Jews and the Financial Meltdown
by George Salamon
“We are doing God’s work.” —Lloyd Blankfein, CEO, Goldman Sachs
“How odd of God/To choose the Jews.” —William Norman Ewer, British journalist
We know that versions of the second thought ran through the minds of some moviegoers as they watched Inside Job, the award-winning 2010 documentary about Wall Street’s role in the financial meltdown of 2008. For Jews in the audience, it was a five-cringe movie, as they saw or heard a minyan or two of malefactors extolling, explaining, but rarely regretting their part in the global economy’s cardiac arrest, which wiped out trillions of dollars of wealth and cost millions of Americans their jobs or homes, erasing their financial resources, plunging them into despair, and robbing them of hope.
Audiences made the acquaintance of generals and captains from the finance industry’s golden triangle: economists at our elite universities, executives from investment banks, and officials from government agencies. Many of them had moved easily and regularly through the triangle’s revolving doors, and many of them were Jewish. Among them: Fred Mishkin, professor at the Columbia Business School who served on the Board of Governors of the Federal Reserve System and as consultant to the International Monetary Fund; Arthur Levitt, chair of the U.S. Securities and Exchange Commission as well as adviser to the Carlyle Group and policy advisor to Goldman Sachs; Lawrence Summers, professor of economics and president at Harvard University, chief economist for the World Bank, Deputy Secretary of the Treasury, and managing partner at the D.E. Shaw & Company hedge fund; Harvard economist Martin Feldstein, who sat on the board of American International Group (AIG) as it imploded from its credit default swaps and needed a government bailout.
Inside Job also featured the godfather of the “greed is good” ideology that has been elevated by Wall Street since the Reagan presidency: Alan Greenspan, chair of the Federal Reserve, consultant to Pacific Investment Management Co., and senior advisor to Deutsche Bank. As one historian of our age of greed observed, Greenspan believed that the “unleashing of unregulated self-interest… was a sufficient condition for prosperity.” In 2008, Greenspan professed to be shocked that he had been wrong. But he was only half-wrong. As one interviewee pointed out in Inside Job, the more money the customers of investment banks lost, the more money the bankers made for themselves.
But why drag in the well-known fact that Wall Street firms are staffed, especially in top positions, by a disproportionally high number of Jews? Most people interested in the history of Jews and capitalism have shied away from confronting or even citing Jewish involvement in Wall Street’s expanding and exploding role in America’s economic, political and social life, perhaps in recognition that the subject leads quickly to words like “stereotype,” “anti-Semitism,” and “blood libel,” and leads to the company of neo-fascists.
I write, however, as a Holocaust refugee — first from Vienna to Switzerland and then to America — to come to terms with my feelings of revulsion and shame that Inside Job and various books about Wall Street greed and indifference have evoked in me.
Over the past three or four generations, the Jewish diaspora experience propelled many in the American Jewish community to act in socially responsible and ethically sound ways, and to view “underdog” communities and poor people with understanding and empathy; Jews have taken leadership in many of the social movements that transformed our country for the better over the last half century. Many contemporary Jews on Wall Street, however, have behaved in a manner that reveals either their ignorance or their rejection of this progressive Jewish tradition. Their dog-eat-dog ideology calls for a response from the Jewish community, from its intellectual and spiritual leaders as well as from all Jews and non-Jews who long for a revival of the Jewish tradition that once inspired people everywhere to work for the common welfare.
When examined now, six years after Greenspan’s “ticking time-bomb” of a system did blow up, the story told in Inside Job reveals a significant piece of bad news for America’s 5.5 million Jews, bad news hidden behind a more superficial bit of good news.
The good news first. “It is a general sociological rule,” wrote historian Jacob Katz in 1961, “that all minority groups are held collectively responsible for the actions of their individual members. The measure of this collective responsibility varies with the extent to which the minority is distinguishable in appearance, and with the degree of its group-isolation.” This rule of collective responsibility hardly applies any longer to Jews in America, so complete is our assimilation and acceptance. Even in the mid- and late 1980s, when Ivan Boesky was convicted of insider trading and Michael Milken for violating U.S. security laws, racketeering and fraud, their Jewishness was not emphasized in descriptions of how these “rogue” traders had performed their transgressions.
This gift of invisibility has enabled Jews to feel relatively safe about discussing the issue, as noted in a January 16, 2009 story in The New York Times headlined, “But Is Madoff Not So Good for the Jews? Discuss Among Yourselves.” The piece reported on a meeting at the YIVO Institute featuring a panel of Jewish VIPs. Panelist and moral philosopher Michael Walzer explained: “I don’t think morality is all that important in the way we think about Wall Street and the economy.” I think he was right, but I wish he had talked a bit about why we don’t — and really should. It was left to former New Republic publisher and editor Marty Peretz to ask if there was “anything about Jews’ participation in the money culture — say excessive expenditures like a bar mitzvah held at Madison Square Garden — that deserved more thoughtful review.” Members of the audience tended to consider the Madoff affair not a “Jewish thing,” feared no anti-Semitic flare-ups, and at most felt “a vague sense of shame.”
Jews, in other words, could feel the same way about Madoff as Methodists did about Enron CEO Kenneth Lay, who was not referred to as a “Protestant fraudster.” Jews were white people by now, or almost so. That’s the good news, with one hand clapping for how well Jews have assimilated in America.
By becoming insiders in America’s capitalist establishment, however — “like everyone else, only more so,” as Chaim Weizmann once put it — Jews have paid a steep price in terms of Jewish ethical identity.
Economist and Nobel laureate Joseph Stiglitz saw in Wall Street behavior a “moral depravity” and an exploitation of the middle class and poor that “knew no bounds.” Inside Job supports his stance. Wall Street’s own psychotherapist, Jonathan Alpert, saw in the financiers’ behavior “a blatant disregard for the impact their actions might have on society,” behavior that “extends to the very top” of their organizations. How they did what they did was likely a combination of reckless but profitable risk-taking and, in the words of Judge Jed Rakoff, “fraudulent practices, of dubious mortgages portrayed as sound risks and packaged into ever more esoteric financial instruments, the fundamental weaknesses of which were intentionally obscured.” The judge points out that the Financial Crisis Inquiry Commission used “variants of the word ‘fraud’ no fewer than 157 times in its final report.”
“Listen, what can we believe in?” lamented one Wall Streeter interviewed for the film. “There’s nothing we can trust anymore.” He’s bemoaning what he and his fellow hucksters and fraudster have done, that is given their lives over to a nihilistic power. Hannah Arendt saw it coming: “the development of commercial society… with the triumphal victory of exchange value over use value, first introduced the principle of interchangeability, then the relativization, and finally the devaluation of all values.”
It’s in this idolatrous, commercial society America’s Jews have gained insider status. The good news is therefore the bad news as well. Alan Dershowitz, who never misses an opportunity for a bit of hyperbole, said about today’s American Jews: “We are the WASPs.” Larry Summers explained to Elizabeth Warren just what such insider-ness means: “Insiders (also) understand one unbreakable rule: They don’t criticize other insiders.”
For Jews, outsiders turned insiders, the essence of cultural Jewishness is expunged: the critical look at society and its establishment, the laughter at its foibles and absurdities, the urge to fight its atrocities and cruelties, the idealism to shape a society that is compassionate, merciful, just and decent. Jewish students who went from college campuses to civil rights marches in1964 or ’65, for example, did not all give up their pursuit of a career in medicine or law or theater; no vows of poverty were required to make those trips. Being Jewish meant, rather, that you can be comfortable off, but you should not be comfortable in your mind. There was an intensity, a prickliness, a combativeness in the Jewish community when the Jew was an outsider, an “other.” Jews could see and try to understand those in the darkness of otherness: the poor, the sick, the troubled, the persecuted.
Insiderness means giving most of that up. Jeff Faux explained how that worked in the 1990s: “In the fall of 1993 a corporate lobbyist, exasperated by my opposition to NAFTA, stopped me in the corridor of the Capitol. ‘Don’t you understand?’ she demanded. ‘We have to help (then-Mexican President Carlos) Salinas. He’s been to Harvard. He’s one of us.’” Faux continues:
Her reference to ‘us’ seemed odd. Neither she nor I was a Harvard graduate. So it took me a while to get her point. ‘We’ internationally mobile professionals had a shared interest in liberating similarly mobile global investors from regulations imposed by national governments on behalf of people who were, well, not like ‘us.’ Despite the considerable social distance between Salinas and both of us, she was appealing to class solidarity.”
Too many American Jews, in my view, have become people “like us.” They participate in the class war as generals or as foot soldiers who benefit from Wall Street’s long march of greed, which is continuing on the same path and remains still without substantial restraints from without or within.
Jewish communal and spiritual leaders could at least try to exercise some of that restraint with finger-pointing and prophetic words. If the PEW report on Jewish-Americans is to be believed, after all, the pursuit of social justice was a defining factor in what it means to be Jewish for than 60 percent of those questioned. Who, then, will ask the follow-up questions?
Jewish students who went from college campuses to civil rights marches in 1964 or ’65 did not all give up their pursuit of a career in medicine or law or theater; no vows of poverty were required to make those trips. Being Jewish used to mean that you can be comfortably off, but you should not be comfortable in your mind. Can Judaism, combined with a Jewish historical consciousness, bring that back? If not, what does it mean to be a light unto other nations? Being just like them is not the correct answer.
Very few Jewish theologians have addressed the issue — even when the Occupy Wall Street (OWS) movement opened doors for them to do so. Rabbi Arthur Waskow has described corporate powers as “the new Pharaohs” of our time, Rabbi David Novak has suggested a capitalism balanced by “the covenantal necessity of human mutuality before God,” and there are plenty of Jews within the movement against what Naomi Wolf calls “disaster capitalism.” Overall, however, there was far more said in the Jewish establishment about anti-Semitic signs that occasionally popped up at OWS encampments than was said about Lloyd Blankfein’s destruction of middle-class prosperity through his machinations as head of Goldman-Sachs; there is far more listed at Google about Jews fretting over the status of the Western Wall than of Wall Street; and, I fear, there will likely be more references to this article at anti-Semitic websites than at Jewish ones.
George Salamon taught German literature and culture at several East Coast colleges, served as staff reporter on the St. Louis Business Journal and senior editor for Defense Systems Review. He has contributed articles to The Washington Post and The American Conservative and poetry to New Verse News. For the past five years he has been a regular contributor to the Gateway Journalism Review.