April 8, 2016
“Sooner or later, chickens the size of 747s had to come home to roost”: An interview with Michael M. Thomas
by Mark Krotov
In his novel Fixers, which we published in January, the great Michael M. Thomas answers a question that, for a while, we seemed to have stopped asking: How did Wall Street get away with it?
As the 2007 financial crisis became the 2008 financial crisis—which, in turn, evolved into the Great Recession—it became clear that the perpetrators (the CEOs, the bankers, the ratings agencies, and the government officials who oversaw the whole thing) weren’t going to jail.
Why not? In Fixers, Thomas offers one worryingly plausible—and explosive—theory. (More on that below.)
Perhaps the most unexpected element of a wholly unexpected presidential campaign has been the visibility and persistence of 2008. Thanks to Bernie Sanders, Donald Trump, The Big Short, and Goldman Sachs, the financial crisis, its origins, and its aftermath have become central features of the campaign.
Fixers has overlapped with the headlines in dramatic ways since its publication, so we asked its author for his take on the news of the last few months. (And for more from Thomas, read his other contributions to MobyLives—and buy the novel!)
I’ll ask the most loaded question first. In Fixers, you imagine an . . . arrangement in 2007 between a very powerful Wall Street investment bank called Struthers Strauss and a key adviser to a certain charismatic Democratic presidential candidate full of hope. The campaign gets an urgently needed cash infusion, and the bank gets a few key friends in the administration. Struthers Strauss chooses the candidate over Hillary Clinton in part because they worry that she may come out against the financial industry. Do you think that would have happened? These days, Clinton can’t seem to shake her Wall Street ties.
Would it have happened? We’ll never know. Could it have happened? For sure. Wall Street is all about connecting people with money to people who need or want money.
At the point the novel kicks off, Barack Obama was a dark horse, with no meaningful financing in hand. Then he took off. I had the idea for Fixers on November 21, 2008, a fortnight after Obama was elected; that was the day that the transition team leaked that Lawrence Summers and Timothy Geithner would head the new administration’s economics/finance team. “Hello!” I exclaimed. “What’s this about?” And there popped into my mind a line that would stay in the novel I would go on to put together for seven years: “This is like appointing a couple of Klu Klux Klan types to run the NAACP.”
Wall Street knew what these appointments meant: the Street feared it might face criminal prosecution for its “fraudster” role in brining on the financial crisis; now it was off the hook. The Dow Jones Index was up 1,000 points that day and the next. And so much we’ve learned since about dark money in politics confirms the possibility of feeding in a big chunk of money in ways the election regulators would never detect.
Fixers is, among other things, a brilliant look at the way Wall Street thinks and talks when no one is looking. With that in mind, what do you make of Hillary Clinton’s reluctance to release the Goldman speeches? Did she really say scandalous things, or is this more a case of a hermetic culture applying to all participants?
Clinton addressed her Goldman audiences in 2013, a time when the big investment and trading firm was still ranked among the most hated American businesses. Given that by then, she and her cadre were surely planning a 2016 presidential run, it seems a sure thing that she told her audience what she and her handlers expected it wanted to hear. I expect it was pretty innocuous, as these things go, but whatever it was, it would be stuff that could only go down badly later—in the heat of what has turned out to be a contentious, venomous campaign.
Did you expect the financial crisis to dominate the headlines the way it has so far this year? Was it inevitable, given Hillary Clinton’s ties to Wall Street, or is this something truly unexpected?
Sooner or later, chickens the size of 747s had to come home to roost. Wall Street ran out of others to blame. I think much of the clamor today wouldn’t have been heard if there had been some meaningful prosecutions, if the crisis had been given more of a face. We needed a twenty-first-century equivalent of Ferdinand Pecora, the federal prosecutor who took the Street apart in 1933. I think the success of the film The Big Short has played a part in turning up the gas. And let us heap laurels on the brow of Senator Elizabeth Warren.
You wrote a column for many years about New York’s most powerful and most vulgar citizens. And so I have to ask: what’s your take on Donald Trump? Is the Trump we’re seeing today consistent with the Trump you saw transfix and horrify New York City in the eighties and nineties? Or, as one of his ex-employees suggested, did reality TV really change him?
I knew Donald Trump a bit when he first surfaced. We were both on the board of a New York nightspot called Le Club. That would have been in the late 1960s. He seemed a perfectly ordinary young guy from Queens. Bit by bit, he turned into the loudmouth—at least his public persona did—he is today, which is when I christened him “the Prince of Swine” in my column. And kept it up for twenty years. He strikes me as a Method actor who invests himself so totally in a role that he becomes the villainous character he should merely be acting.
You and I were both taken aback last month when President Obama found himself defending his response to the financial crisis. “I want to dispel the notion both on the left and on the right,” he told reporters, “that after the financial crisis nothing happened.” Are you surprised that the issues you discuss in Fixers are still being litigated?
Mark, what goes around, comes around. To be honest, given what I think is a two-faced policy on the part of the Obama administration with regard to Wall Street, I’m surprised that anything meaningful has been brought to bear. But then, Obama isn’t running again; what he has to look forward to is a future the color and sheen of gold, as the Street expresses its gratitude for not seeing certain of its more prominent citizens behind bars.
One of the things readers might find surprising about your book is that it’s not really anti-Wall Street. You’re hard on illegality and ethical lapses, but you’re sympathetic to the fact that finance is an industry like any industry. It has its own norms, it has many complicated actors, and it has a private language. So: bad apples, or something more systemically toxic?
I worked on Wall Street proper from 1961 to 1975. We were much more tied into the rest of the country then, and our principal business was helping American and later global commerce finance its objectives—which, let it be admitted, began by 1970 to consist of buying other businesses with borrowed money. Still, the post-1929 regulatory apparatus remained in place and was pretty effective. And the idiotic notion that the sole function of corporate manager was to enrich the shareholders had not gained traction. Sure, there were bad apples and bad deals and shady dealings, but all in all, the Street had to behave. But then, in the post-Reagan eighties, when Milken came along, and the savings-and-loan debacle ensued, and Continental Illinois Bank had to be bailed out, the center gradually ceased to hold. The deregulatory actions that took place under Clinton were the coup de grace. And let’s not forget how much money was available to play the game with. The average hedge-funder today makes ten, twenty, a hundred times what the total capital of Lehman Brothers was when I was a partner there in the late 1960s.
In his rave review of Fixers, the Washington Post’s great Michael Dirda called the novel, among other things, “a meditation on values.” We’ve mostly been talking about negative values in this interview, but are there examples of the old, positive values around these days, or can we only find them in fiction?
Chauncey Suydam, the narrator of Fixers, went to Groton, the school whose greatest alumnus was FDR. He was imbued at the school with the sort of values that, among other things, taught that it was possible to be a good loser, a notion that today (see under “Trump”) generates only gasps, sneers and stares of incredulity. He is very much aware of the conflict between the way we were taught then and the way we live now. But as the Street says, “Don’t fight the tape,” and so the latter value system very much prevails in Chauncey until an emotional connection enfolds him back into a way of life full of ethical and behavioral resonances from his boyhood.
Fixers is on sale now. You can buy your copy here or at your local independent bookstore.
Mark Krotov was a senior editor at Melville House.