 I think having a richer and better, bigger ecology of public financial institutions is crucial for a number of reasons. Number one, they will provide the things that we need, rather than the things that the bankers need. But number two, the bankers have a big club that they hold over the heads of the rest of us. The club is, well, if you don't give us what we want, we're going to have a capital strike. We're not going to finance you, or we're going to move our headquarters that are abroad, or we're going to do something else. If we have a really rich group of public financial institutions, it'll be easier for us as a society to say, okay, good riddance, goodbye, you can move, we don't need you. So these public financial institutions also serve as a safety net for the rest of us. My name is Gerald Epstein, I'm a professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst. In my new book, Busting the Bankers Club, Finance for the Rest of Us, published by University of California Press, was originally funded by INEC. So it's great to be here with you all. We know the main requirements for a socially productive financial system. It's a regulation of all financial institutions. It's leverage requirements and policies to ensure that banks finance productive activities. But we don't have them because of what I call the Bankers Club. The Bankers Club is a group of allies of the banks, it's the banks themselves and a group of allies that support them and protect them. And the Bankers Club comes to their defense whenever society or the government tries to highly regulate finance and make them more socially useful. So the Bankers Club sustains the power of finance through a variety of mechanisms. One is by passing legislation that protects the bankers. This is legislation that deregulates finance such as the ending of the Glass-Steagall Act in 1998. The Glass-Steagall Act, as you might remember, was the law passed during the Great Depression by FDR and the new dealers that would separate commercial from investment banks and limit speculation that banks could take, put in federal deposit insurance. And this legislation, the banks didn't like. The banks didn't like it because it limited what they could do, it reduced the incomes that they could get. And so almost immediately after the Second World War, they started trying to get rid of this legislation and related types of legislation. So they spent millions of dollars, perhaps billions of dollars, in financing politicians that would help get rid of this legislation. Financing judges that would help get rid of this legislation. Financial regulators and lawyers who would try to get rid of it. And so finally, in the late 1990s, they really succeeded after having nipped away at it over the preceding decade. And under President Clinton, with Alan Greenspan as head of the Federal Reserve, and other neoliberal politicians, they finally passed legislation to almost completely deregulate the financial system. And so those are all various ways in which the bankers club, that is, the Federal Reserve lawyers, economists, I'll talk about a little bit later, were also involved, and regulators. All try to make it easier for the bankers to make money and to get bigger and more powerful. The bankers club is comprised of a number of primary groups. First of all, it's the bankers themselves and the politicians, the legislators that they pay off. They lobby them, they give them money to help them have a happy post-legislative life, the revolving door, and it gives them good jobs once they're done with being legislators. It involves the Federal Reserve, I call the Federal Reserve the chairman of the club. The Federal Reserve really protects the banks, it orchestrates subsidies for the banks, low interest rates when that will help the banks, high interest rates when there's inflation, and that will help the banks. And the Federal Reserve is really their main protector, both at the regulatory level, making sure that they have regulations that aren't too onerous, and at the monetary policy level, making sure that monetary policy increases asset prices when that's useful and stops inflation when that's useful. In addition to the Federal Reserve, we also have the lawyers who work for banks, lawyers who help fashion legislation that will make it easier for banks to expand into new types of businesses, will help the banks get first in the line when there's a bankruptcy, they get their money back first, and lawyers of course help craft legislation. Unfortunately, my own profession, the economists, some of them are also in the bankers club as well. This operates at a number of different levels, at one kind of general intellectual level, they develop research that tries to show that unregulated financial markets are best for society as a whole. They try to fashion research that shows that banks should be left to do what they want to do, and that's going to trickle down to the rest of us. I'm thinking of people like Eugene Fama, who got the Nobel Prize for his work on efficient markets and so forth. Of course what INET is doing is trying to counter this kind of research, this kind of ideology, and I think it's been very effective at doing that. Economists also operate in a more material, a more devious way. In research that I and my former graduate student Jessica Hagenbarth looked at, we looked at economists and top economists who were kind of on the take from the bankers, that is, they were on the boards of directors of bankers, they got consulting fees for bankers, and then when they appeared in public and supported banks and low regulation, they didn't reveal the fact that they were also getting money from the banks themselves. Another group that I think it's very important to look at is non-financial corporations. As Tom Ferguson has written in his really important work on the Depression, during the Depression there was a group of banks that really, excuse me, non-financial corporations that really didn't align themselves with the bankers club. They supported the New Deal regulations by Franklin Roosevelt. There was kind of a split at that time between some segments of finance and some segments of industry, but by the time we get to the 1990s and the 2000s, you can find almost no space between finance and industry. One is why, and I looked into that quite a lot, and one possibility is the idea of financialization, that non-financial corporations get more and more of their income from financial activities. And that's important, but I think the main reason is what I call the financialization of the CEOs, that is, the CEOs and top management of these corporations are fabulously wealthy and they need financiers to manage their funds and to get them to tax breaks and to help them get around tax laws and so forth. And so they don't want to interfere with what finance can do because they personally gain so much from what the financial industry does. So that's why they align themselves as part of the bankers club with finance. I begin the book talking about the Jekyll and Hyde of finance, and you'll probably recall the Robert Louis Stevenson story, Dr. Jekyll, an upstanding member of the community, had this other side, the Dr. Hyde side, who was a murderous villain, and they were both embedded in the same person. And the financial system is kind of like that. That is, we as a society need finance. We need finance to support mortgages for homes, for investing in plant and equipment, for coming up with innovations that will help everybody to invest in communities, small businesses, et cetera. At times, financial system becomes what I call roaring banking. That is, it creates financial crises every 10 or 12 years, needs to get bailed out. It allocates most of its resources to speculation, to having a lot of leverage in the economy and creating crises. And it doesn't provide good services for most of the population. That is, small businesses are often rationed out or charged too much. For retirement, it doesn't offer good financial retirement for most people. So that's the Hyde part of finance. Now why is this? It's because finance essentially can create money out of thin air. And it can create money out of thin air and make enormous profits by engaging in all of these kinds of speculative activities. So unless the government regulates finance, makes it difficult or impossible for it to engage in these kinds of activities, it's going to make the most profit for the companies and for the CEOs by engaging in this kind of speculative and destructive activity. So when we have proper guardrails, when we have proper regulation, and we also have to have the government that's underwriting the Hyde's, the Jekyll side of finance, underwriting the good things, then we can have a financial system that operates for the rest of us. There's so much artificially created complexity and obscurity around finance, because as Dennis Keller heard, the head of Better Markets puts it, finance does very well in the dark. It is when there's a lot of complexity, first of all, the people on the other side of the trade, that is the people who are buying the financial products or are borrowing from the financial companies, they don't really understand completely what's involved with these investments, what the real costs are and so forth. And that allows financial markets to create products that are sold not like commodities where there's a clear understanding of what's in it and there's a common competitive price, but they're able to charge high prices for their commodities and get an extra profit from it, number one. Number two, this complexity makes it hard for, and obscurity makes it hard for these products to be regulated. So the regulators have trouble understanding what's in them and so they can't regulate. And the financiers themselves use this as an excuse for saying, well, we're the only ones who really understand it, let us regulate ourselves, you don't try to regulate it. Moreover, if people out in the community, they can't understand us, so they can't really try to rein us in and prevent us from doing this, so just leave it to us. So it serves purposes both at the micro level where it allows them to get more profit, at the regulatory level where it says, regulators, let us do it, and at the more social political level when they say, well, it's too complicated, it's too technical, nobody can understand it. And that's one of the things that I try to do in my book, is to make these kinds of issues understandable to everyday people, students and people in the street and people even in the government who want to understand better how these financial products work and oftentimes only work for the banks. The top of my book is Busting the Bankers Club, Finance for the rest of us. And if you look at it from one side, you say, well, finance is so powerful, it's got this huge club behind it, it has all this money at its disposal, so it's hopeless. But what I've found is that, no, in fact, there's this whole group of what I call clubbusters out there, economists, lawyers, some government people, politicians, and others who are really fighting and have been fighting for a long time to reform the financial system and make it work for the rest of us. So for example, starting at the top, the politicians, we have politicians like Elizabeth Warren and Sherrod Brown and Jeff Merkley and many others who have really made regulating finance and making it work for the rest of us a top priority, and so that's crucial. And then we have lawyers and legal scholars like Jennifer Taube and Sola Omerova who was prevented from being the head of the OCC because they thought she would be too hard on the banks, and many other legal scholars who are trying to show what's wrong with finance and how we can regulate it better. Then you have economists and educational institutions, INED is one of them, economists like Jane Durista and others who are trying to puncture holes in this mythology of finance, helping everybody when it's deregulated and being too technical. And then we have activists who operate at a number of different levels. So for example, Dennis Kelleher in Better Markets or Lisa Donners and Americans for Financial Reform, and then at the grassroots, there are many activists out there. Many of them are pushing for regulations of various kinds, and importantly, they're pushing for publicly-oriented financial institutions, public banks and other kinds of financial institutions like that, which I think are really crucial for busting the bankers' club. Banks without bankers means publicly-oriented financial institutions. They may be wholly owned by the government or by a municipality or by a state. They might be a public-private partnership that has a social mission, and maximizing profit isn't the main focus. And they can be a hybrid, partly public, partly private, which actually most financial institutions are. And they often have particular missions, missions to finance affordable housing or missions to finance green energy or to finance a small business or housing or something like that. And we have, over the world, over the whole world, there are many public financial institutions. In the United States, we have a number of different kinds. You can think of credit unions and others, which I would call public financial institutions. But they're mostly very small, and they're not up to scale to really compete with the big financial institutions. I think having a richer and better, bigger ecology of public financial institutions is crucial for a number of reasons. Number one, they will provide the things that we need rather than the things that the bankers need. But number two, the bankers have a big club that they hold over the heads of the rest of us. So that's the kind of double entendre in the title of my book. The club is, well, if you don't give us what we want, we're going to have a capital strike. We're not going to finance you, or we're going to move our headquarters that are abroad, or we're going to do something else. If we have a really rich group of public financial institutions, it'll be easier for us as a society to say, okay, good riddance, goodbye, you can move, we don't need you. So these public financial institutions also serve as a safety net for the rest of us when the private financial institutions won't do what we really need. So what we need to make them more viable, to allow them to grow bigger, allow them to be a bigger part of our financial system, is we need the same kind of federal reserve and government support for these kinds of financial institutions as they give to the megabanks. One of the things that keeps the bankers club going is what I call the money spigot. The money spigot is the funds that go into paying lobbyists, paying economists, paying lawyers, and buying legislation. Now the money spigot comes from the profits of the big banks, but it also comes from the huge subsidies that our government gives to the big banks. First of all, the government bails them out when they get into trouble. The great financial crisis, the government, the federal reserve, and the Treasury spent over $20 trillion bailing out the big banks. They did it again during the COVID pandemic in March of 2020. We saw it more recently with Silicon Valley Bank and so forth. But they give almost no money subsidizing and supporting banks without bankers, these publicly oriented financial institutions. So what we need is, for example, the federal reserve to open up the discount window and the liquidity support for these kinds of banks. The federal reserve should create a financial regime that allows these kinds of banks to thrive. The government should stop bailing out the mega banks and help these banks become bigger and more important in our economy. That's what we need.