Janine Wedel - Unaccountable - How Elite Power Brokers Corrupt Our Finances, Freedom, and Security

41. Group of Thirty, Consultative Group on International Economic and Monetary, Inc. (http://www.group30.org/members.shtml).

Here’s how the Washington Post described the G30 in early 2013: Neil Irwin, “How do we fix the global economy? Here’s the answer from the secretive group of 30 bankers that runs the world.” Washington Post, February 11, 2013 (http://www.washingtonpost.com/blogs/wonkblog/wp/2013/02/11/how-do-we-fix-the-global-economy-hes-the-answer-from-the-secretive-group-of-30-bankers-that-runs-the-world/).

See also Zero Hedge, a well-trafficked financial news aggregator and commentator site, which called it the “Goldman Sachs-sponsored G30” (“Tyler Durden,” “ECB Head Forced to Defend His Goldman ‘Conflicts of Interests’.” Zero Hedge, December 6, 2012 (http://www.zerohedge.com/news/2012-12-06/ecb-head-forced-defend-his-goldman-conflicts-interest]).

42. Interview with Stuart Mackintosh, executive director, Group of Thirty, June 13, 2014.

43. Eleni Tsingou, Club Model Politics and Global Financial Governance: The Case of the Group of Thirty. Doctoral dissertation, University of Amsterdam, 2012 (http://dare.uva.nl/document/364210), p. 87. The G-30 report she references is: Group of Thirty, Derivatives: Practices and Principles. Global Derivatives Study Group, Washington D.C., July 1993.

44. Gillian Tett, Fool’s Gold: The Inside Story of J.P. Morgan and How Wall Street Greed Corrupted Its Bold Dream and Created a Financial Catastrophe. New York: Free Press, 2009, p. 34.

45. See http://www.nytimes.com/1993/07/22/business/market-place-group-approves-use-of-derivatives.html.

46. Gillian Tett, Fool’s Gold: The Inside Story of J.P. Morgan and How Wall Street Greed Corrupted Its Bold Dream and Created a Financial Catastrophe. New York: Free Press, 2009, p. 35.

47. Tett’s quote reads in full. (Gillian Tett, Fool’s Gold: The Inside Story of J.P. Morgan and How Wall Street Greed Corrupted its Bold Dream and Created a Financial Catastrophe. New York: Free Press, 2009, p. 35.)

The tome . . . did it drop any hint that the derivatives world might benefit from a centralized clearing system, like that for commodities derivatives and the New York Stock Exchange, to settle its trades. These clearing systems not only recorded the volume of trades, providing a valuable barometer of activity that signaled signs of trouble, but also protected investors from the eventuality that the party on the other side of the trade—the counterparty—might fall through on a deal, leaving the trade in limbo.

Of course, this very counterparty issue was to rear its ugly head—and in a big way—in the 2008 financial crisis, when big banks scrambled to assess the massive exposure they had to collapsing deals. This report shows that the struggle to measure counterparty risk continues (http://www.newyorkfed.org/newsevents/news/banking/2014/an140115.html).

48. See http://www.nytimes.com/2009/01/04/magazine/04risk-t.html?pagewanted=all&_r=0

49. Interview with Stuart Mackintosh, executive director, Group of Thirty, June 13, 2014.

50. Ibid. He also said the Group has “elements of [both] formality and informality” and that most members “have straddled both . . . public and private [roles of influence].”

51. Ibid.

52. See Eleni Tsingou, Club Model Politics and Global Financial Governance: The Case of the Group of Thirty. Doctoral dissertation, University of Amsterdam, 2012, p. 249 (http://dare.uva.nl/document/364210).

53. For discussion of the impact of these transformational developments, see Janine R. Wedel, Shadow Elite: How the World’s New Power Brokers Undermine Democracy, Government, and the Free Market . New York: Basic Books, 2009, pp. 23-45.

54. The three-quarters figure is from government scholar Paul C. Light, who compiles the most reliable figures on federal contractors in the United States. In 2008, he calculated that the contract workforce consisted of upwards of 7.6 million employees, or “three contractors for every federal employee.” Paul C. Light, “Open Letter to the Presidential Candidates.” Huffington Post , June 25, 2008 (http://www.huffingtonpost.com/paul-c-light/open-letter-to-the-presid_b_109276.html).

See Chapter 6 for further information on government contracting.

55. The excesses in Iraq of the now infamous Blackwater (renamed Xe and renamed again Academi) security firm are well known, but the public is practically unaware that the outsourcing of many government functions is now routine. These are functions deemed so integral to government that only federal employees should carry them out. See Janine R. Wedel, Shadow Elite , pp. 73-109; and Janine R. Wedel, Selling Out Uncle Sam: How the Myth of Small Government Undermines National Security. New America Foundation, August 2010 (http://www.newamerica.net/sites/newamerica.net/files/policydocs/SellingOutUncleSamAug10.pdf).

56. See these Congressional Research Service reports on federal advisory committees, published in 2009 and 2013, respectively: Wendy Ginsberg, “Federal Advisory Committees: An Overview.” Congressional Research Service, April 16, 2009 (http://www.fas.org/sgp/crs/misc/R40520.pdf); and Matthew Eric Glassman, “Congressional Membership and Appointment Authority to Advisory Commissions, Boards, and Groups.” Congressional Research Service, February 5, 2013 (http://www.fas.org/sgp/crs/misc/RL33313.pdf).

President Obama put limits on registered lobbyists serving on these boards when he took office; but obviously that doesn’t include those who don’t register (see Chapter 3 on “shadow lobbyists”). A New York Times editorial praises the Obama White House for banning registered lobbyists from the boards, but says the unregistered ones fall through the cracks ( New York Times Editorial, “No Place for (Registered) Lobbyists.” New York Times, December 4, 2009 [http://www.nytimes.com/2009/12/04/opinion/04fri4.html]).

57. See Chapter 9 for analysis of the role of think tanks. The Supreme Court’s 2010 Citizens United decision unleashed a massive amount of independent election advertising, often from so-called “nonprofits,” some of which are not required to release their donor information.

58. See Chapter 7 for detailed analysis of this issue. Think tanks, traditionally focused more on substantive studies, even while often influenced by ideology—leaning to the left, the right, or the “free” market—and by agenda-laden sponsors, today have turned more attention to advocacy and to branding their message for the media.

59. See, for instance, Linette Lopez, “Elizabeth Warren Wants to Take This Goldman Sachs Aluminum Story and Run Right Over Wall Street with It.” Business Insider , July 23, 2013 (http://www.businessinsider.com/senate-banking-on-wall-st-commodities-2013-7).

60. A June 2013 letter signed by four members of Congress expressed concern to the Federal Reserve about banks’ (including Goldman Sachs, Morgan Stanley, and JPMorgan Chase) expanding commercial operations. They pointed out that these extracurricular activities have nothing to do with the business of banking, and that it is not clear how the Fed or other bank regulators can actually regulate the activities. The four members of Congress are Representatives Alan Grayson (D-Fla.), Raul Grijalva (D-Ariz.), John Conyers (D-Mich.), and Keith Ellison (D-Minn.). Footnotes in the letter provide some useful information about what the banks are currently doing. See: Zach Carter, “House Dems Press Ben Bernanke on Risks of Bank Expansion.” Huffington Post , July 2, 2013 (http://www.huffingtonpost.com/2013/07/02/ben-bernanke-banks_n_3533821.html).