Why Wall Street Should Be Worried About Steve Bannon
Policy + Politics

Why Wall Street Should Be Worried About Steve Bannon

REUTERS/Carlo Allegri

Donald Trump’s nomination of Breitbart News executive chairman Steve Bannon to serve as chief strategist and senior counselor in the White House at first generated a furious reaction from anti-hate groups, because of the connection between the alt-right movement his website supports with white nationalism. But religious and ethnic minorities might not be the only ones getting a little nervous that Bannon has the future president’s ear.

On Tuesday, BuzzFeed News released a transcript of remarks Bannon delivered to the Christian conservative Human Dignity Institute in 2014. In a lengthy discourse on the causes and aftereffects of the 2008 financial crisis Bannon, himself a former managing partner at Goldman Sachs, blamed the financial crisis and subsequent recession on the “greed” of his fellow bankers and expressed anger at the fact that no bank executives faced criminal prosecution.

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“Think about it — not one criminal charge has ever been brought to any bank executive associated with 2008 crisis,” Bannon said. “And in fact, it gets worse. No bonuses and none of their equity was taken. So part of the prime drivers of the wealth that they took in the 15 years leading up to the crisis was not hit at all, and I think that’s one of the fuels of this populist revolt that we’re seeing as the tea party.”

He continued, “[T]he underpinning of this populist revolt is the financial crisis of 2008. That revolt, the way that it was dealt with, the way that the people who ran the banks and ran the hedge funds have never really been held accountable for what they did, has fueled much of the anger in the tea party movement in the United States.”

Some of Bannon’s remarks sound as though they could have come not from the close aide to an incoming Republican president, but rather from liberals like Vermont Sen. Bernie Sanders or populist Massachusetts Sen. Elizabeth Warren. Among other things, he discussed what he sees as the need to limit the activities that financial institutions are allowed to engage in, such as forcing commercial banks to focus on lending, and blocking investment banks from trading in securities.

Bannon criticized steps taken at the outset of the financial crisis to prevent widespread failures in the financial services industry, arguing that the burden of paying for the bailout was on taxpayers while the benefits flowed to “crony capitalists.”

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“I think the bailouts in 2008 were wrong … Middle-class taxpayers, people that are working-class people, right, people making incomes under $50,000 and $60,000, it was the burden of those taxpayers, right, that bailed out the elites. And let’s think about it for a second. Here’s how capitalism metastasized, is that all the burdens put on the working-class people who get none of the upside. All of the upside goes to the crony capitalists.

“The bailouts were absolutely outrageous, and here’s why: It bailed out a group of shareholders and executives who were specifically accountable. The shareholders were accountable for one simple reason: They allowed this to go wrong without changing management … And we know this now from congressional investigations, we know it from independent investigations, this is not some secret conspiracy. This is kind of in plain sight.”

Bannon described an alliance of law firms, accounting firms and other influential players in Washington who collectively pressured politicians and prosecutors to look the other way as, in his telling, the same people who caused the crisis in the first place benefited lavishly from the efforts to repair the damage they had done.

But it was his promise -- made nearly a year before Trump declared his candidacy and almost two years before Bannon became CEO of his campaign -- that will likely cause the most concern in Wall Street boardrooms.

“And they’ve never been held accountable today,” Bannon said. “Trust me — they are going to be held accountable.”