusion about which administration (Bush or Obama) did what. But when did this all start and what are the political, economic, and ideological connections? More simply, what is the answer to a question posed by a bewildered George W. Bush: "How did this happen?"

As Mr. Scheer tells it, the crime unfolded over almost 3 decades. Ronald Reagan laid the groundwork with the indispensible help of antiregulatory true believers Dr. Wendy Gramm and her husband, Senator Phil Gramm. Scheer carefully describes their efforts to overturn the financial regulatory system introduced by Franklin Roosevelt's New Deal. The top target, dubbed the "holy grail of Wall Street," was the 1933 Glass-Steagall Act, which regulated the financial services industry by erecting a wall between the commercial banks (entrusted with depositors' FDIC insured funds), investment banks, and insurance companies. Although by the end of Reagan's presidency Glass-Steagall remained in place, Scheer explains how President Reagan had been wildly successful on the ideological front in selling the view that big government was the cause economic stagnation.

Then, with Big Government as the newly accepted enemy of unrestricted wealth, the Republicans (in the Reagan and in both Bush administrations) found a way to achieve at least a part of what they wanted by appointing regulators who hated regulations. Thus, in 1988, Wendy Gramm became chair of the Commodity Futures Trading Commission. The foxes were now charged with guarding the henhouse.

While Scheer credits the Republicans with laying the necessary foundation, he is consistently nonpartisan and the real deregulatory victories are shown to come during the Clinton administration. Working in the ideologically anti-government atmosphere that he inherited, it is Bill Clinton, Treasury Secretary Robert Rubin, Larry Summers, Fed chair Alan Greenspan, along with the Republican Congress, that successfully ended Glass-Steagall.

The story is complex, but, as written here, understandable. The end of effective financial regulation, the end of Glass-Steagall, comes in 1999 with the Financial Services Modernization Act. A year later that is followed by the Commodity Futures Modernization Act, which insured the legality of unregulated over-the-counter derivatives and paved the way for the rise and fall of Enron and Arthur Anderson.

If this seems too much like a story composed of dry and difficult economic statistics it is not. Scheer laces the tale with fascinating details, like the inclusion in the Commodity Futures Modernization Act, of the "Enron loophole" which specifically exempted energy trading from regulatory scrutiny. And there is the story of the largely unsung heroine, Brooksley Born, who as the successor to Wendy Gramm at the Commodity Futures Trading Commission struggled valiantly to save us from the coming unregulated nightmare of unlimited over-the-counter derivatives including those labeled "Collateralized Debt Obligations" (CDOs) which allowed loan originators to retain no residual risk for loans they made to those obviously unable to pay.

The tale of Born's meeting with Alan Greenspan, attributed to an article published in Stanford Magazine, is almost surreal. Greenspan begins by saying to Born, "Well, Brooksley, I guess you and I will never agree about fraud." So Born asks, "What is there not to agree on?" "Well," Greenspan replies, "you probably will always believe that there should be laws against fraud, and I don't think there is any need for a law against fraud." Given what we now know about former NASDAQ chair, Bernie Madoff, Enron, Worldcom, and Global Crossing, it is not hard to imagine this Alan Greenspan as a character in Alice in Wonderland with Alice remarking, off to the side, "curiouser and curiouser!"

In "The Great American Stickup" Robert Scheer has clearly laid out the connections that run from Ronald Reagan through the Gramms and on to Enron; from Robert Rubin at Treasury to Citigroup; from Citigroup back to Enron and on to the subprime loan craze. He traces the evolution of Fannie Mae and Freddie Mac from government-sponsored creations to privately owned, and publicly traded, financial monsters. Scheer writes incisively about the incestuous world of finance and government where Goldman Sachs is nicknamed Government Sachs. He connects Hank Paulson and Goldman to AIG and Timothy Geithner to President Obama and back to AIG.

The saddest connection of all may turn out to be the one that runs from candidate Obama to President Obama. Early in the book Scheer quotes Obama's important speech at Cooper Union where the candidate astutely observed, "The American experiment has worked in large part because we have guided the market's invisible hand with a higher principle. Our free market was never meant to be a free license to take whatever you can get, however you can get it."

But that speech, with its clear recognition of the wisdom of Franklin Roosevelt's New Deal, stands in stark contrast to the policies of President Obama and leads me to one last quote from Alice (or, as I would like to imagine, from President Obama himself): "I wonder if I've been changed in the night? Let me think. Was I the same when I got up this morning? I almost think I can remember feeling a little different. But if I'm not the same, the next question is 'Who in the world am I?' Ah, that's the great puzzle!"

Buy this book, read it, and discuss it with friends and neighbors over a pot of tea, or if you prefer, a pot of coffee.

79 of 83 people found the following review helpful:

5.0 out of 5 stars Great read!, August 22, 2010

By 

nicole - See all my reviews

This review is from: The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street (Paperback)

The Great American Stickup is an excellent read! Mr. Scheer does an outstanding job analyzing how we got into the financial crisis and, in doing so, sheds light on what is needed to avoid a repeat. The book is full of fascinating and important anecdotes, exposing key actors and clear details of actions they took that sewed the seeds of our financial meltdown. His style is highly engaging -- given his journalistic credentials, this isn't a surprise. I have never read an account that so clearly lays out the relationship between Washington and Big Business and its impact on Main Street. His case isn't a partisan one and that makes this book particularly powerful.