Accounts of the October 13 meeting between US Treasury Secretary Henry Paulson and top bank CEOs on the government’s bailout of Wall Street—now estimated at $2.5 trillion—paint an extraordinary portrait of class relations in America. Though they were to receive hundreds of billions of dollars from the Treasury to stave off a credit collapse of their own making, the bankers arrogantly refused to accept the slightest limits on their prerogatives.
Instead, the Treasury approached the bankers as a supplicant, agreeing that if they accepted the bailout, it would place no real caps on exorbitant CEO pay and exercise no effective oversight of bank operations.
On the evening of the 12th and morning of the 13th, Paulson telephoned the CEOs of major banks who had gathered in Washington for the annual meeting of the International Monetary Fund. At the time, the US media was predicting a deal along the lines of the European bailout arranged over the weekend: the Treasury would pump money directly into the banks by buying shares and guarantee inter-bank loans.
Such conditions, one need hardly point out, are never granted to ordinary mortals. Working class mortgage holders typically face foreclosure after missing three monthly payments. A small business receiving a loan from a bank must make all interest payments and can typically operate at a loss for at most two quarters before the bank places it in workout, effectively taking over its operations.
The bailout deal underscores a powerful social reality: There is a ruling class in America, whose interests the government is dedicated to defend, by blatantly unequal treatment if necessary. Despite ritual invocations of democracy, the American ruling class will not allow any popular interference in matters affecting its fundamental interests.
The deference paid to this financial aristocracy, amid predictions of a global economic depression, recalls nothing more than the dying days of the Ancien Régime monarchy before the French Revolution. One can imagine similar meetings as Louis XVI’s last finance minister, Viscount Charles Alexandre de Calonne—whose role is now played by Paulson, the multimillionaire ex-CEO of Goldman Sachs—drew up doomed plans attempting to stave off state bankruptcy, while preserving the nobility’s privileges.