Have We Done All We Could?

Mon, Apr 30, 2012

Note: This essay was proposed by Cathy O’Neil, a facilitator of the Occupy Wall Street Alternative Banking Working Group, and written by Morgan Sandquist, a participant in the Working Group. It ran in four parts on mathbabe (thanks Cathy) and Naked Capitalism (thanks Yves) from April 27 through April 30, 2012.

I. In Denial

The largest banks in America–Citibank, Bank of America, Wells Fargo, and others–are probably insolvent. I learned of this from my companions in Occupy Wall Street’s Alternative Banking Working Group. It seems that, based on a host of legal and accounting irregularities, the banks have been able to conceal real and potential losses far larger than their capital reserves. But this has been difficult to confirm.

Isn’t that strange? Wouldn’t the possible insolvency of the core of our banking industry be a matter of nearly universal importance? Shouldn’t we be trying to figure out if this is in fact so, how it came to be, what we’re going to do about it, and how we can prevent its happening again?

Anyone investigating the true health of the banking industry, apparently including regulators, is faced with opacity, complexity, and even outright hostility that stymies all but the most savvy and persistent. Fortunately, people within OWS, including the Occupy the SEC Working Group, are that savvy and persistent. But the reaction of the industry and its partisans to such efforts has included the not-so-subtle suggestion that inquiring into the well-being of the banking industry will somehow cause problems to arise that wouldn’t otherwise exist if we would all just mind our own business.

This seems odd in an ostensibly objective and quantitative context like banking. Shouldn’t the truth be clearly visible in the accounting? Shouldn’t we all-borrowers, investors, depositors, and regulators-want to know exactly what’s going on?

As unexpected as such a visceral and irrational reaction to genuine, well-founded concern is from the supposedly rational realm of finance, that telltale blend of evasion, grandiosity, and superstition will be familiar to anyone who has ever confronted an addict about his or her addiction.

Denial is far more than an addict’s dismissal of the truth of his or her addiction; it’s collectively developed by the addict’s entire social sphere, and it takes many forms.

It might be helpful to imagine addiction and denial as intangible agents acting in a social context. Addiction’s agency is directed solely toward uninterrupted use of the addictive substance, and denial’s agency is directed solely toward ensuring that no one sees, understands, or limits addiction’s agency. Denial denies not just claims and assertions, it also denies access and insight into the reality of addiction. It denies that behavior is driven by addiction and that behavior’s consequences are the results of addiction. It denies the story of addiction and proposes an endless collection of counter-conspiracies.

It appears as those around the addict ignoring the addict’s use and the consequences of that use; as the narratives, tics, and habits through which the addict understands and acts out his or her use; and as the alternate version of reality that the addict and everyone around him or her shares in lieu of the reality of addiction. To paraphrase Baudelaire on the devil, denial’s best trick is to persuade us that addiction doesn’t exist.

No addiction could develop a more effective narrative of denial than the trade in exotic financial instruments that’s evolved over the last decade or so; no addiction could hope for more willing abettors than the financial press, regulators, and ratings agencies; and no addiction could depend on a more permissive enabler than the Federal Reserve Bank.

It’s difficult not to imagine the banking industry as jittery and unshaven, embarking on yet another unregulated derivative binge, telling us, its concerned partner, that we just wouldn’t understand what it’s like, how high the return can get, while its friends in the financial press and ratings agencies encourage it, scoffing at the very idea of risk.

And later that night, as it’s coming down, it’ll shout something at us about not really needing the $1.2 trillion in liquidity, but if the Fed’s offering, why not?, it’ll make the night that much better, only to face us the next morning, hungover and distractedly claiming none of it ever happened.

We’ll confront it with seemingly undeniable evidence of MERS, TARP, executive bonuses, and a ruined housing sector, and it’ll look betrayed, ask us how we could even say such a thing, and tell us that it’s none of our concern and that we just have to trust it, because the bills are paid, right? It’s not like it’s as bad as AIG or MF Global, it’ll say, which will lead to an impossible-to-follow tale of the prank it played on MF Global last night, and how that was like something that happened to Bear Stearns and Lehman Brothers once, and ending with the declaration that the Fed and the SEC would never let anything bad happen to the Banking Industry.

And what choice do we have? Maybe it’s not that bad. After all, if the banks really were insolvent, there would’ve been something on the evening news.

II. The Addiction

Is it fair to say that because the quality of the denial surrounding the banking industry’s problems is so similar to that of the denial surrounding addiction, that addiction is therefore the root of those problems and our ongoing failure to adequately address them? Perhaps not, but others have come to describe money, debt, and banking as something very much like addiction for entirely different, and far better argued, reasons.

In Debt: The First Five Thousand Years, David Graeber looks deeply into the anthropological record and finds that money and debt, and, by extension, banking, are all essentially the same thing, and they’re not what most of us understand them to be. Money is certainly not simply the objective store of value and medium of exchange that economists would have us believe it is. Because money is created as debt, its use to finance productive activity means that that activity, whatever it is, must then generate interest to be returned to money’s creators in addition to the money lent.

This has given rise to an industry, even a class of people, that derives its livelihood not from any productive activity of its own, but merely from having money. In Sacred Economics, Charles Eisenstein takes this a step further to show that this overhead cost inherent in all monetarily denominated activities means that the value represented by money must always grow. There is no logical end to what must be monetized-natural resources, ideas, time. Nothing can remain unowned and clear of liens, and that will eventually consume any finite realm:

The dynamics of usury-money are addiction dynamics, requiring an ever-greater dose (of the commons) to maintain normality, converting more and more of the basis of well-being into money for a fix. If you have an addict friend, it won’t do any good to give her “help” of the usual kind, such as money, a car to replace the one she crashed, or a job to replace the one she lost. All of those resources will just go down the black hole of addiction. So too it is with our politicians’ efforts to prolong the age of growth.

I don’t hope to make in a couple of paragraphs the full case that those two authors have made over hundreds of pages, so I’ll just assert it to have been compellingly made: namely, that money, debt, and banking have gone from being a tool that we might use to ease social activities to being the purpose of those activities. They have become an addiction, and because they’re an addiction, all of us who are touched by them have developed a rich and pervasive denial of this fact, its history, and its consequences.

In practical terms, what do we gain by perceiving money, debt, and banking as an addiction and the discourse around them as denial? Speaking for myself, it helps me understand the otherwise inexplicable irrationality behind our ongoing financial decline. I can imagine no other explanation for so much of what we’ve seen in the last few years: the failures to properly address the mortgage and subsequent foreclosure crises; the criminal activities of banks, hedge funds, and ratings agencies, and the spiral of consumer indebtedness; the deeply emotional and often militarized response to people sleeping in an otherwise unused square of concrete in a nocturnally unpopulated commercial district; and, most of all, the general populace’s willing acquiescence to all of this.

It appears only that banking must continue as it is, undisturbed, and nothing must disrupt the use and abuse of debt and money. Though an explanation for the full range of symptoms of the banking crisis, or for the full range of symptoms of any addiction, risks being reductive, without some causal dynamic behind these symptoms, there can be no effective response to them. To prevent something from happening, a cause must be identified and addressed.

Understanding money, debt, and banking as addiction also helps me trust myself and seek a constructive approach to the daunting task of resolving this crisis. As anyone who has ever had to face the full force of shared social and familial evasion can attest, the temptation to surrender to that alternate reality despite his or her better judgment, if only for the sake of civil relations, can be overwhelming.

In the case of the banking industry, that evasion often comes in the form of expert opinion that seeks to persuade not through the substance of the discussion, but through a dependence on credentials and ad hominem dismissal. It’s invaluable to be reminded that such a surrender, regardless of expert arguments, will at best only defer the consequences that we fear. Asking ourselves if, at the addict’s eventual funeral, we’ll be comfortable that we did everything we could is a remarkable inducement to focus. It can also be a powerful inducement to anger, so the understanding that it’s really addiction and denial, not friends and family, that we’re fighting can provide a basis for the compassion we would need to constructively approach such an emotionally volatile undertaking.

Finally, this understanding helps me focus on the ultimate goal of any such effort, rather than becoming sidetracked by pointless diversions.

As I mentioned above, one strategy of denial is to hide the connection between the symptoms of addiction and their real cause. It allows the alcoholic to believe that his or her diabetes and other health issues are the result of poor diet and that his or her depression is genetic or the result of poor parenting. It’s not that an alcoholic necessarily consumes a model diet or was well reared, but addressing just those symptoms allows the alcoholic to keep drinking, and other symptoms will follow from that drinking.

Similarly, it’s not that banks don’t need to be better capitalized, but providing them with capital and liquidity alone allows banks to continue pursuing courses of action that are neither financially nor economically viable.

To effectively address addiction is to prevent further addictive use of the substance. Any effort directed at symptoms will, to the extent they’re effective, simply enable continued substance abuse. It’s only by understanding the nature and extent of denial, navigating its maze, and intervening directly in the use of the substance that one can hope to effectively address addiction, and even then, the odds aren’t in the addict’s favor. And only with a thorough understanding of this dynamic and all of its implications can we hope to intervene effectively in the banking crisis that as of now continues unabated.

III. An Intervention

What are we to do with our banking industry, sitting there at the kitchen table in its underwear, drumming on the table with one hand and scratching its increasingly coarse chin with the other in an impossibly syncopated rhythm, letting fly a dizzying stream of assurances, justifications, and accusations, and generally spoiling for a fight that can only be avoided by complete and enthusiastic agreement with a narrative that can be very difficult to follow, let alone make sense of?

Because this is our kitchen too, we have our legal and moral rights. We would be well within those rights to respond to its nonsense with far more coherent and sweeping condemnations of our own. Throwing the bum out in its underwear without so much as a cup of coffee, taking the children, and keeping our share of whatever might be left could certainly be justified.

Though the sense of release offered by those responses is tempting, they’re not likely to be of any practical use. We can’t win an argument with an irrational person, and our share of an insolvent industry is likely to be very little-certainly not enough to feed the children. We have to recognize the hard truth of our implication in the banking industry and its addiction.

This doesn’t mean that we’re responsible for the addiction and its consequences, or that we can make the choice not to continue that addiction on our own, but it does mean that the problem won’t be constructively resolved without our efforts. To the extent that denial is about obscuring the connection between decisions and results, the most effective means of undermining denial is to clarify that connection, and the process of doing that is intervention.

Whether or not its participants are thinking in these terms, Occupy Wall Street, to the extent that it can coherently be referred to as an entity, is in many respects functioning as an intervention into the banking industry’s increasingly untenable addiction to money and debt.

The movement’s core values of transparency, sustainability, and nonviolence reflect the clarity, patience, and compassion needed for an effective intervention.

This is not to say that all of the efforts directed at banks by the movement have been magnanimous or constructive. We have to remember the terrible suffering that has been inflicted upon so many and offer that clarity, patience, and compassion not just to the addict, but also to ourselves as intervenors and to everyone who has been affected by the banking industry.

On the whole, I have been deeply heartened by how this movement has evolved over the last seven months, and though intervention isn’t the easiest or most promising process, it’s one I recognize and know can work (in stark contrast to political revolution). From the beginning, the Occupiers have shown a fearless, poignant spontaneity that’s available only beyond the addiction-centered dynamic of denial, and the banking industry, its enablers, and others still within that dynamic of denial (which, to be fair, has included most of us at one point or another) have responded as would be expected.

The determination and wisdom granted to those who see more clearly is profoundly threatening to those seeking to maintain denial, though of course they wouldn’t be able to say quite why.

The initial objections from the press that Occupy Wall Street was making no demands could be seen as an enabler’s yearning for symptoms that can be isolated and addressed, without admitting to or addressing the addiction from which they arise. To keep calmly and patiently pointing to that underlying cause is simultaneously incomprehensible and maddening to those trapped within denial, and their responses have run the gamut from smug certainty that nothing could possibly be wrong to whistling past the graveyard to ill-conceived and unjustified violence. And the Occupiers’ patience, diligence, and good nature in the face of that decidedly ill will is as textbook an illustration of the process of intervention as we’re likely to see.

It would be all too easy to remain passive in the face of our increasingly delusional, erratic, and combative banking industry. Surely there must be a more palatable alternative to undermining the continued functioning of the complex and highly evolved process that is the core of our economy.

If we force it to rehabilitate, what will happen during that process? Will our economy collapse? When its rehabilitation is complete, will the banking industry be able to function as well as it once did? Or as the banking industry’s enablers would have it: Any attempts to regulate the banking industry will only harm it, making it less effective to all of our detriment; these banks are too important a part of our economy to be allowed to fail; and bankers must continue to receive bonuses for banks to remain competitive.

It’s true that the banking industry has seized upon the process that’s the basis of our economic survival, and that attempts to address the problems of the banking industry cannot be undertaken lightly. But it’s also true that the banking industry has perverted that process, and that attempts to address that won’t prevent our return to some fantasy of efficiency and plenty, though they might prevent the otherwise inevitable, tragic end of the current trajectory left unchecked.

Whatever happens while the banking industry is rehabilitated is unlikely to be worse than what will happen as it continues to indulge in its addiction unaddressed, and it’s unlikely to function any worse upon the completion of its rehabilitation than it is now. As Charles Eisenstein puts it, “any efforts we make today to ‘raise bottom’ for our collectively addicted civilization-any efforts we make to protect or reclaim social, natural, or spiritual capital-will both hasten and ameliorate the crisis.”

Once an addict has reached the point in his or her descent where an intervention is necessary, there’s no realistic possibility of a return to some pre-addiction Golden Age. The apparent paradox that an addict’s life must be destroyed to save it is, stated in those terms, false. The addict’s life only appears to be as yet undestroyed through the lens of denial, and a future life without substance abuse or consequences is an illusion.

But the more gently stated paradox that intervention will cause the addict suffering in the short term to help him or her in the long term is accurate. There are, however, deeper, more intractable paradoxes, and they are those of the psychology of addiction. The process of intervention is often crucial to an addict’s entering rehab and beginning recovery, yet only the addict can decide to enter rehab.

The addict must understand the damage he or she has done in order to stop using but mustn’t succumb to shame, which would simply cause a retreat to the substance. The addict must admit that he or she is powerless over the substance and that life has become unmanageable, but mustn’t surrender to hopelessness and despair, which would sap the considerable motivation needed in the process of recovery. An intervenor must do something, but there’s nothing that can be done. There is no single act, no grand gesture or magic bullet, that can accomplish anything meaningful or lasting. Intervention is a long, unpredictable process requiring superhuman compassion and patience of everyone involved. Prior training or practice in commitment to a process without regard to the outcome of that process is invaluable.

Yes, we can answer the banking industry’s petulant invective in kind, but that won’t fix the problem; the industry will become more defensive and reckless, and we probably wouldn’t end up feeling any better anyway. Our encyclopedic harangue would be cogent, compelling, and convince our friends in the retelling, but no matter how loud we shout it over the banking industry’s coffee cup into that sullen, bloodshot face, it will simply be brushed aside with the wave of a shaky hand and a hoarse grumble, or, worse, it will hit home, and rattled, the banking industry will glare at us and we’ll know that tonight will bring another nihilistic binge of leverage and derivatives, and maybe this time there will be no tomorrow morning. The industry will tell us that we don’t understand, that the pressure it’s under is unimaginable, that life is grim, and that even though it can’t fix that, it should be thanked for what it has accomplished, and that that’s the best it can do. What more could we want? What more could it do? And we can only sigh and shake our head, because we know the simple, honest answer would just fall on deaf ears, and even if it were understood and accepted, the broken soul sitting across the table is in no shape to do anything constructive.

The confrontations shown on television or in the movies, or that you have perhaps participated in yourself, are just part of the larger process of intervention, but they illustrate the themes that inform that larger process. Those themes can best be summarized as connection: the connection between the addict’s choices and the suffering of the addict and those who are around him or her; the connection between addiction and the addict’s choices; and the unbreakable, always available connection between the addict and the intervenors.

Where denial seeks to divide and conquer, intervention seeks to unify and transcend. Intervention doesn’t respond to denial on denial’s terms, but rather reflects reality as it is. It doesn’t engage in the petty distractions of accusations and recriminations, nor does it seek escape from the addict and his or her problems. Intervention shows the addict his or her choices as they’re made, how those choices are determined by addiction, and the consequences that follow from those choices, but it also shows the redemption that’s always available despite those choices and their consequences.

Where denial is deceptive, impulsive, and selfish, intervention is clear, patient, and compassionate. Intervention finally presents the addict with an unavoidable choice between continued deluded suffering and real, sustainable sanity. The addict may or may not respond positively to that choice, but it must continually be presented on the same terms until the addict surrenders his or her denial.

And to induce that surrender, it’s crucial that the addict be offered an alternative to his or her addiction, whether it’s formal rehab, a twelve-step program, methadone, or a recovery dog. It’s important to recognize that even before the addict became physically or emotionally dependent on the substance, that substance met an otherwise unmet need, and leaving it unmet will lead only to relapse.

IV. Conclusion

Still sitting in our breakfast nook, with the banking industry squinting grumpily back at us through the glare of the morning sun on the perfectly polished granite table top, we can sit back, rest our hands on the table, and rather than shouting what it expects to hear, playing our part in the script of codependency, we can speak, without pleading or rancor, the truths that are beyond the script.

Rather than repeating once again our expectations and the banking industry’s failure to meet them, rather than pleading with it to live up to its obligations and do what’s fair, we can speak of the mundane practical details of our life and our children’s lives after its eventual demise, of the specific process by which everything around us will be sold to pay the ruinous debts for which its insurance will prove woefully inadequate.

We can make of the inevitability something tangible, rather than a vague, abstract threat. We can catalog the likely disposition of all of the banking industry’s prized possessions and family heirlooms, the eventual owners of everything it values. We won’t engage in a debate over whether the inevitable will occur, nor will we revel in the justice of it, because we’ll all suffer.

The banking industry must take responsibility for the laws it has broken and make appropriate restitution, not because we’re vengeful, but because the connection between choices and consequences so necessary to any successful relationship must be restored. And as long as the banking industry is adamant that it can’t or won’t change, and given the suffering that will follow from that refusal, we have no choice but to regretfully plan for our own and our children’s well-being to the extent we can. Should it accuse us of betrayal, our response is that the first step toward an alternative is one the banking industry must take.

I would have liked to title this section of this essay “Recovery,” but I’m not in the position to do that. I can’t speak to outcomes, only to process. I’m neither imaginative nor prescient enough to suggest what the successful results of our efforts might look like, but I have some idea of how those efforts should be undertaken.

I could use the Twelve Steps of Alcoholics Anonymous (“We admitted we were powerless over debt-that our industry had become unmanageable,” and so on) to describe what might follow from the banking industry taking that first step, but that would be a too literal extension of the metaphor.

The truth is that history offers no examples of the sort of transformation that’s now needed. Though addiction and recovery may offer greater insight into our predicament than yet another political or economic analysis, there’s no reason to believe that the situation will stick to that metaphor as it evolves, even as we proceed with what is essentially an intervention.

Gil Scott-Heron famously said, “the revolution will not be televised.” I take this to mean that any real, fundamental change to the workings of our society, won’t be an entertainment offered by revolutionaries to the rest of us. It won’t be achieved if we sit home waiting for someone on television, or now the Internet, to present us with a number we can call or text, a petition we can sign, or a ballot we can fill out. Our opinions will effect nothing, and our agreement is neither solicited nor required.

I offer this essay not to start another in the endless string of conversations about what is to be done, but to prompt you to do it, whatever it will be, even if what you will do proves that everything I’ve written here it categorically incorrect. I also offer this as an explanation of why I’m doing what I’m doing.

Among other things, I’m working with several participants in the Alternative Banking Working Group on a Web application that will allow people in New York City (and, later, the rest of the country) to find credit unions for which they’re eligible (something that turns out to be far more complicated than you might expect). This will facilitate the return of money from banks, where it functions as an addictive substance, to community ownership, where it functions as a tool in the business of that community.

I do this on your behalf as well as my own, but not in your place. What else will be done and what will come of it will be the result of what you do. The Occupy Wall Street movement is entirely open and will become no more or less than what we make of it. Tomorrow’s May Day events will provide people with the chance to find out for themselves what that movement is, how they can become involved, and what it will become.

With events in more than 115 American cities and many more around the world, you should be able to find an event near you (if you’re in New York City, you can even hear more about the prank played on MF Global by the banks).

Take the day off and meet the people with whom you share this struggle, whether you’ve agreed to it or not. If the movement isn’t what you want it to be, it’s incumbent upon you to transform it as necessary. You can sit home waiting for a movement that checks all your boxes to somehow arise and solicit your participation, but so passive an approach is unlikely to accomplish much.

Let’s all get together on May 1st and see how much we can accomplish in this American Spring.