The finance and banking sectors have undergone significant changes in the past few decades. The New Deal’s banking reforms, which helped ensure stability in the financial system, were reversed by the neoliberal counterrevolution, leading to a financial system dominated by mega banks and shadow financial institutions. Gerald Epstein, a world-renowned progressive economist, delves into these issues in his new book, “Busting the Bankers’ Club: Finance for the Rest of Us,” while warning of the potential consequences of the recent approval of bitcoin exchange-traded funds by the Securities and Exchange Commission. In this exclusive interview with Truthout, Epstein discusses the rise of financialization, the dangers of cryptocurrency, and his groundbreaking book, “Busting the Bankers’ Club.”
Epstein’s book contains a comprehensive exploration of the financial system’s Jekyll-and-Hyde personality. While finance is necessary for society by facilitating payments, providing savings opportunities, and aiding the financial needs of businesses and individuals, the negative side is driven by capitalist greed. The post-World War II period saw relative stability due to the New Deal financial regulations, but the breakdown of this regime in the late 1960s led to a push for liberalization in the financial and banking system by powerful institutions, forming the “Bankers’ Club.”
The current financial system is now dominated by huge “universal” banks, asset managers, and private equity firms, which have little regulation and can extract significant wealth from customers and employees, contributing to a highly unequal income and wealth distribution. Moreover, the recent approval of bitcoin exchange-traded funds could set legal and regulatory precedents that might have adverse outcomes, similar to the run-up to the Great Financial Crisis. Ultimately, these developments highlight the urgent need for financial reform that benefits the majority of people.