By Alexander Reed Kelly
Every week the Truthdig editorial staff selects a Truthdigger of the Week, a group or person worthy of recognition for speaking truth to power, breaking the story or blowing the whistle. It is not a lifetime achievement award. Rather, we’re looking for newsmakers whose actions in a given week are worth celebrating. Nominate our next Truthdigger here.
The man President Obama and every corporate banker in the nation favored as the next chair of the Federal Reserve unceremoniously exempted himself from consideration for the post Sept. 15 after cries of opposition from members of the Democratic Party and others in Congress.
“I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery,” Lawrence Summers, Obama’s former economics czar, wrote in a letter confirming his decision to the president.
Summers is undeniably right. More direction from the man whose performance in Clinton’s Treasury department helped create the 2008 economic crisis and the ongoing horrors that followed runs directly against the interests of all Americans, including those in the ruling and owning class. But I and many others were looking forward to a hearing to confirm Summers. Why? Because as the Indian news service Niti Central may have been the first to point out, Summers could have been asked to publicly explain the meaning of a secret 1997 Treasury memo (viewable here) reminding him to pick up a phone and reassure the most powerful CEOs in the world that plans to tear apart laws protecting the economies of 156 nations from predatory bankers were going ahead as scheduled.
That document lit up the Web when investigative reporter Greg Palast spotlighted it in his column in Vice magazine in mid-August. Palast, who acquired the document from an unnamed source, had published it before—in his 2011 book “Vultures’ Picnic” and elsewhere—but Summers’ nomination earlier this year provided an urgent opportunity to give the public another look at the memo and the nature of the man it exposed.
As Palast wrote in his column: “The Memo confirmed every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet. When you see 26.3% unemployment in Spain, desperation and hunger in Greece, riots in Indonesia and Detroit in bankruptcy, go back to this End Game memo, the genesis of the blood and tears.
“It’s not the little cabal of confabs held by Summers and the banksters that’s so troubling,” Palast continued. “The horror is in the purpose of the ‘end game’ itself.
“The year was 1997. US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks. It was like replacing bank vaults with roulette wheels.
“Second, the banks wanted the right to play a new high-risk game: ‘derivatives trading.’ … Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt [by U.S. legislators and regulators] to control derivatives. But what was the use of turning US banks into derivatives casinos if money would flee to nations with safer banking laws? … The answer conceived by the Big Bank Five: eliminate controls on banks in every nation on the planet—in one single move. It was as brilliant as it was insanely dangerous.”
The bankers and their friends in the Treasury proceeded to pull off this “mad caper,” Palast explained, by rewriting international trade agreements to hold the purchase of key exports of target countries hostage until they agreed to accept trade in “toxic assets like financial derivatives.”
“Until the bankers’ re-draft of the [Financial Services Agreement], each nation controlled and chartered the banks within their own borders. The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives ‘products.’ ” Every bullied country signed. Thus was the ground prepared for world economic collapse almost 10 years later.
Palast’s expose was widely reported internationally and among alternative news sites in the United States. (Before ending her search, a Truthdig associate counted 130 such pages.) But the American mainstream press took no notice. Like most of Palast’s investigations, the “End-Game Memo” was ignored by CNN, CBS, NBC, MSNBC, PBS and Fox. Major papers, including The New York Times, the Los Angeles Times and The Washington Post, also pretended it didn’t exist. The compelling question, given the story’s immense bearing on the nation’s future, is why?
I asked a variation of this question in early June during a visit to New York City. It was after midnight on a Saturday and I was sitting across from Palast, drinking a glass of his vodka. “I read your work,” I remember saying, “and it’s this intricate, crucial stuff. Then I go to sites where most people are getting their news and I’m in another dimension. Facts and relationships that you uncover, that change a whole story—they’re nowhere in sight. What gets reported is so obviously incomplete. How can this happen?”
Temporarily out from beneath his signature fedora, Palast cracked a wry, forbearing smile. “I’ll show you,” he said. “Come with me.”
We did a bit of traveling and found ourselves inside a dark room. Palast flicked on a light. Before me was a desk bordered with papers and notes. A shelf filled from end to end with three ring binders hung directly above. Behind me was more of the same, rows of boxes and notebooks, all crammed into maybe four or five shelves from ceiling to floor extending the entire length of the wall.
“These are a fraction of my personal files,” Palast said as my eyes traveled the room. “All of my reporting is original. I have records on banks, oil companies and public officials going back decades.” (Later in the night he would tell me he didn’t become a reporter until late in his 40s. After studying economics with Milton Friedman (by no means his hero) at the University of Chicago, Palast went to work for labor, consumer and environmental groups across the world. In two decades investigating corporate fraud, he directed the largest racketeering case in U.S. government history and led the inquiry into double-dealing in the aftermath of the Exxon Valdez disaster. One of his cases led to a $4.3 billion jury award.)
It wasn’t just his work that escaped notice in the mainstream news. With the exception of Harper’s Magazine, The Nation and a few fringe publications, and shows like “Democracy Now!,” Palast himself couldn’t get published in America; only select British and European newspapers and broadcasters would touch him. And now I could literally see why. He pulled down a binder and laid it open on the desk. “My investigations can lead to some damning charges,” he said, passing over its pages. “All of this stuff has to be thoroughly fact-checked. Most publishers either lack the resources or don’t want to spend the money, and all of them are afraid of getting sued.”
The irony was delicious. One of the few investigative reporters actually worthy of the name was being denied work in his own country precisely because does his job. The nation’s biggest publishers and editors have abandoned one of the best of their own. They refuse to use their considerable time, wealth and resources to employ journalists like him to report the news, and the American public is made ignorant as a result. Furthermore, they have the gall to present themselves as fearless crusaders for truth. I already had a low opinion of the corporate side of my profession, but I hadn’t seen the pieces put together in quite this way. The crookedness and hypocrisy rankled me.
Palast had satisfactorily explained why his work was not incorporated into conventionally accepted and told narratives of world events. But his answer spoke to another issue I hadn’t brought up explicitly. That’s the question of his relationship to his professional peers, and how exactly he, a genuine independent, fits into the current news establishment. In other fields this topic might rightly be regarded as irrelevant, but among journalists whose work bears upon the public, it is a matter of public significance.
In my five years working with editors, publishers and journalists, I had heard a few private criticisms of the man and his work from people inside offices and at parties on both American coasts. “There’s no insight,” one representative of this crowd told me, dismissing the reporter’s entire body of work. This person declined to clarify when I pressed the matter. I admit to having much to learn, but the comment struck me as a strange description of a career that uncovered George W. Bush’s secret prewar plans for the oil fields of Iraq, the role of Florida officials in the theft of a U.S. presidential election, and a cover-up by one of the world’s largest oil companies of knowledge of negligence that led to an environmentally devastating blowout and the deaths of 11 of its workers. And today, of course, the Summers “End-Game Memo.” (A little time with Palast’s work will show this list and its themes are far from exhaustive.)
How best then to account for this network of casual disapproval? In my direct experience, Palast does something that is taboo in almost every profession: He is uncommonly open with himself—a free-wheeler. You don’t have to meet him to guess this. He curses at will, writes like a crime novelist and says whatever he wants in his own voice, personally. (See the video interview below for a prime example of this.) His open disregard for the hierarchy of his profession and its accompanying rules and traditions suggests he did little if any groveling to advance himself. His meteoric rise in a new and cutthroat field relatively late in life—which no doubt spared him many experiences that can harden or stunt those who enter journalism when young—supports this thesis. Moreover, he appears in his public appearances always to be having fun. These dimensions make his work more interesting, and his character a model for independent-minded youths (as well as explaining why many young journalists are strongly drawn to him). All I can surmise from a set of bizarre criticisms I’m otherwise helpless to explain is jealousy and fear on the part of tight-laced if otherwise committed professionals. As Noam Chomsky once said, Palast “upsets all the right people.”
I’ll now return to the question that occasioned this article. Did Greg Palast stop Lawrence Summers from chairing the Federal Reserve? After noting to me that his job is to “expose Summers, not take him down,” he was unwilling to say whether the “End-Game Memo” was the deciding straw. He knows politicians and others in Washington read his reports—he’s seen his investigations inside official files on George W. Bush and other of his targets. Democratic Sen. Sherrod Brown of Ohio, the chair of the Senate subcommittee on financial institutions and consumer protection who early and openly opposed Summers’ confirmation, is among his audience, Palast said. And Brown would have been in a position to make the memo a matter of congressional record by publicly laying it on Summers.
Still, the reporter did not get carried away with the news of Summers’ withdrawal. “You knock one infection out and another appears in its place,” Palast said, referring to America’s persistent disease of government by the amoral rich. “They’ll get someone else in there. Unfortunately, that’s how it works.” Additionally, Obama announced in his response to Summers’ exit that he intended to continue “to seek [Summers’] guidance and counsel in the future.”
Only those with access to the committee’s hearing files know what Summers’ auditors were planning, and only Summers and a handful of others know what he and the establishment he represents were willing to endure. But it’s reasonable to assume that without the dirt Palast dug up, leadership of the most important bank in the country by the person Truthdig Editor-in-Chief Robert Scheer charged with making “the financial industry culprits whole, while abandoning” the public would have been much more likely. For his probable role in the derailment of a man on his way to take a place at the top of banking shenanigans in the United States, we honor Greg Palast as our Truthdigger of the Week.
Hear Palast talk about his work and what makes a good investigative journalist in the treasure of an interview by Luke Rudkowski of “We Are Change” below.