The center of the financial crisis, four years later
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Kai Ryssdal: We’re in New York City today. There’s a Republican primary here tomorrow; four other states as well. There’s no real doubt about the results. You can’t say the name Mitt Romney anymore without adding ‘presumptive nominee’ in front of it.
But this whole thing isn’t really about the primaries anymore, is it? It’s a national election now, about what’s really gonna matter in November. About what we call The Real Economy.
There’s no better place to talk about that than New York City, circa spring 2012, because the economics of this election were shaped here four years ago, by Wall Street and subprime loans and mortgage-backed securities. The defining slogans of the last four years came from here: ‘too big to fail’ and ‘we are the 99 percent.’
So today, a story throughout the program. Three scenes around New York City from the past four years at center of the financial universe. We start in midtown Manhattan, not far from where the financial crisis started, in the company of our bureau chief Heidi Moore.
Ryssdal: New York in the rain, baby. Honestly, it’s kind of dismal.
Heidi Moore: It’s pretty sad, but check out the cloud patterns.
Ryssdal: I know, it’s actually pretty cool, because you cannot see the tops of some of these buildings.
Moore: Yeah. And you’ll see this whole stretch of Park Avenue is the new Wall Street. So all up and down here, this is where all the financial firms are. The private equity firms; an increasing number of hedge funds. All the banks are clustered within maybe an eight-block radius of here — all the really big banks except for Goldman Sachs. And that’s a big change.
Ryssdal: Heidi, corner of 49th and 7th — but why? It’s Barclays.
Moore: Exactly. Well four years ago, this wasn’t Barclays — this was Lehman Brothers. And these screens were not these brilliant blue, but they were the hunter green that was the Lehman logo. Right in from of us, as you can see, there is a line of towncars prepared to take bankers to meetings.
Ryssdal: Oh yeah.
Moore: Where they can earn more money or make more profits, whichever way you want to see it. And this is probably not just a corner of the street, but the corner on which the financial system turned, if you’ll forgive the metaphor.
Ryssdal: No, that’s a great line. Remind me where we were four years ago this spring. Bear Stearns had just gone under?
Moore: Bear Stearns had fallen apart, just a month before this, in March 2008. A lot of people in finance were confused, they were wondering what was happening to the financial system. Banks weren’t lending to each other as much. Everyone was pulling in the reins and really worried about the future, and trying to put a good face on it.
Ryssdal: Every time I talked to somebody back then, we’d have them on the show and I’d say, ‘So how long is this going to last?’ And they said, ‘Oh you know, six months.’ And here we are, still talking about this.
Moore: It’s true. We’re still talking about it because the problems that arose from the financial crisis are the kind that you just don’t solve in six months. And I think what you heard back then was the level of denial that we still see in the financial system, to some extent, which is how deeply the system needs to be restructured. And people didn’t know back in 2008 — and arguably, they still don’t know in 2012 — how interconnected a lot of banks are, and how much trouble they could potentially be in if just one more tips over, like Lehman Brothers did in 2008.
Ryssdal: You know, it occurs to me that a lot of this stuff that we’re talking about in this election, that people are talking about in this election — the decisions that got us here were made four years ago in buildings like this one.
Moore: That’s right. And it’s the struggle since then has been of the financial system, of the populists, of almost everyone else in America to get Wall Street to realize that. I mean, if you look at New York, if you look at this street right now, you see men in the most finely woven suits possible.
Ryssdal: You know it’s funny, because it’s almost like, not that it didn’t happen, but people here don’t acknowledge that it happened.
Moore: I think we’ve heard a lot about the 99 percent and the 1 percent, and that’s not just true of the economy at large, and it’s certainly true in New York State, which has the highest income disparity of almost any state in the union. But it’s also true of Wall Street. We have a 99 percent and a 1 percent — well, maybe an 80 percent and a 20 percent — on Wall Street too. We have office workers and then we have the people who make the decisions, who make millions of dollars a year, and by no means do they march to the same beat.
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