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
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Kellie Bright as Linda Carter and Danny Dyer as Mick Carter

EastEnders Christmas specials are known for their shouty, over-the-top soap drama but tonight the show has done itself proud thanks to Danny Dyer.

PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Call The Midwife: Miranda Hart as Chummy
tvCall the Midwife Christmas Special
Sport
Laura Trott and Jason Kenny are preparing for the Commonwealth Games in Glasgow
sport
Arts and Entertainment
Sir Bruce Forsyth with Tess Daly in the BBC's Strictly Come Dancing Christmas Special
tvLouis Smith wins with 'Jingle Bells' quickstep on Strictly Come Dancing's Christmas Special
News
news
Arts and Entertainment
tv
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

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Day In a Page

Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all
The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there