Masters of the universe but not of their own destiny

They used to be the masters of the universe. Now they are not even masters of their own destiny.

These are the titans of Wall Street, the bank chief executives who wielded trillions of dollars of borrowed money and decided whether currencies, commodities and even countries rose and fell – and whose own pockets bulged with hundreds of millions of dollars in annual bonuses.

Now they are reduced to the status of local branch managers, summoned to the headquarters of the Federal Bailout Bank for a dressing down, some bad news about next year's pay and a tricky budget meeting.

On Monday, they trooped in to the US Treasury Department to be told the federal government was going to be taking a big stake in their companies, whether they liked it or not. Yesterday, with the formal announcement of the most extensive US government interference in the free market perhaps in history, they awoke to a humiliating new world. It is a world that has repudiated their quick-buck business practices and their view of red-in-tooth-and-claw capitalism, a repudiation that came not because of any moral epiphany but because it has been shown to be way too dangerous to the prosperity of all of us.

All the members of the club were there. At the helm, the Treasury Secretary Henry Paulson, who has only been in politics since 2006 after being lured from his $35m-a-year job at Goldman Sachs. Across the table, two of his former Goldman deputies, his successor Lloyd Blankfein and John Thain, now running Merrill Lynch. John Mack, of Morgan Stanley; Jamie Dimon, of JPMorgan Chase, and Vikram Pandit, of Citigroup were also in attendance.

The American people have learnt a lot about the Wall Street executive lifestyle as the crisis has unfolded – the helicopter rides to the golf course taken even while billions of dollars were being wiped out; the multi-million-dollar "golden parachute" cheques written as the pilot ejects from his doomed company.

Dick Fuld, the Lehman Brothers chief executive, hauled before Congress last month, could count up how much money he had taken out of the company during his time at the helm. He disagreed with $500m (£290m), thought $350m might be more like it. With income inequality at its most extreme since before the Great Crash of 1929, it is perhaps unsurprising that the general population has fixed "Wall Street" and "greed" together in the lexicon.

And as with all elite clubs, there comes an easy sense of superiority. When these titans descended on Washington in the past it was to place an order from the trusty menu of free-market dishes. Less regulation for starters. Lower taxes. Help to prise open foreign markets. Second helpings of less regulation.

What is remarkable is how quickly their ideological framework has collapsed. At each stage, there has been a reluctance to use government as a solution to the banking crisis until events dictated it must be. Just three weeks ago, Mr Paulson was rejecting the notion that the government should take control of the banks. His plan to use $700bn of taxpayer money to buy up toxic mortgage assets was finicky precisely because it tried to orchestrate a quasi-market solution. Only the whirlwind of nationalisations begun by Gordon Brown has forced the U-turn that finally humiliated Wall Street.

One of the most oft-quoted chairmen of the Federal Reserve is William McChesney Martin, who served during the Fifties and Sixties. He said his job was "to take away the punch bowl just as the party gets going". With laissez-faire governments on the decks and a McChesney Martin successor, Alan Greenspan, behind the bar dispensing interest rate cuts in shot glasses, no one took the bowl away this time.

George Bush described the scene this year by saying "Wall Street got drunk and now it's got a hangover", but we are not even at the hangover stage. This is only the staggering into the street and passing out in a cab stage. Don't expect these former masters of the universe to wake up with their dignity intact.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Recruitment Genius: Outbound Sales Executive - OTE £25,000

£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Java Developer / J2EE Developer - Watford - £45,000 - £47,000

£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...

Ashdown Group: Marketing Product Manager - (Financial Services) - SW London

£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project